Document:

Exhibit
      10.1

     

    THIS
      SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE
      TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT
      TO
      REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
      “1933 ACT”).

     

    NONE
      OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION
      AGREEMENT”) RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
      OF 1933 (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
      REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
      STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
      PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
      FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
      THE
      1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
      LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
      CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

     

    SUBSCRIPTION
      AGREEMENT

    (Offshore
      Subscribers)

     

    
      	TO:	
              Skins
                Inc. (the “Company”)

              
                45
                  West 21st Street

                2nd
                  Floor

                New
                  York, NY 10010 

              

            

    

     

    Purchase
      of Units

     

    
      
        1.
          Subscription

      

    

     

    1.1 On
      the
      basis of the representations and warranties and subject to the terms and
      conditions set forth herein, ____________________(the “Subscriber”)
      hereby
      irrevocably subscribes for and agrees to purchase ____________ units (the
“Units”)
      at a
      price per Unit of US$0.75 (such subscription and agreement to purchase being
      the
“Subscription”),
      for an
      aggregate purchase price of US$__________ (the “Subscription
      Proceeds”).
      

     

    1.2 Each
      Unit
      will consist of one share of common stock of the Company (each, a “Share”)
      and one
      common share purchase warrant (each, a “Warrant”)
      subject
      to adjustment. Each Warrant shall be non-transferable and shall entitle the
      holder thereof to purchase one share of common stock in the capital of the
      Company (each, a “Warrant
      Share”)
      for a
      period of thirty (30) months commencing from the Closing (as defined hereafter),
      at a price per Warrant Share of US$1.00. Certificate(s) representing the
      Warrants will be in the form attached as Exhibit
      A.
      The
      Shares, Warrants and the Warrant Shares are referred to as the “Securities”.

     

    1.3 On
      the
      basis of the representations and warranties and subject to the terms and
      conditions set forth herein, the Company hereby irrevocably agrees to sell
      the
      Units to the Subscriber.

     

    1.4 Subject
      to the terms hereof, the Subscription will be effective upon its acceptance
      by
      the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        2.
          Payment

      

    

     

    2.1 At
      the
      Closing (as defined below), the Subscription Proceeds shall be paid by wire
      transfer to the Company pursuant to the wiring instructions below:

     

    Skins
      Footwear Inc.

    Wachovia
      Bank

    Account
      # 2000013527206

    Routing
      # 031201467

     

    2.2 The
      Subscriber acknowledges and agrees that this Subscription Agreement and any
      other documents delivered in connection herewith will be held on behalf of
      the
      Company. In the event that this Subscription Agreement is not accepted by the
      Company for whatever reason, which the Company expressly reserves the right
      to
      do, within 15 days of the delivery of an executed Subscription Agreement by
      the
      Subscriber, this Subscription Agreement and any other documents delivered in
      connection herewith will be returned to the Subscriber at the address of the
      Subscriber as set forth in this Subscription Agreement. At the Closing, the
      Company will provide a fully executed Subscription Agreement to the Subscriber
      and the Subscriber shall effect the wire transfer of the Subscription Proceeds
      to the Company.

     

    
      
        3.
          Documents
          Required from Subscriber

      

    

     

    3.1 The
      Subscriber must complete, sign and return to the Company an executed copy of
      this Subscription Agreement.

     

    3.2 The
      Subscriber shall complete, sign and return to the Company as soon as possible,
      on request by the Company, any documents, questionnaires, notices and
      undertakings as may be required by regulatory authorities, the OTC Bulletin
      Board and applicable law.

     

    
      
        4.
          Closing

      

    

     

    4.1 Closing
      of the offering of the Securities (the “Closing”)
      shall
      occur on or before May 9, 2007, or on such other date as may be determined
      by
      the Company (the “Closing
      Date”).
      At the
      Closing, the Company shall (i) provide a fully executed Subscription Agreement
      to the Subscriber, (ii) provide a fully executed Warrant agreement to the
      Subscriber, and (iii) deliver irrevocable instructions to its transfer agent
      to
      deliver a stock certificate representing the Shares to the Subscriber at the
      address indicated at the end of this Subscription Agreement (with a copy of
      such
      instructions to the Subscriber). At the Closing, the Subscriber shall effect
      the
      wire transfer of the Subscription Proceeds to the Company pursuant to Section
      2
      hereof.

     

    
      
        5.
          Acknowledgements
          of Subscriber

      

    

     

    5.1 The
      Subscriber acknowledges and agrees that:

     

    
      	 	
              (a)

            	
              none
                of the Securities have been or will be registered under the 1933
                Act, or
                under any state securities or “blue sky” laws of any state of the United
                States, and, unless so registered, may not be offered or sold in
                the
                United States or, directly or indirectly, to U.S. Persons, as that
                term is
                defined in Regulation S under the 1933 Act (“Regulation
                S”),
                except in accordance with the provisions of Regulation S, pursuant
                to an
                effective registration statement under the 1933 Act, or pursuant
                to an
                exemption from, or in a transaction not subject to, the registration
                requirements of the 1933 Act and in each case only in accordance
                with
                applicable state securities laws;

            

    

     

    
      	 	
              (b)

            	
              other
                than as set out herein, the Company has not undertaken, and will
                have no
                obligation, to register any of the Securities under the 1933 Act
                or any
                other securities legislation;

            

    

     

    
      	 	
              (c)

            	
              it
                has received and carefully read this Subscription
                Agreement;

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (d)

            	
              the
                decision to execute this Subscription Agreement and purchase the
                Securities agreed to be purchased hereunder has not been based upon
                any
                oral or written representation as to fact or otherwise made by or
                on
                behalf of the Company and such decision is based entirely upon a
                review of
                any public information which has been filed by the Company with the
                Securities and Exchange Commission (“SEC”)
                in compliance, or intended compliance, with applicable securities
                legislation, and the Subscriber acknowledges that it has received
                and
                reviewed a copy of the Company’s Form 10-KSB for the year ended December
                31, 2006 as filed with the SEC;

            

    

     

    
      	 	
              (e)

            	
              it
                and its advisor(s) have had a reasonable opportunity to ask questions
                of
                and receive answers from the Company in connection with the sale
                of the
                Securities hereunder, and to obtain additional information, to the
                extent
                possessed or obtainable by the Company without unreasonable effort
                or
                expense;

            

    

     

    
      	 	
              (f)

            	
              the
                books and records of the Company were available upon reasonable notice
                for
                inspection, subject to certain confidentiality restrictions, by the
                Subscriber during reasonable business hours at its principal place
                of
                business and that all documents, records and books in connection
                with the
                sale of the Securities hereunder have been made available for inspection
                by him and his attorney and/or
                advisor(s);

            

    

     

    
      	 	
              (g)

            	
              all
                information which the Subscriber has provided to the Company is correct
                and complete as of the date the Subscription Agreement is signed,
                and if
                there should be any change in such information prior to this Subscription
                Agreement being executed by the Company, the Subscriber will immediately
                provide the Company with such
                information;

            

    

     

    
      	 	
              (h)

            	
              the
                Company is entitled to rely on the representations and warranties
                of the
                Subscriber contained in this Subscription Agreement and the Subscriber
                will hold harmless the Company from any loss or damage it or they
                may
                suffer as a result of the Subscriber’s failure to correctly complete this
                Subscription Agreement;

            

    

     

    
      	 	
              (i)

            	
              the
                Subscriber will indemnify and hold harmless the Company and, where
                applicable, its respective directors, officers, employees, agents,
                advisors and shareholders from and against any and all loss, liability,
                claim, damage and expense whatsoever (including, but not limited
                to, any
                and all fees, costs and expenses whatsoever reasonably incurred in
                investigating, preparing or defending against any claim, lawsuit,
                administrative proceeding or investigation whether commenced or
                threatened) arising out of or based upon any representation or warranty
                of
                the Subscriber contained herein or in any document furnished by the
                Subscriber to the Company in connection herewith being untrue in
                any
                material respect or any breach or failure by the Subscriber to comply
                with
                any covenant or agreement made by the Subscriber to the Company in
                connection therewith;

            

    

     

    
      	 	
              (j)

            	
              the
                Subscriber has been advised to consult the Subscriber’s own legal, tax and
                other advisors with respect to the merits and risks of an investment
                in
                the Securities and with respect to applicable resale restrictions,
                including without limitation registration restrictions under Rule
                415 of
                the 1933 Act, and it is solely responsible (and the Company is not
                in any
                way responsible) for compliance
                with:

            

    

     

    
      	 	
              (i)

            	
              any
                applicable laws of the jurisdiction in which the Subscriber is resident
                in
                connection with the distribution of the Securities hereunder,
                and

            

    

     

    
      	 	
              (ii)

            	
              applicable
                resale restrictions;

            

    

     

    
      	 	
              (k)

            	
              none
                of the Securities are listed on any stock exchange or automated dealer
                quotation system and no representation has been made to the Subscriber
                that any of the Securities will become listed on any stock exchange
                or
                automated dealer quotation system, except that currently certain
                market
                makers make market in the common shares of the Company on the National
                Association of Securities Dealers, Inc.’s OTC Bulletin
                Board;

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (l)

            	
              the
                Subscriber is outside the United States when receiving and executing
                this
                Subscription Agreement and is acquiring the Securities as principal
                for
                its own account, for investment purposes only, and not with a view
                to, or
                for, resale, distribution or fractionalization thereof, in whole
                or in
                part, and no other person has a direct or indirect beneficial interest
                in
                such Securities;

            

    

     

    
      	 	
              (m)

            	
              none
                of the Securities may be offered or sold to a U.S. Person or for
                the
                account or benefit of a U.S. Person (other than a distributor) prior
                to
                the end of the Distribution Compliance Period (as defined
                herein);

            

    

     

    
      	 	
              (n)

            	
              the
                Company will refuse to register any transfer of the Securities not
                made in
                accordance with the provisions of Regulation S, pursuant to an effective
                registration statement under the 1933 Act or pursuant to an available
                exemption from the registration requirements of the 1933 Act and
                in each
                case in accordance with applicable state securities
                laws;

            

    

     

    
      	 	
              (o)

            	
              neither
                the SEC nor any other securities commission or similar regulatory
                authority has reviewed or passed on the merits of the
                Securities;

            

    

     

    
      	 	
              (p)

            	
              no
                documents in connection with the sale of the Securities hereunder
                have
                been reviewed by the SEC or any state securities administrators;
                

            

    

     

    
      	 	
              (q)

            	
              there
                is no government or other insurance covering any of the
                Securities;

            

    

     

    
      	 	
              (r)

            	
              the
                issuance and sale of the Securities to the Subscriber will not be
                completed if it would be unlawful or if, in the discretion of the
                Company
                acting reasonably, it is not in the best interests of the
                Company;

            

    

     

    
      	 	
              (s)

            	
              the
                Subscriber is purchasing the Securities pursuant to an exemption
                from the
                registration and the prospectus requirements of applicable securities
                legislation on the basis that the Subscriber is an accredited investor
                of
                the Company and, as a consequence:

            

    

     

    
      	 	
              (i)

            	
              is
                restricted from using most of the civil remedies available under
                securities legislation,

            

    

     

    
      	 	
              (ii)

            	
              may
                not receive information that would otherwise be required to be provided
                under securities legislation, and

            

    

     

    
      	 	
              (iii)

            	
              the
                Company is relieved from certain obligations that would otherwise
                apply
                under securities legislation;

            

    

     

    
      	 	
              (t)

            	
              the
                statutory and regulatory basis for the exemption claimed for the
                offer and
                sale of the Securities, although in technical compliance with Regulation
                S, would not be available if the offering is part of a plan or scheme
                to
                evade the registration provisions of the 1933 Act;
                and

            

    

     

    
      	 	
              (u)

            	
              this
                Subscription Agreement is not enforceable by the Subscriber unless
                it has
                been accepted by the Company.

            

    

     

    
      
        6.
          Representations,
          Warranties and Covenants of the Subscriber

      

    

     

    6.1 The
      Subscriber hereby represents and warrants to and covenants with the Company
      (which representations, warranties and covenants shall survive the Closing)
      that:

     

    
      	 	
              (a)

            	
              the
                Subscriber is not a U.S. Person;

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              the
                Subscriber is not acquiring the Securities for the account or benefit
                of,
                directly or indirectly, any U.S.
                Person;

            

    

     

    
      	 	
              (c)

            	
              the
                Subscriber is resident in the jurisdiction set out under the heading
“Name
                and Address of Subscriber” on the signature page of this Subscription
                Agreement and the sale of the Securities to the Subscriber as contemplated
                in this Subscription Agreement complies with or is exempt from the
                applicable securities legislation of the jurisdiction of residence
                of the
                Subscriber;

            

    

     

    
      	 	
              (d)

            	
              the
                Subscriber has the legal capacity and competence to enter into and
                execute
                this Subscription Agreement and to take all actions required pursuant
                hereto and, if the Subscriber is a corporation, it is duly incorporated
                and validly subsisting under the laws of its jurisdiction of incorporation
                and all necessary approvals by its directors, shareholders and others
                have
                been obtained to authorize execution and performance of this Subscription
                Agreement on behalf of the
                Subscriber;

            

    

     

    
      	 	
              (e)

            	
              if
                the Subscriber is a corporation or other entity, the entering into
                of this
                Subscription Agreement and the transactions contemplated hereby do
                not and
                will not result in the violation of any of the terms and provisions
                of any
                law applicable to, or the constating documents of, the Subscriber
                or of
                any agreement, written or oral, to which the Subscriber may be a
                party or
                by which the Subscriber is or may be
                bound;

            

    

     

    
      	 	
              (f)

            	
              the
                Subscriber has duly executed and delivered this Subscription Agreement
                and
                it constitutes a valid and binding agreement of the Subscriber enforceable
                against the Subscriber;

            

    

     

    
      	 	
              (g)

            	
              the
                Subscriber is acquiring the Securities as principal for its own account
                for investment purposes only and not for the account of any other
                person
                and not for distribution, assignment or resale to others, and no
                other
                person has a direct or indirect beneficial interest in such Securities,
                and it has not subdivided its interest in the Securities with any
                other
                person;

            

    

     

    
      	 	
              (h)

            	
              the
                Subscriber is outside the United States when receiving and executing
                this
                Subscription Agreement and is acquiring the Securities as principal
                for
                the Subscriber’s own account for investment purposes only, and not with a
                view to, or for, resale, distribution or fractionalisation thereof,
                in
                whole or in part, and no other person has a direct or indirect beneficial
                interest in the Securities;

            

    

     

    
      	 	
              (i)

            	
              the
                Subscriber is aware that an investment in the Company is speculative
                and
                involves certain risks, including the possible loss of the entire
                investment and it has carefully read and considered the matters set
                forth
                under the heading “Risk Factors” appearing in the Company’s Form 10-KSB
                and any other filings filed with the
                SEC;

            

    

     

    
      	 	
              (j)

            	
              the
                Subscriber has made an independent examination and investigation
                of an
                investment in the Securities and the Company and has depended on
                the
                advice of its legal and financial advisors and agrees that the Company
                will not be responsible in any way whatsoever for the Subscriber’s
                decision to invest in the Securities and the
                Company;

            

    

     

    
      	 	
              (k)

            	
              the
                Subscriber (i) has adequate net worth and means of providing for
                its
                current financial needs and possible personal contingencies, (ii)
                has no
                need for liquidity in this investment, and (iii) is able to bear
                the
                economic risks of an investment in the Securities for an indefinite
                period
                of time;

            

    

     

    
      	 	
              (l)

            	
              the
                Subscriber understands and agrees that the Company and others will
                rely
                upon the truth and accuracy of the acknowledgements, representations
                and
                agreements contained in this Subscription Agreement and agrees that
                if any
                of such acknowledgements, representations and agreements are no longer
                accurate or have been breached, the Subscriber shall promptly notify
                the
                Company;

            

    

     

    
      	 	
              (m)

            	
              the
                Subscriber has the legal capacity and competence to enter into and
                execute
                this Subscription Agreement and to take all actions required pursuant
                hereto;

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (n)

            	
              the
                Subscriber has duly executed and delivered this Subscription Agreement
                and
                it constitutes a valid and binding agreement of the Subscriber enforceable
                against the Subscriber in accordance with its
                terms;

            

    

     

    
      	 	
              (o)

            	
              the
                Subscriber is not an underwriter of, or dealer in, the common shares
                of
                the Company, nor is the Subscriber participating, pursuant to a
                contractual agreement or otherwise, in the distribution of the
                Securities;

            

    

     

    
      	 	
              (p)

            	
              it
                is not an underwriter of, or dealer in, the common shares of the
                Company,
                nor is the Subscriber participating, pursuant to a contractual agreement
                or otherwise, in the distribution of the
                Securities;

            

    

     

    
      	 	
              (q)

            	
              the
                Subscriber understands and agrees that none of the Securities have
                been or
                will, except as set forth in this Agreement, be registered under
                the 1933
                Act, or under any state securities or “blue sky” laws of any state of the
                United States, and, unless so registered, may not be offered or sold
                in
                the United States or, directly or indirectly, to U.S. Persons, as
                that
                term is defined in Regulation S under the 1933 Act (“Regulation
                S”),
                except in accordance with the provisions of Regulation S, pursuant
                to an
                effective registration statement under the 1933 Act, or pursuant
                to an
                exemption from, or in a transaction not subject to, the registration
                requirements of the 1933 Act and in each case only in accordance
                with
                applicable state securities laws;

            

    

     

    
      	 	
              (r)

            	
              the
                Subscriber understands and agrees that offers and sales of any of
                the
                Securities prior to the expiration of a period of one year after
                the date
                of original issuance of the Securities (the one year period hereinafter
                referred to as the “Distribution
                Compliance Period”)
                shall only be made in compliance with the safe harbor provisions
                set forth
                in Regulation S, pursuant to the registration provisions of the 1933
                Act
                or an exemption therefrom, and that all offers and sales after the
                Distribution Compliance Period shall be made only in compliance with
                the
                registration provisions of the 1933 Act or an exemption therefrom
                and in
                each case only in accordance with applicable state securities
                laws;

            

    

     

    
      	 	
              (s)

            	
              the
                Subscriber acknowledges that it has not acquired the Securities as
                a
                result of, and will not itself engage in, any “directed selling efforts”
                (as defined in Regulation S under the 1933 Act) in the United States
                in
                respect of any of the Securities which would include any activities
                undertaken for the purpose of, or that could reasonably be expected
                to
                have the effect of, conditioning the market in the United States
                for the
                resale of any of the Securities; provided, however, that the Subscriber
                may sell or otherwise dispose of any of the Securities pursuant to
                registration of any of the Securities pursuant to the 1933 Act and
                any
                applicable state securities laws or under an exemption from such
                registration requirements and as otherwise provided
                herein;

            

    

     

    
      	 	
              (t)

            	
              the
                Subscriber understands and agrees not to engage in any hedging
                transactions involving any of the Securities unless such transactions
                are
                in compliance with the provisions of the 1933 Act and in each case
                only in
                accordance with applicable state securities
                laws;

            

    

     

    
      	 	
              (u)

            	
              the
                Subscriber understands and agrees that the Company will refuse to
                register
                any transfer of the Securities not made in accordance with the provisions
                of Regulation S, pursuant to an effective registration statement
                under the
                1933 Act or pursuant to an available exemption from the registration
                requirements of the 1933 Act;

            

    

     

    
      	 	
              (v)

            	
              the
                Subscriber (i) is able to fend for itself in the Subscription; (ii)
                has
                such knowledge and experience in financial and business matters as
                to be
                capable of evaluating the merits and risks of its investment in the
                Securities and the Company; and (iii) has the ability to bear the
                economic
                risks of its prospective investment and can afford the complete loss
                of
                such investment;

            

    

     

    
      	 	
              (w)

            	
              the
                Subscriber is not aware of any advertisement of any of the Securities
                and
                is not acquiring the Securities as a result of any form of general
                solicitation or general advertising including advertisements, articles,
                notices or other communications published in any newspaper, magazine
                or
                similar media or broadcast over radio or television, or any seminar
                or
                meeting whose attendees have been invited by general solicitation
                or
                general advertising; and

            

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (x)

            	
              no
                person has made to the Subscriber any written or oral
                representations:

            

    

     

    
      	 	
              (i)

            	
              that
                any person will resell or repurchase any of the
                Securities,

            

    

     

    
      	 	
              (ii)

            	
              that
                any person will refund the purchase price of any of the
                Securities,

            

    

     

    
      	 	
              (iii)

            	
              as
                to the future price or value of any of the Securities,
                or

            

    

     

    
      	 	
              (iv)

            	
              that
                any of the Securities will be listed and posted for trading on any
                stock
                exchange or automated dealer quotation system or that application
                has been
                made to list and post any of the Securities of the Company on any
                stock
                exchange or automated dealer quotation system, except that currently
                the
                Company’s common shares are quoted on the over-the-counter market operated
                by the NASD’s Over-The-Counter Bulletin
                Board.

            

    

     

    6.2 In
      this
      Subscription Agreement, the term “U.S. Person” shall have the meaning ascribed
      thereto in Regulation S.

     

    
      
        7.
          Representations
          and Warranties will be Relied Upon by the
          Company

      

    

     

    7.1 The
      Subscriber acknowledges that the representations and warranties contained herein
      are made by it with the intention that such representations and warranties
      may
      be relied upon by the Company and its legal counsel in determining the
      Subscriber’s eligibility to purchase the Securities under applicable securities
      legislation, or (if applicable) the eligibility of others on whose behalf it
      is
      contracting hereunder to purchase the Securities under applicable securities
      legislation. The Subscriber further agrees that by accepting delivery of the
      certificates representing the Securities, it will be representing and warranting
      that the representations and warranties contained herein are true and correct
      as
      at the Closing Date with the same force and effect as if they had been made
      by
      the Subscriber on the Closing Date and that they will survive the purchase
      by
      the Subscriber of the Securities and will continue in full force and effect
      notwithstanding any subsequent disposition by the Subscriber of such
      Securities.

     

    
      
        8.
          Resale
          Restrictions

      

    

     

    8.1 The
      Subscriber acknowledges that any resale of the Securities will be subject to
      resale restrictions contained in the securities legislation applicable to each
      Subscriber or proposed transferee. The Subscriber acknowledges that the
      Securities have not been registered under the 1933 Act of the securities laws
      of
      any state of the United States. The Securities may not be offered or sold in
      the
      United States unless registered in accordance with United States federal
      securities laws and all applicable state securities laws or exemptions from
      such
      registration requirements are available.

     

    8.2 The
      Subscriber acknowledges that restrictions on the transfer, sale or other
      subsequent disposition of the Securities by the Subscriber may be imposed by
      securities laws in addition to any restrictions referred to in Section
8.1
      above,
      and, in particular, the Subscriber acknowledges and agrees that none of the
      Securities may be offered or sold to a U.S. Person or for the account or benefit
      of a U.S. Person (other than a distributor) prior to the end of the Distribution
      Compliance Period.

     

    
      
        9.
          Acknowledgement
          and Waiver

      

    

     

    9.1 The
      Subscriber has acknowledged that the decision to purchase the Securities was
      solely made on the basis of information available to the Subscriber on the
      EDGAR
      database maintained by the SEC at www.sec.gov.
      The
      Subscriber hereby waives, to the fullest extent permitted by law, any rights
      of
      withdrawal, rescission or compensation for damages to which the Subscriber
      might
      be entitled in connection with the distribution of the Securities.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      
        10.
          Legending
          of Subject Securities

      

    

     

    10.1 The
      Subscriber hereby acknowledges that that upon the issuance thereof, and until
      such time as the same is no longer required under the applicable securities
      laws
      and regulations, the certificates representing any of the Securities will bear
      a
      legend in substantially the following form:

     

    
      	 	
              “THESE
                SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO
                ARE NOT
                U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE
                UNITED
                STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY,
                NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN
                REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS,
                AND,
                UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES
                OR,
                DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT
                PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
                EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
                REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
                WITH
                APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
                INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
                WITH
                THE 1933 ACT.”

            

    

     

    10.2 The
      Subscriber hereby acknowledges and agrees to the Company making a notation
      on
      its records or giving instructions to the registrar and transfer agent of the
      Company in order to implement the restrictions on transfer set forth and
      described in this Subscription Agreement.

     

    
      
        11.
          Costs

      

    

     

    11.1 The
      Subscriber acknowledges and agrees that all costs and expenses incurred by
      the
      Subscriber (including any fees and disbursements of any special counsel retained
      by the Subscriber) relating to the purchase of the Securities shall be borne
      by
      the Subscriber.

     

    
      
        12.
          Resale
          Registration.

      

    

     

    On
      or
      prior to the date (the “Filing
      Date”)
      that is
      thirty (30) days after the Closing, the Company shall prepare and file with
      the
      SEC a "resale" Registration Statement providing for the resale of the Shares
      and
      the Warrant Shares (collectively, the “Registrable
      Securities”)
      for an
      offering to be made on a continuous basis pursuant and subject to Rule 415,
      which was promulgated by the SEC pursuant to the 1933 Act, as such Rule may
      be
      amended from time to time, or any similar rule or regulation hereafter adopted
      by the SEC having substantially the same effect as such Rule (“Rule
      415”).
      The
      Registration Statement shall be on Form SB-2 (except if the Company is not
      then
      eligible to register for resale the Registrable Securities on Form SB-2, in
      which case such registration shall be on another appropriate form in accordance
      with the Securities Act and the rules promulgated thereunder). The Company
      shall
      (i) not permit any securities other than the Registrable Securities and the
      securities to be listed on Exhibit
      B
      hereto
      to be included in the Registration Statement and (ii) use its reasonable best
      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 prior to the date (the “Effectiveness
      Date”)
      that
      is 150 days after the earlier of (i) the date of filing of the Registration
      Statement, and (ii) the Filing Date, and to keep such Registration Statement
      continuously effective under the Securities Act until such date as is the
      earlier of (x) the date when all Registrable Securities covered by such
      Registration Statement have been sold or (y) the date on which the Registrable
      Securities may be sold without any restriction pursuant to Rule 144(k) as
      determined by the counsel to the Company pursuant to a written opinion letter,
      addressed to the Company's transfer agent to such effect (the "Effectiveness
      Period").
      Notwithstanding anything to the contrary set forth in this Subscription
      Agreement, in the event the SEC does not permit the Company to register the
      “resale” of all of the Registrable Securities anticipated to be so registered on
      such Registration Statement pursuant to Rule 415, the Company shall register
      in
      the Registration Statement such number of Registrable Securities as is permitted
      by the SEC, and the number of Registrable Securities to be included in such
      Registration Statement or any subsequent registration statement shall be
      determined on a pro rata basis among the Subscribers or in such amounts as
      agreed upon by the Subscribers, where the amount of Shares and Warrant Shares
      to
      be registered for a Subscriber to cut back proportionately or as mutually agreed
      upon. In the event the SEC does not permit the Company to register all of the
      Registrable Securities in the Registration Statement, the Company shall use
      its
      best efforts to register the Registrable Securities, subject to the foregoing
      sentence, that were not registered in the Registration Statement as promptly
      as
      possible and in a manner permitted by the SEC. 

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      
        13.
          Registration
          Procedures.

      

    

     

    13.1 In
      connection with the Company's registration obligations hereunder, the Company
      shall:

     

    
      	 	
              (a)

            	
              not
                less than five (5) business days prior to the filing of the Registration
                Statement or any related prospectus or any amendment or supplement
                thereto
                (including any document that would be incorporated therein by reference),
                the Company shall (i) furnish to the Subscriber copies of all such
                documents proposed to be filed, which documents (other than those
                incorporated by reference) will be subject to the review of the
                Subscriber, and (ii) cause its officers and directors, counsel and
                independent certified public accountants to respond to such inquiries
                as
                shall be necessary, in the reasonable opinion of the Subscriber,
                to
                conduct a reasonable investigation within the meaning of the Securities
                Act. Unless otherwise advised by outside counsel to the Company,
                the
                Company shall not file the Registration Statement or any such prospectus
                or any amendments or supplements thereto to which the Subscriber
                shall
                reasonably object in writing within three (3) business days of its
                receipt
                thereof.

            

    

     

    
      	 	
              (b)

            	
              (i)
                Prepare and file with the SEC such amendments, including post-effective
                amendments, to the Registration Statement as may be necessary to
                keep the
                Registration Statement continuously effective as to the applicable
                Registrable Securities for the Effectiveness Period and prepare and
                file
                with the Commission such additional Registration Statements as necessary
                in order to register for resale under the Securities Act all of the
                Registrable Securities; (ii) cause the related prospectus to be amended
                or
                supplemented by any required prospectus supplement, and as so supplemented
                or amended to be filed pursuant to Rule 424 (or any similar provisions
                then in force) promulgated under the Securities Act; (iii) respond
                as
                promptly as possible, but in no event later than ten (10) business
                days,
                to any comments received from the SEC with respect to the Registration
                Statement or any amendment thereto and as promptly as possible provide
                the
                Subscriber true and complete copies of all correspondence from and
                to the
                SEC relating to the Registration Statement; and (iv) comply in all
                material respects with the provisions of the Securities Act and the
                Exchange Act with respect to the disposition of all Registrable Securities
                covered by the Registration Statement during the applicable period
                in
                accordance with the intended methods of disposition by the Subscriber
                thereof set forth in the Registration Statement as so amended or
                in such
                prospectus as so supplemented. The
                Company and the Subscriber agree that the Subscriber will suffer
                damages
                if the Company fails to cause the Registration Statement to be declared
                effective by the Commission on or before the Effectiveness Date.
                The
                Company and the Subscriber further agree that it would not be feasible
                to
                ascertain the extent of such damages with precision. Accordingly,
                if the
                Company fails to cause the Registration Statement to be declared
                effective
                by the Commission on or before the Effectiveness Date, the Company
                shall
                pay an amount in cash as liquidated damages to the Subscriber equal
                to
                .025% for each day after the Effectiveness Date until the Registration
                Statement is declared effective by the Commission. Notwithstanding
                anything to the contrary contained herein, in no event shall any
                liquidated damages be payable with respect to the delay caused solely
                due
                to a Rule 415 comment by the SEC. 

            

    

     

    
      	 	
              (c)

            	
              Notify
                the Subscriber as promptly as possible (and, in the case of (i)(A)
                below,
                not less than five (5) days prior to such filing) and (if requested
                by any
                such person) confirm such notice in writing no later than one (1)
                business
                day following the day (i)(A) when a prospectus or any prospectus
                supplement or post-effective amendment to the Registration Statement
                is
                filed; (B) when the SEC notifies the Company whether there will be
                a
                "review" of such Registration Statement and whenever the SEC comments
                in
                writing on such Registration Statement and (C) with respect to the
                Registration Statement or any post-effective amendment, when the
                same has
                become effective; (ii) of any request by the SEC or any other Federal
                or
                state governmental authority for amendments or supplements to the
                Registration Statement or prospectus or for additional information;
                (iii)
                of the issuance by the SEC of any stop order suspending the effectiveness
                of the Registration Statement covering any or all of the Registrable
                Securities or the initiation of any proceedings for that purpose;
                (iv) if
                at any time any of the representations and warranties of the Company
                contained in any agreement contemplated hereby ceases to be true
                and
                correct in all material respects; (v) of the receipt by the Company
                of any
                notification with respect to the suspension of the qualification
                or
                exemption from qualification of any of the Registrable Securities
                for sale
                in any jurisdiction, or the initiation or threatening of any proceeding
                for such purpose; and (vi) of the occurrence of any event that makes
                any
                statement made in the Registration Statement or prospectus or any
                document
                incorporated or deemed to be incorporated therein by reference untrue
                in
                any material respect or that requires any revisions to the Registration
                Statement, prospectus or other documents so that, in the case of
                the
                Registration Statement or the prospectus, as the case may be, it
                will not
                contain any untrue statement of a material fact or omit to state
                any
                material fact required to be stated therein or necessary to make
                the
                statements therein, in the light of the circumstances under which
                they
                were made, not misleading.

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (d)

            	
              Use
                its reasonable best efforts to avoid the issuance of, or, if issued,
                obtain the withdrawal of, (i) any order suspending the effectiveness
                of
                the Registration Statement or (ii) any suspension of the qualification
                (or
                exemption from qualification) of any of the Registrable Securities
                for
                sale in any jurisdiction, at the earliest practicable
                moment.

            

    

     

    
      	 	
              (e)

            	
              If
                requested by the Subscriber, (i) promptly incorporate in a prospectus
                supplement or post-effective amendment to the Registration Statement
                such
                information as the Company reasonably agrees should be included therein
                and (ii) make all required filings of such prospectus supplement
                or such
                post-effective amendment as soon as practicable after the Company
                has
                received notification of the matters to be incorporated in such prospectus
                supplement or post-effective
                amendment.

            

    

     

    
      	 	
              (f)

            	
              Furnish
                to the Subscriber, without charge, at least one conformed copy of
                each
                Registration Statement and each amendment thereto, including financial
                statements and schedules, all documents incorporated or deemed to
                be
                incorporated therein by reference, and all exhibits to the extent
                requested by the Subscriber (including those previously furnished
                or
                incorporated by reference) promptly after the filing of such documents
                with the SEC.

            

    

     

    
      	 	
              (g)

            	
              Promptly
                deliver to the Subscriber, without charge, as many copies of the
                prospectus or prospectuses (including each form of prospectus) and
                each
                amendment or supplement thereto as the Subscriber may reasonably
                request;
                and the Company hereby consents to the use of such prospectus and
                each
                amendment or supplement thereto by the Subscriber in connection with
                the
                offering and sale of the Registrable Securities covered by such prospectus
                and any amendment or supplement
                thereto.

            

    

     

    
      	 	
              (h)

            	
              Prior
                to any public offering of the Registrable Securities, use its reasonable
                best efforts to register or qualify or cooperate with the Subscriber
                in
                connection with the registration or qualification (or exemption from
                such
                registration or qualification) of such Registrable Securities for
                offer
                and sale under the securities or Blue Sky laws of such jurisdictions
                within the United States as the Subscriber requests in writing, to
                keep
                each such registration or qualification (or exemption therefrom)
                effective
                during the Effectiveness Period and to use commercially reasonable
                efforts
                to enable the disposition in such jurisdictions of the Registrable
                Securities covered by a Registration Statement; provided,
                however,
                that the Company shall not be required to qualify generally to do
                business
                in any jurisdiction where it is not then so qualified or to take
                any
                action that would subject it to general service of process in any
                such
                jurisdiction where it is not then so subject or subject the Company
                to any
                material tax in any such jurisdiction where it is not then so
                subject.

            

    

     

    
      	 	
              (i)

            	
              Cooperate
                with the Subscriber to facilitate the timely preparation and delivery
                of
                certificates representing Registrable Securities to be sold pursuant
                to a
                Registration Statement, which certificates shall be free of all
                restrictive legends (provided that the issuance of such unlegended
                certificates is in compliance with applicable securities laws), and
                to
                enable such Registrable Securities to be in such denominations and
                registered in such names as the Subscriber may request in writing
                at least
                two (2) business days prior to any sale of Registrable
                Securities.

            

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (j)

            	
              Upon
                the occurrence of any event contemplated by Section 13.1(c)(vi),
                as promptly as possible, prepare a supplement or amendment, including
                a
                post-effective amendment, to the Registration Statement or a supplement
                to
                the related prospectus or any document incorporated or deemed to
                be
                incorporated therein by reference, and file any other required document
                so
                that, as thereafter delivered, neither the Registration Statement
                nor such
                prospectus will contain an untrue statement of a material fact or
                omit to
                state a material fact required to be stated therein or necessary
                to make
                the statements therein, in the light of the circumstances under which
                they
                were made, not misleading.

            

    

     

    
      	 	
              (k)

            	
              Use
                its reasonable best efforts to cause all Registrable Securities relating
                to the Registration Statement to continue to be listed on the OTC
                Bulletin
                Board or
                any other securities exchange, quotation system or market, if any,
                on
                which similar securities issued by the Company are then listed or
                traded.

            

    

     

    
      	 	
              (l)

            	
              Comply
                in all material respects with all applicable rules and regulations
                of the
                SEC and make generally available to its security holders earning
                statements satisfying the provisions of Section 11(a) of the Securities
                Act and Rule 158 not later than 45 days after the end of any 12-month
                period (or 90 days after the end of any 12-month period if such period
                is
                a fiscal year) or such extended period as is permitted under the
                Securities Act commencing on the first day of the first fiscal quarter
                of
                the Company after the effective date of the Registration Statement,
                which
                statement shall conform to the requirements of Rule
                158.

            

    

     

    
      	 	
              (m)

            	
              The
                Company may require the Subscriber to furnish to the Company information
                regarding itself and the distribution of such Registrable Securities
                as is
                required by law to be disclosed in the Registration Statement, and
                the
                Company may exclude from such registration the Registrable Securities
                of
                the Subscriber if it unreasonably fails to furnish such information
                within
                a reasonable time after receiving such
                request.

            

    

     

    
      	 	
              (n)

            	
              If
                the Registration Statement refers to the Subscriber by name or otherwise
                as the holder of any securities of the Company, then the Subscriber
                shall
                have the right to require (if such reference to the Subscriber by
                name or
                otherwise is not required by the Securities Act or any similar federal
                statute then in force) the deletion of the reference to such Holder
                in any
                amendment or supplement to the Registration Statement filed or prepared
                subsequent to the time that such reference ceases to be
                required.

            

    

     

    
      	 	
              (o)

            	
              The
                Subscriber covenants and agrees that (i) it will not sell any Registrable
                Securities under the Registration Statement until it has received
                copies
                of the prospectus as then amended or supplemented as contemplated
                in
                Section 13.1(g)
                and notice from the Company that such Registration Statement and
                any
                post-effective amendments thereto have become effective as contemplated
                by
                Section 13.1(c)
                and (ii) it and its officers, directors or Affiliates, if any, will
                comply
                with the prospectus delivery requirements of the Securities Act as
                applicable to them in connection with sales of Registrable Securities
                pursuant to the Registration
                Statement.

            

    

     

    
      	 	
              (p)

            	
              The
                Subscriber agrees by its acquisition of such Registrable Securities
                that,
                upon receipt of a notice from the Company of the occurrence of any
                event
                of the kind described in Section 13.1(c)(ii),
                13.1(c)(iii),
                13.1(c)(iv),
                13.1(c)(v),
                13.1(c)(vi)
                or 13.1(q),
                the Subscriber will forthwith discontinue disposition of such Registrable
                Securities under the Registration Statement until the Subscriber's
                receipt
                of the copies of the supplemented prospectus and/or amended Registration
                Statement contemplated by Section 13.1(j),
                or until it is advised in writing (the "Advice")
                by the Company that the use of the applicable prospectus may be resumed,
                and, in either case, has received copies of any additional or supplemental
                filings that are incorporated or deemed to be incorporated by reference
                in
                such prospectus or Registration
                Statement.

            

    

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (q)

            	
              If
                (i) there is material non-public information regarding the Company
                which
                the Company's Board of Directors (the "Board")
                reasonably determines not to be in the Company's best interest to
                disclose
                and which the Company is not otherwise required to disclose, or (ii)
                there
                is a significant business opportunity (including, but not limited
                to, the
                acquisition or disposition of assets (other than in the ordinary
                course of
                business) or any merger, consolidation, tender offer or other similar
                transaction) available to the Company which the Board reasonably
                determines not to be in the Company's best interest to disclose,
                then the
                Company may (x) postpone or suspend filing of a registration statement
                for
                a period not to exceed 30 consecutive days or (y) postpone or suspend
                effectiveness of a registration statement for a period not to exceed
                20
                consecutive days; provided that the Company may not postpone or suspend
                effectiveness of a registration statement under this Section 13.1(q)
                for more than 45 days in the aggregate during any 360 day period;
                provided,
                however,
                that no such postponement or suspension shall be permitted for consecutive
                20 day periods arising out of the same set of facts, circumstances
                or
                transactions.

            

    

     

    13.2 Registration
      Expenses.

    

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company, except as and to the extent specified in this Section 13.2,
      shall
      be borne by the Company whether or not the Registration Statement is filed
      or
      becomes effective and whether or not any Registrable Securities are sold
      pursuant to the Registration Statement. The fees and expenses referred to in
      the
      foregoing sentence shall include, without limitation, (i) all registration
      and
      filing fees (including, without limitation, fees and expenses (A) with respect
      to filings required to be made with any securities exchange or market on which
      Registrable Securities are required hereunder to be listed, (B) with respect
      to
      filing fees required to be paid to the National Association of Securities
      Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state
      securities or Blue Sky laws (including, without limitation, fees and
      disbursements of counsel for the Subscriber in connection with Blue Sky
      qualifications of the Registrable Securities and determination of the
      eligibility of the Registrable Securities for investment under the laws of
      such
      jurisdictions as the Subscriber may designate)), (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities and of printing prospectuses if the printing of
      prospectuses is requested by the Subscriber), (iii) messenger, telephone and
      delivery expenses, (iv) fees and disbursements of counsel for the Company,
      (v)
      Securities Act liability insurance, if the Company so desires such insurance,
      and (vi) fees and expenses of all other persons retained by the Company in
      connection with the consummation of the transactions contemplated by this
      Agreement, including, without limitation, the Company's independent public
      accountants (including the expenses of any comfort letters or costs associated
      with the delivery by independent public accountants of a comfort letter or
      comfort letters). In addition, the Company shall be responsible for all of
      its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit, the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder.

     

    
      
        14.
          Indemnification.

      

    

     

    14.1 Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless the Subscriber, the officers, directors, agents, brokers
      (including brokers who offer and sell Registrable Securities as principal as
      a
      result of a pledge or any failure to perform under a margin call of Common
      Stock), investment advisors and employees of the Subscriber, each person who
      controls the Subscriber (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, agents and
      employees of each such controlling person, to the fullest extent permitted
      by
      applicable law, from and against any and all losses, claims, damages,
      liabilities, costs (including, without limitation, costs of preparation and
      attorneys' fees) and expenses (collectively, "Losses"),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in the Registration Statement, any prospectus
      or
      any form of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein (in the case of any prospectus or form of prospectus
      or
      supplement thereto, in the light of the circumstances under which they were
      made) not misleading, except to the extent, but only to the extent, that (i)
      such untrue statements or omissions are based solely upon information regarding
      the Subscriber furnished in writing to the Company by or on behalf of the
      Subscriber expressly for use therein, and (ii) that the foregoing indemnity
      agreement is subject to the condition that, insofar as it relates to any untrue
      statement, allegedly untrue statement, omission or alleged omission made in
      any
      preliminary prospectus but eliminated or remedied in the final prospectus (filed
      pursuant to Rule 424 of the Securities Act), such indemnity agreement shall
      not
      inure to the benefit of the Subscriber or any underwriter, broker or other
      person acting on behalf of holders of the Registrable Securities, from whom
      the
      person asserting any loss, claim, damage, liability or expense purchased the
      Registrable Securities which are the subject thereof, if a copy of such final
      prospectus had been made available to such person and the Subscriber or such
      underwriter, broker or other person acting on behalf of the Subscriber and
      such
      final prospectus was not delivered to such person with or prior to the written
      confirmation of the sale of such Registrable Securities to such person. The
      Company shall notify the Subscriber promptly of the claim, threat or assertion
      of any proceeding of which the Company is aware in connection with the
      transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    14.2 Indemnification
      by Subscriber.
      The
      Subscriber shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review), as incurred, arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in the Registration Statement, any prospectus, or any form of
      prospectus, or arising solely out of or based solely upon any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading, to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by the
      Subscriber to the Company specifically for inclusion in the Registration
      Statement or such prospectus. Notwithstanding anything to the contrary contained
      herein, the Subscriber shall be liable under this Section 14.2
      for only
      that amount as does not exceed the lesser of (i) the dollar amount of the net
      proceeds received by the Subscriber upon the sale of the Registrable Securities
      giving rise to such indemnification obligation and (ii) the aggregate purchase
      price paid by the Subscriber for the Securities pursuant to this
      Agreement.

     

    14.3 Contribution.
      If a
      claim for indemnification under Section 14.1
      or
14.2
      is
      unavailable to an indemnified party because of a failure or refusal of a
      governmental authority to enforce such indemnification in accordance with its
      terms (by reason of public policy or otherwise), then each indemnifying party,
      in lieu of indemnifying such indemnified party, shall contribute to the amount
      paid or payable by such indemnified party as a result of such Losses, in such
      proportion as is appropriate to reflect the relative benefits received by the
      indemnifying party on the one hand and the indemnified party on the other from
      the offering of the Registrable Securities. If, but only if, the allocation
      provided by the foregoing sentence is not permitted by applicable law, the
      allocation of contribution shall be made in such proportion as is appropriate
      to
      reflect not only the relative benefits referred to in the foregoing sentence
      but
      also the relative fault, as applicable, of the indemnifying party and
      indemnified party in connection with the actions, statements or omissions that
      resulted in such Losses as well as any other relevant equitable considerations.
      The relative fault of such indemnifying party and indemnified party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such indemnifying party or indemnified party, and
      the parties'
      relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action, statement or omission. The amount paid or payable by a
      party as a result of any Losses shall be deemed to include any reasonable
      attorneys' or other reasonable fees or expenses incurred by such party in
      connection with (i) any
      proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms
      or (ii)
      enforcing any rights under this Section 14.
      In no
      event shall the Subscriber be required to contribute an amount under this
      Section 14.3
      in
      excess of the net proceeds received by the Subscriber upon sale of the
      Subscriber’s Registrable Securities pursuant to the Registration Statement
      giving rise to such contribution obligation.

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 14.3
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding paragraph. No person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any person who was not guilty of such
      fraudulent misrepresentation.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the indemnifying parties may have to the indemnified
      parties. Notwithstanding anything to the contrary contained herein, the
      Subscriber shall be liable under this Section 14.3
      for only
      that amount as does not exceed the net proceeds to the Subscriber as a result
      of
      the sale of Registrable Securities pursuant to such Registration
      Statement.

     

    
      
        15.
          Rule
          144.

      

    

     

    As
      long
      as the Subscriber owns any Registrable Securities, the Company covenants to
      timely file (or obtain extensions in respect thereof and file within the
      applicable grace period) all reports required to be filed by the Company after
      the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As
      long
      as the Subscriber owns any Registrable Securities, if the Company is not
      required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
      Act,
      it will prepare and furnish to the Subscriber and make publicly available in
      accordance with Rule 144(c) promulgated under the Securities Act annual and
      quarterly financial statements, together with a discussion and analysis of
      such
      financial statements in form and substance substantially similar to those that
      would otherwise be required to be included in reports required by Section 13(a)
      or 15(d) of the Exchange Act, as well as any other information required thereby,
      in the time period that such filings would have been required to have been
      made
      under the Exchange Act. The Company further covenants that it will take such
      further action as the Subscriber may reasonably request in writing, all to
      the
      extent required from time to time to enable the Subscriber to sell the
      Registrable Securities without registration under the Securities Act within
      the
      limitation of the exemptions provided by Rule 144 promulgated under the
      Securities Act, including providing any legal opinions relating to such sale
      pursuant to Rule 144.

     

    
      
        16.
          Governing
          Law

      

    

     

    16.1 This
      Subscription Agreement is governed by the laws of the State of Nevada and the
      federal laws of the United States applicable therein.

     

    
      
        17.
          Survival

      

    

     

    17.1 This
      Subscription Agreement, including without limitation the representations,
      warranties and covenants contained herein, shall survive and continue in full
      force and effect and be binding upon the parties hereto notwithstanding the
      completion of the purchase of the Securities by the Subscriber pursuant
      hereto.

     

    
      
        18.
          Assignment

      

    

     

    18.1 This
      Subscription Agreement is not transferable or assignable.

     

    
      
        19.
          Severability

      

    

     

    19.1 The
      invalidity or unenforceability of any particular provision of this Subscription
      Agreement shall not affect or limit the validity or enforceability of the
      remaining provisions of this Subscription Agreement.

     

    
      
        20.
          Entire
          Agreement

      

    

     

    20.1 Except
      as
      expressly provided in this Subscription Agreement and in the agreements,
      instruments and other documents contemplated or provided for herein, this
      Subscription Agreement contains the entire agreement between the parties with
      respect to the sale of the Securities and there are no other terms, conditions,
      representations or warranties, whether expressed, implied, oral or written,
      by
      statute or common law, by the Company or by anyone else.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    
      
        21.
          Notices

      

    

     

    21.1 All
      notices and other communications hereunder shall be in writing and shall be
      deemed to have been duly given if mailed or transmitted by any standard form
      of
      telecommunication. Notices to the Subscriber shall be directed to the address
      on
      the signature page of this Subscription Agreement and notices to the Company
      shall be directed to it at Skins Inc., 45 West 21st Street, 2nd Floor, New
      York,
      NY 10010, Attention: Mark Klein, Chief Executive Officer.

     

    
      
        22.
          Counterparts
          and Electronic Means

      

    

     

    22.1 This
      Subscription Agreement may be executed in any number of counterparts, each
      of
      which, when so executed and delivered, shall constitute an original and all
      of
      which together shall constitute one instrument. Delivery of an executed copy
      of
      this Subscription Agreement by electronic facsimile transmission or other means
      of electronic communication capable of producing a printed copy will be deemed
      to be execution and delivery of this Subscription Agreement as of the date
      hereinafter set forth.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    
      
        23. Delivery
          Instructions

      

    

    

    23.1 The
      Subscriber hereby directs the Company to deliver the Share Certificates and
      the
      Warrant Certificates to:

     

    
      
        

      

      (name)

       

    

    
      

    

    (address)

    

    23.2 The
      Subscriber hereby directs the Company to cause the Shares and the Warrants
      to be
      registered on the books of the Company as follows:

     

    
      

    

    (name)

     

    
      

    

    (address)

    

    23.3 The
      undersigned hereby acknowledges that it will deliver to the Company all such
      additional completed forms in respect of the Subscriber’s purchase of the
      Securities as may be required for filing with the appropriate securities
      commissions and regulatory authorities.

     

    IN
      WITNESS WHEREOF
      the
      Subscriber has duly executed this Subscription Agreement as of the date of
      acceptance by the Company.

    
      	 	 	 	 
	
            	 	 	
            
	
            	 	 	
              
(Name
              of Subscriber - Please type or print)
	 	 	 	 
	 	 	 	 
	 	 	 	
              
(Signature
              and, if applicable, Office)
	 	 	 	 
	 	 	 	 
	 	 	 	
              
(Address
              of Subscriber)
	 	 	 	 
	 	 	 	 
	 	 	 	
              
(City,
              State or Province, Postal Code of
              Subscriber)
	 	 	 	 
	 	 	 	 
	 	 	 	
              
(Country
              of Subscriber)

    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    ACCEPTANCE

     

    The
      above-mentioned Subscription Agreement in respect of the Units is hereby
      accepted by Skins Inc.

     

    DATED
      at
      New York, New York, United States of America, the 21st day of May,
      2007.

     

     

    SKINS
      INC.

     

    Per: /s/
      Mark
      Klein 

    
      

    

    Mark
      Klein

    Chief
      Executive Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A TO
      THE SUBSCRIPTION AGREEMENT

     

    THE
      SECURITIES REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS
      CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS
      NOT
      A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
      STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

     

    NONE
      OF THE SECURITIES REPRESENTED HEREBY OR THE SECURITIES INTO WHICH THIS SECURITY
      IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE
      SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY
      OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS
      EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT,
      PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT
      TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
      REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
      WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
      INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
      1933
      ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE
      1933 ACT. 

    

    THESE
      WARRANTS WILL EXPIRE AND BECOME NULL AND VOID

    AT
      5:00
      P.M. (EASTERN STANDARD TIME) ON NOVEMBER 20, 2009.

     

    SHARE
      PURCHASE WARRANTS

    TO
      PURCHASE SHARES OF COMMON STOCK

    

    Skins
      Inc.

     

    incorporated
      in the State of Nevada

     

    THIS
      IS
      TO CERTIFY THAT _____________________, (the “Holder”)
      of
      ________________, has the right to purchase, upon and subject to the terms
      and
      conditions hereinafter referred to, up to _______________ fully paid and
      non-assessable common shares (the “Shares”)
      in the
      capital of Skins Inc. (hereinafter called the “Company”)
      on or
      before 5:00 p.m. (Eastern Standard Time) on the date which is thirty months
      from the date of issue of this Warrant as set forth above (the “Expiry
      Date”)
      at a
      price per Share (the “Exercise
      Price”)
      of US
      $1.00 on the terms and conditions attached hereto as Appendix “A” (the
“Terms
      and Conditions”).

     

    
      	 	
              1.

            	
              ONE
                (1) WARRANT AND THE EXERCISE PRICE ARE REQUIRED TO PURCHASE ONE SHARE.
                THIS CERTIFICATE REPRESENTS __________________
                WARRANTS.

            

    

     

    
      	 	
              2.

            	
              These
                Warrants are issued subject to the Terms and Conditions, and the
                Warrant
                Holder may exercise the right to purchase Shares only in accordance
                with
                those Terms and Conditions.

            

    

     

    
      	 	
              3.

            	
              Nothing
                contained herein or in the Terms and Conditions will confer any right
                upon
                the Holder hereof or any other person to subscribe for or purchase
                any
                Shares at any time subsequent to the Expiry Date, and from and after
                such
                time, this Warrant and all rights hereunder will be void and of no
                value.

            

    

     

    IN
      WITNESS WHEREOF the Company has executed this Warrant Certificate this 21st
      day
      of May, 2007.

     

     

    SKINS
      INC.

     

     

    Per: /s/
      Mark
      Klein 

    
      

    

    Mark
      Klein, 

    Chief
      Executive Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PLEASE
      NOTE THAT ALL SHARE CERTIFICATES MUST BE LEGENDED AS FOLLOWS DURING THE CURRENCY
      OF APPLICABLE HOLD PERIODS:

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
      TO A
      PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION
      S
      UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

     

    NONE
      OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT,
      OR
      ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED
      OR
      SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO
      U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
      THE
      1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
      OR
      PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
      THE
      REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
      WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
      INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
      1933
      ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE
      1933 ACT.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    APPENDIX
      “A”

    

    TERMS
      AND
      CONDITIONS dated May 21, 2007, attached to the Warrants issued by Skins
      Inc.

     

    
      
        1.
          INTERPRETATION

      

    

     

    1.1 Definitions

     

    In
      these
      Terms and Conditions, unless there is something in the subject matter or context
      inconsistent therewith:

     

    
      	 	
              (a)

            	
              “Company”
                means Skins Inc. until a successor corporation will have become such
                as a
                result of consolidation, amalgamation or merger with or into any
                other
                corporation or corporations, or as a result of the conveyance or
                transfer
                of all or substantially all of the properties and estates of the
                Company
                as an entirety to any other corporation and thereafter “Company” will mean
                such successor corporation;

            

    

     

    
      	 	
              (b)

            	
              “Company’s
                Auditors”
                means an independent firm of accountants duly appointed as auditors
                of the
                Company;

            

    

     

    
      	 	
              (c)

            	
              “Director”
                means a director of the Company for the time being, and reference,
                without
                more, to action by the directors means action by the directors of
                the
                Company as a Board, or whenever duly empowered, action by an executive
                committee of the Board;

            

    

     

    
      	 	
              (d)

            	
              “herein”,
                “hereby”
                and similar expressions refer to these Terms and Conditions as the
                same
                may be amended or modified from time to time; and the expression
“Article”
                and “Section,” followed by a number refer to the specified Article or
                Section of these Terms and
                Conditions;

            

    

     

    
      	 	
              (e)

            	
              “person”
                means an individual, corporation, partnership, trustee or any
                unincorporated organization and words importing persons have a similar
                meaning;

            

    

     

    
      	 	
              (f)

            	
              “shares”
                means the common shares in the capital of the Company as constituted
                at
                the date hereof and any shares resulting from any subdivision or
                consolidation of the shares;

            

    

     

    
      	 	
              (g)

            	
              “Warrant
                Holders”
                or
                “Holders”
                means the holders of the Warrants;
                and

            

    

     

    
      	 	
              (h)

            	
              “Warrants”
                means the warrants of the Company issued and presently authorized
                and for
                the time being outstanding.

            

    

     

    1.2 Gender

     

    Words
      importing the singular number include the plural and vice versa and words
      importing the masculine gender include the feminine and neuter
      genders.

     

    1.3 Interpretation
      not affected by Headings

     

    The
      division of these Terms and Conditions into Articles and Sections, and the
      insertion of headings are for convenience of reference only and will not affect
      the construction or interpretation thereof.

     

    1.4 Applicable
      Law

     

    The
      Warrants will be construed in accordance with the laws of the State of Nevada
      and the federal law of the United States applicable therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        2.
          ISSUE
          OF WARRANTS

      

    

     

    2.1 Additional
      Warrants

     

    The
      Company may at any time and from time to time issue additional warrants or
      grant
      options or similar rights to purchase shares of its capital stock.

     

    2.2 Warrants
      to Rank Pari
      Passu

     

    All
      Warrants and additional warrants, options or similar rights to purchase shares
      from time to time issued or granted by the Company, will rank pari
      passu
      whatever
      may be the actual dates of issue or grant thereof, or of the dates of the
      certificates by which they are evidenced.

     

    2.3 Issue
      in substitution for Lost Warrants

     

    
      	 	
              (a)

            	
              In
                case a Warrant becomes mutilated, lost, destroyed or stolen, the
                Company,
                at its discretion, may issue and deliver a new Warrant of like date
                and
                tenor as the one mutilated, lost, destroyed or stolen, in exchange
                for and
                in place of and upon cancellation of such mutilated Warrant, or in
                lieu
                of, and in substitution for such lost, destroyed or stolen Warrant
                and the
                substituted Warrant will be entitled to the benefit hereof and rank
                equally in accordance with its terms with all other Warrants issued
                or to
                be issued by the Company.

            

    

     

    
      	 	
              (b)

            	
              The
                applicant for the issue of a new Warrant pursuant hereto will bear
                the
                cost of the issue thereof and in case of loss, destruction or theft
                furnish to the Company such evidence of ownership and of loss,
                destruction, or theft of the Warrant so lost, destroyed or stolen
                as will
                be satisfactory to the Company in its discretion and such applicant
                may
                also be required to furnish indemnity in amount and form satisfactory
                to
                the Company in its discretion, and will pay the reasonable charges
                of the
                Company in connection therewith.

            

    

     

    2.4 Warrant
      Holder Not a Shareholder

     

    The
      holding of a Warrant will not constitute the Holder thereof a shareholder of
      the
      Company, nor entitle him to any right or interest in respect thereof except
      as
      in the Warrant expressly provided.

     

    
      
        3.
          NOTICE

      

    

     

    3.1 Notice
      to Warrant Holders

     

    Any
      notice required or permitted to be given to the Holders will be in writing
      and
      may be given by prepaid registered post, electronic facsimile transmission
      or
      other means of electronic communication capable of producing a printed copy
      to
      the address of the Holder appearing on the Holder’s Warrant or to such other
      address as any Holder may specify by notice in writing to the Company, and
      any
      such notice will be deemed to have been given and received by the Holder to
      whom
      it was addressed if mailed, on the third day following the mailing thereof,
      if
      by facsimile or other electronic communication, on successful transmission, or,
      if delivered, on delivery; but if at the time or mailing or between the time
      of
      mailing and the third business day thereafter there is a strike, lockout, or
      other labour disturbance affecting postal service, then the notice will not
      be
      effectively given until actually delivered.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    3.2 Notice
      to the Company

     

    Any
      notice required or permitted to be given to the Company will be in writing
      and
      may be given by prepaid registered post, electronic facsimile transmission
      or
      other means of electronic communication capable of producing a printed copy
      to
      the address of the Company set forth below or such other address as the Company
      may specify by notice in writing to the Holder, and any such notice will be
      deemed to have been given and received by the Company to whom it was addressed
      if mailed, on the third day following the mailing thereof, if by facsimile
      or
      other electronic communication, on successful transmission, or, if delivered,
      on
      delivery; but if at the time or mailing or between the time of mailing and
      the
      third business day thereafter there is a strike, lockout, or other labour
      disturbance affecting postal service, then the notice will not be effectively
      given until actually delivered:

     

    Skins
      Inc.

    45
      West
      21st Street

    2nd
      Floor

    New
      York,
      NY 10010

     

    Attention:
      Mark Klein, Chief Executive Officer

     

    Fax
      No.
      (212) 656-1788

     

    with
      a
      copy, which shall not constitute notice, to:

     

    Kirkpatrick
      & Lockhart Preston Gates Ellis LLP

    10100
      Santa Monica Boulevard, 7th Floor

    Los
      Angeles, CA 90067

     

    Attention:
      Anh Q. Tran, Esq.

     

    Fax:
      (310) 552-5001

     

    
      
        4.
          EXERCISE
          OF WARRANTS

      

    

     

    4.1 Method
      of Exercise of Warrants

     

    The
      right
      to purchase shares conferred by the Warrants may be exercised by the Holder
      surrendering the Warrant Certificate representing same, with a duly completed
      and executed subscription in the form attached hereto and a bank draft or
      certified cheque payable to the Company for the purchase price applicable at
      the
      time of surrender in respect of the shares subscribed for in lawful money of
      the
      United States of America, to the Company at the address set forth in, or from
      time to time specified by the Company pursuant to, Section 3.2.

     

    4.2 Effect
      of Exercise of Warrants

     

    
      	 	
              (a)

            	
              Upon
                surrender and payment as aforesaid the shares so subscribed for will
                be
                deemed to have been issued and such person or persons will be deemed
                to
                have become the Holder or Holders of record of such shares on the
                date of
                such surrender and payment, and such shares will be issued at the
                subscription price in effect on the date of such surrender and
                payment.

            

    

     

    
      	 	
              (b)

            	
              Within
                ten business days after surrender and payment as aforesaid, the Company
                will forthwith cause to be delivered to the person or persons in
                whose
                name or names the shares so subscribed for are to be issued as specified
                in such subscription or mailed to him or them at his or their respective
                addresses specified in such subscription, a certificate or certificates
                for the appropriate number of shares not exceeding those which the
                Warrant
                Holder is entitled to purchase pursuant to the Warrant
                surrendered.

            

    

     

    4.3 Subscription
      for Less Than Entitlement

     

    The
      Holder of any Warrant may subscribe for and purchase a number of shares less
      than the number which he is entitled to purchase pursuant to the surrendered
      Warrant. In the event of any purchase of a number of shares less than the number
      which can be purchased pursuant to a Warrant, the Holder thereof upon exercise
      thereof will in addition be entitled to receive a new Warrant in respect of
      the
      balance of the shares which he was entitled to purchase pursuant to the
      surrendered Warrant and which were not then purchased.

     

    4.4 Warrants
      for Fractions of Shares

     

    To
      the
      extent that the Holder of any Warrant is entitled to receive on the exercise
      or
      partial exercise thereof a fraction of a share, such right may be exercised
      in
      respect of such fraction only in combination with another Warrant or other
      Warrants which in the aggregate entitle the Holder to receive a whole number
      of
      such shares.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    4.5 Expiration
      of Warrants

     

    After
      the
      expiration of the period within which a Warrant is exercisable, all rights
      thereunder will wholly cease and terminate and such Warrant will be void and
      of
      no effect.

     

    4.6 Time
      of Essence

     

    Time
      will
      be of the essence hereof.

     

    4.7 Subscription
      Price

     

    Each
      Warrant is exercisable at a price per share (the “Exercise Price”) of One Dollar
      (US$1.00). One (1) Warrant and the Exercise Price are required to subscribe
      for
      each share during the term of the Warrants.

     

    4.8 Adjustment
      of Exercise Price

     

    
      	 	
              (a)

            	
              The
                Exercise Price and the number of shares deliverable upon the exercise
                of
                the Warrants will be subject to adjustment in the event and in the
                manner
                following:

            

    

     

    
      	 	
              (i)

            	
              If
                and whenever the shares at any time outstanding are subdivided into
                a
                greater or consolidated into a lesser number of shares the Exercise
                Price
                will be decreased or increased proportionately as the case may be;
                upon
                any such subdivision or consolidation the number of shares deliverable
                upon the exercise of the Warrants will be increased or decreased
                proportionately as the case may be.

            

    

     

    
      	 	
              (ii)

            	
              In
                case of any capital reorganization or of any reclassification of
                the
                capital of the Company or in the case of the consolidation, merger
                or
                amalgamation of the Company with or into any other Company (hereinafter
                collectively referred to as a “Reorganization”), each Warrant will after
                such Reorganization confer the right to purchase the number of shares
                or
                other securities of the Company (or of the Company’s resulting from such
                Reorganization) which the Warrant Holder would have been entitled
                to upon
                Reorganization if the Warrant Holder had been a shareholder at the
                time of
                such Reorganization.

            

    

     

    In
      any
      such case, if necessary, appropriate adjustments will be made in the application
      of the provisions of this Article Four relating to the rights and interest
      thereafter of the Holders of the Warrants so that the provisions of this
      Article Four will be made applicable as nearly as reasonably possible to
      any shares or other securities deliverable after the Reorganization on the
      exercise of the Warrants.

     

    The
      subdivision or consolidation of shares at any time outstanding into a greater
      or
      lesser number of shares (whether with or without par value) will not be deemed
      to be a Reorganization for the purposes of this clause 4.8(a)(ii).

     

    
      	 	
              (b)

            	
              The
                adjustments provided for in this Section 4.8
                are cumulative and will become effective immediately after the record
                date
                or, if no record date is fixed, the effective date of the event which
                results in such adjustments.

            

    

     

    4.9 Determination
      of Adjustments

     

    If
      any
      questions will at any time arise with respect to the Exercise Price or any
      adjustment provided for in Section 4.8,
      such
      questions will be conclusively determined by the Company’s Auditors, or, if they
      decline to so act any other firm of certified public accountants in the United
      States of America that the Company may designate and who will have access to
      all
      appropriate records and such determination will be binding upon the Company
      and
      the Holders of the Warrants.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      
        5.
          WAIVER
          OF CERTAIN RIGHTS

      

    

     

    5.1 Immunity
      of Shareholders, etc.

     

    The
      Warrant Holder, as part of the consideration for the issue of the Warrants,
      waives and will not have any right, cause of action or remedy now or hereafter
      existing in any jurisdiction against any past, present or future incorporator,
      shareholder, Director or officer (as such) of the Company for the issue of
      shares pursuant to any Warrant or on any covenant, agreement, representation
      or
      warranty by the Company herein contained or in the Warrant.

     

    
      
        6.
          MODIFICATION
          OF TERMS, MERGER, SUCCESSORS

      

    

     

    6.1 Modification
      of Terms and Conditions for Certain Purposes

     

    From
      time
      to time the Company may, subject to the provisions of these presents, modify
      the
      Terms and Conditions hereof, for the purpose of correction or rectification
      of
      any ambiguities, defective provisions, errors or omissions herein.

     

    6.2 Warrants
      Not Transferable

     

    The
      Warrant and all rights attached to it are not transferable.

     

    DATED
      as
      of the date first above written in these Terms and Conditions.

     

    
      	 	 	 
	 	SKINS
              INC.
	 
 	 
 	 
 
	
            	By:  	/s/
              Mark
              Klein
	 	
              
Authorized
              Signatory

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    [FORM
      OF NOTICE OF EXERCISE OF WARRANT]

     

    NOTICE
      OF EXERCISE OF WARRANT

     

    (To
      be executed upon exercise of Warrant)

     

    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant Certificate for, and to purchase thereunder,
      securities of Skins Inc., as provided for therein, and tenders herewith payment
      of the exercise price in full in the form of cash or a certified or official
      bank check in same-day funds in the amount of $____________ for _________ such
      securities.

     

    Please
      issue a certificate or certificates for such securities in the name of (please
      print name, address and social security number):

    
      	 	 	 	 
	
              Name: 

            	 	 	
            
	
              
                

              

            	 	 	
            
	
              Address: 

            	 	 	
            
	
              
                

              

               

              
                

              

               

              
                

              

               

              
                

              

                  

            	 	 	 
	
              SSN/EIN:
                 

            	 	 	 
	
              
                
 

            	 	 	 
	 	 	 	 
	
              Signature: 

            	 	 	 
	
              
                
 

            	 	 	 
	
              Title
                (if applicable):  

            	 	 	 
	
              
                
 

            	 	 	 
	
              Date:  

            	 	 	 
	
              
                
 

            	 	 	 

    

     

    Note:
      The
      above signature should correspond exactly with the name on the first page of
      this Warrant Certificate.

     

    If
      said
      number of shares shall not be all the shares purchasable under the within
      Warrant Certificate, a new Warrant Certificate is to be issued in the name
      of
      said undersigned for the balance remaining of the shares purchasable thereunder
      rounded up to the next higher whole number of shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B TO THE SUBSCRIPTION AGREEMENT

     

    LIST
      OF SECURITIES TO BE REGISTERED

     

    The
      registration statement shall cover 4,000,000 shares of the common stock of
      Skins
      Inc. and 4,000,000 shares of common stock that may be issued upon the exercise
      of warrants (the “Registrable Securities”) sold and issued in this offering
      exempt from registration under the 1933 Act under Regulation S.EXHIBIT
      C

     

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    COMMON
      STOCK PURCHASE WARRANT

    

     Coda
      Octopus Group, Inc.

     

     

    
      	Warrant Shares: [_______	Initial Exercise Date: April ___,
              2007

    

        

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, _____________ (the “Holder”)
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Coda Octopus Group, Inc.,
      a
      Delaware corporation (the “Company”),
      up to
      ______ shares (the “Warrant
      Shares”)
      of
      Common Stock. The purchase price of one share of Common Stock under this Warrant
      shall be equal to the Exercise Price, as defined in Section 2(b). 

     

    Section
      1.   Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      March __, 2007, among the Company and the purchasers signatory
      thereto.

     

    Section
      2.    Exercise.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    a)     
      Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivering to the Company (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company) of a duly executed facsimile copy of the Notice of Exercise Form
      annexed hereto; and, within 3 Trading Days of the date said Notice of Exercise
      is delivered to the Company, causing the Company to have received payment of
      the
      aggregate Exercise Price of the shares thereby purchased by wire transfer or
      cashier’s check drawn on a United States bank. Notwithstanding anything herein
      to the contrary, the Holder shall not be required to physically surrender this
      Warrant to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full, in which case,
      the Holder shall surrender this Warrant to the Company for cancellation within
      3
      Trading Days of the date the final Notice of Exercise is delivered to the
      Company. Partial exercises of this Warrant resulting in purchases of a portion
      of the total number of Warrant Shares available hereunder shall have the effect
      of lowering the outstanding number of Warrant Shares purchasable hereunder
      in an
      amount equal to the applicable number of Warrant Shares purchased. The Holder
      and the Company shall maintain records showing the number of Warrant Shares
      purchased and the date of such purchases. The Company shall deliver any
      objection to any Notice of Exercise Form by 5:00 P.M., Eastern time, on the
      second Business Day after receipt of such notice. In the event of any dispute
      or
      discrepancy, the records of the Holder shall be controlling and determinative
      in
      the absence of manifest error. The
      Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
      that, by reason of the provisions of this paragraph, following the purchase
      of a
      portion of the Warrant Shares hereunder, the number of Warrant Shares available
      for purchase hereunder at any given time may be less than the amount stated
      on
      the face hereof.

     

    b)      Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be
$_____1,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

     

    c)     
      Cashless
      Exercise.
      If at
      any time after one year from the Closing there is no effective Registration
      Statement registering, or no current prospectus available for, the resale of
      the
      Warrant Shares by the Holder, then this Warrant may also be exercised at such
      time by means of a “cashless exercise” in which the Holder shall be entitled to
      receive a certificate for the number of Warrant Shares equal to the quotient
      obtained by dividing [(A-B) (X)] by (A), where:

     

    (A)
      = the
      VWAP on the Trading Day immediately preceding the date of such
      election;

    

    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and 

    

    (X)
      = the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise.

     

    _________________________

    1
      $1.30 as
      to Series A Warrants and $1.70 as to Series B Warrants.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    Notwithstanding
      anything herein to the contrary, on the Termination Date, to the extent
      permitted under Section 2(d), this Warrant shall be automatically exercised
      via
      cashless exercise pursuant to this Section 2(c).

    

    d)     
      Holder’s
      Restrictions.
      The
      Company shall not effect any exercise of this Warrant, and a Holder shall not
      have the right to exercise any portion of this Warrant, pursuant to Section
      2 or
      otherwise, to the extent that after giving effect to such issuance after
      exercise as set forth on the applicable Notice of Exercise, such Holder
      (together with such Holder’s Affiliates, and any other person or entity acting
      as a group together with such Holder or any of such Holder’s Affiliates), would
      beneficially own in excess of the Beneficial Ownership Limitation (as defined
      below).  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such Holder and its Affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this Warrant
      with
      respect to which such determination is being made, but shall exclude the number
      of shares of Common Stock which would be issuable upon (A) exercise of the
      remaining, nonexercised portion of this Warrant beneficially owned by such
      Holder or any of its Affiliates and (B) exercise or conversion of the
      unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any other Common Stock Equivalents) subject
      to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by such Holder or any of its affiliates.  Except
      as set forth in the preceding sentence, for purposes of this Section 2(d),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder, it being
      acknowledged by the Holder that the Company is not representing to such Holder
      that such calculation is in compliance with Section 13(d) of the Exchange Act
      and such Holder is solely responsible for any schedules required to be filed
      in
      accordance therewith. To the extent that the limitation contained in this
      Section 2(d) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by such Holder together with any
      Affiliates) and of which portion of this Warrant is exercisable shall be in
      the
      sole discretion of the Holder, and the submission of a Notice of Exercise shall
      be deemed to be the Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by such Holder together
      with
      any Affiliates) and of which portion of this Warrant is exercisable, in each
      case subject the Beneficial Ownership Limitation, and the Company shall have
      no
      obligation to verify or confirm the accuracy of such determination. In addition,
      a determination as to any group status as contemplated above shall be determined
      in accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder. For purposes of this Section 2(d), in
      determining the number of outstanding shares of Common Stock, a Holder may
      rely
      on the number of outstanding shares of Common Stock as reflected in (x) the
      Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more
      recent public announcement by the Company or (z) any other notice by the Company
      or the Company’s Transfer Agent setting forth the number of shares of Common
      Stock outstanding.  Upon the written request of a Holder, the Company shall
      within two Trading Days confirm in writing to such Holder the number of shares
      of Common Stock then outstanding.  In any case, the number of outstanding
      shares of Common Stock shall be determined after giving effect to the conversion
      or exercise of securities of the Company, including this Warrant, by such Holder
      or its Affiliates since the date as of which such number of outstanding shares
      of Common Stock was reported. The “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      exercise of this Warrant. The Beneficial Ownership Limitation provisions of
      this
      Section 2(d) may be waived by such Holder, at the election of such Holder,
      upon
      not less than 61 days’ prior notice to the Company to change the Beneficial
      Ownership Limitation to 9.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant, and the provisions of this Section 2(d)
      shall continue to apply. Upon such a change by a Holder of the Beneficial
      Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the
      Beneficial Ownership Limitation may not be further waived by such Holder. The
      provisions of this paragraph shall be construed and implemented in a manner
      otherwise than in strict conformity with the terms of this Section 2(d) to
      correct this paragraph (or any portion hereof) which may be defective or
      inconsistent with the intended Beneficial Ownership Limitation herein contained
      or to make changes or supplements necessary or desirable to properly give effect
      to such limitation. The limitations contained in this paragraph shall apply
      to a
      successor holder of this Warrant.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    e)      
      Mechanics
      of Exercise.
      

     

    i.  Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system and there is an effective
      Registration Statement permitting the resale of the Warrant Shares by the
      Holder, and otherwise by physical delivery to the address specified by the
      Holder in the Notice of Exercise not later than 5:00 P.M., Eastern time on
      the
      third Trading Day after receipt by the Company of the Notice of Exercise Form,
      surrender of this Warrant (if required) and payment of the aggregate Exercise
      Price as set forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company. The Warrant Shares shall be deemed to have been issued,
      and Holder or any other person so designated to be named therein shall be deemed
      to have become a holder of record of such shares for all purposes, as of the
      date the Warrant has been exercised by payment to the Company of the Exercise
      Price (or by cashless exercise, if permitted) and all taxes required to be
      paid
      by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of
      such shares, have been paid. If the Company fails for any reason to deliver
      to
      the Holder certificates evidencing the Warrant Shares subject to a Notice of
      Exercise by the second Trading Day following the Warrant Share Delivery Date,
      the Company shall pay to such Holder, in cash, as liquidated damages and not
      as
      a penalty, for each $2,000 of Warrant Shares subject to such exercise (based
      on
      the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
      $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading
      Day
      after such liquidated damages begin to accrue) for each Trading Day after such
      second Trading Day following the Warrant Share Delivery Date until such
      certificates are delivered.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    ii.  Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      a Holder and upon surrender of this Warrant certificate, at the time of delivery
      of the certificate or certificates representing Warrant Shares, deliver to
      Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
      Warrant Shares called for by this Warrant, which new Warrant shall in all other
      respects be identical with this Warrant.

     

    iii.  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e)(ii) by the second Trading Day following the Warrant Share Delivery
      Date, then the Holder will have the right to rescind such exercise.

     

    iv.    
      Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the second
      Trading Day following the Warrant Share Delivery Date, and if after such date
      the Holder is required by its broker to purchase (in an open market transaction
      or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
      Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
      Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In and, upon request of
      the
      Company, evidence of the amount of such loss. Nothing herein shall limit a
      Holder’s right to pursue any other remedies available to it hereunder, at law or
      in equity including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    v.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall at
      its
      election, either pay a cash adjustment in respect of such final fraction in
      an
      amount equal to such fraction multiplied by the Exercise Price or round up
      to
      the next whole share.

     

    vi.    
      Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii.   
      Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    Section
      3.    Certain Adjustments.

     

    a)     
      Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise makes a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted such that the aggregate Exercise
      Price of this Warrant shall remain unchanged. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    b)     
      Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall sell or grant any option to purchase, or sell or grant
      any
      right to reprice, or otherwise dispose of or issue (or announce any offer,
      sale,
      grant or any option to purchase or other disposition) any Common Stock or Common
      Stock Equivalents entitling any Person to acquire shares of Common Stock, at
      an
      effective price per share less than the then Exercise Price (such lower price,
      the “Base
      Share Price”
and
      such issuances collectively, a “Dilutive
      Issuance”)
      (if
      the holder of the Common Stock or Common Stock Equivalents so issued shall
      at
      any time, whether by operation of purchase price adjustments, reset provisions,
      floating conversion, exercise or exchange prices or otherwise, or due to
      warrants, options or rights per share which are issued in connection with such
      issuance, be entitled to receive shares of Common Stock at an effective price
      per share which is less than the Exercise Price, such issuance shall be deemed
      to have occurred for less than the Exercise Price on such date of the Dilutive
      Issuance), then the Exercise Price shall be reduced and only reduced to equal
      the Base Share Price and the number of Warrant Shares issuable hereunder shall
      be increased such that the aggregate Exercise Price payable hereunder, after
      taking into account the decrease in the Exercise Price, shall be equal to the
      aggregate Exercise Price prior to such adjustment. Such adjustment shall be
      made
      whenever such Common Stock or Common Stock Equivalents are issued.
      Notwithstanding the foregoing, no adjustments shall be made, paid or issued
      under this Section 3(b) in respect of an Exempt Issuance. The Company shall
      notify the Holder in writing, no later than the Trading Day following the
      issuance of any Common Stock or Common Stock Equivalents subject to this Section
      3(b), indicating therein the applicable issuance price, or applicable reset
      price, exchange price, conversion price and other pricing terms (such notice
      the
“Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in
      the Notice of Exercise.

     

    c)     
      Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (but not to the Holder)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the VWAP at the record date mentioned below, then the
      Exercise Price shall be multiplied by a fraction, of which the denominator
      shall
      be the number of shares of the Common Stock outstanding on the date of issuance
      of such rights or warrants plus the number of additional shares of Common Stock
      offered for subscription or purchase, and of which the numerator shall be the
      number of shares of the Common Stock outstanding on the date of issuance of
      such
      rights or warrants plus the number of shares which the aggregate offering price
      of the total number of shares so offered (assuming receipt by the Company in
      full of all consideration payable upon exercise of such rights, options or
      warrants) would purchase at such VWAP. Such adjustment shall be made whenever
      such rights or warrants are issued, and shall become effective immediately
      after
      the record date for the determination of stockholders entitled to receive such
      rights, options or warrants. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    d)     
      Pro
      Rata Distributions.
      If the
      Company, at any time while this Warrant is outstanding, shall distribute to
      all
      holders of Common Stock (but not to the Holder) evidences of its indebtedness
      or
      assets (including cash and cash dividends) or rights or warrants to subscribe
      for or purchase any security other than the Common Stock (which shall be subject
      to Section 3(b)), then in each such case the Exercise Price shall be adjusted
      by
      multiplying the Exercise Price in effect immediately prior to the record date
      fixed for determination of stockholders entitled to receive such distribution
      by
      a fraction of which the denominator shall be the VWAP determined as of the
      record date mentioned above, and of which the numerator shall be such VWAP
      on
      such record date less the then per share fair market value at such record date
      of the portion of such assets or evidence of indebtedness so distributed
      applicable to one outstanding share of the Common Stock as determined by the
      Board of Directors in good faith. In either case the adjustments shall be
      described in a statement provided to the Holder of the portion of assets or
      evidences of indebtedness so distributed or such subscription rights applicable
      to one share of Common Stock. Such adjustment shall be made whenever any such
      distribution is made and shall become effective immediately after the record
      date mentioned above.

     

    e)     
      Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (each “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, the number
      of shares of Common Stock of the successor or acquiring corporation or of the
      Company, if it is the surviving corporation, and any additional consideration
      (the “Alternate
      Consideration”)
      receivable as a result of such merger, consolidation or disposition of assets
      by
      a holder of the number of shares of Common Stock for which this Warrant is
      exercisable immediately prior to such event. For purposes of any such exercise,
      the determination of the Exercise Price shall be appropriately adjusted to
      apply
      to such Alternate Consideration based on the amount of Alternate Consideration
      issuable in respect of one share of Common Stock in such Fundamental
      Transaction, and the Company shall apportion the Exercise Price among the
      Alternate Consideration in a reasonable manner reflecting the relative value
      of
      any different components of the Alternate Consideration. If holders of Common
      Stock are given any choice as to the securities, cash or property to be received
      in a Fundamental Transaction, then the Holder shall be given the same choice
      as
      to the Alternate Consideration it receives upon any exercise of this Warrant
      following such Fundamental Transaction. To the extent necessary to effectuate
      the foregoing provisions, any successor to the Company or surviving entity
      in
      such Fundamental Transaction shall issue to the Holder a new warrant consistent
      with the foregoing provisions and evidencing the Holder’s right to exercise such
      warrant into Alternate Consideration. The terms of any agreement pursuant to
      which a Fundamental Transaction is effected shall include terms requiring any
      such successor or surviving entity to comply with the provisions of this Section
      3(e) and insuring that this Warrant (or any such replacement security) will
      be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. Notwithstanding anything to the contrary, in the event of a
      Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
      transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
      as amended, or (3) a Fundamental Transaction involving a person or entity not
      traded on a national securities exchange, the Nasdaq Global Select Market,
      the
      Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
      entity shall pay at the Holder’s option, exercisable at any time concurrently
      with or within 30 days after the consummation of the Fundamental Transaction,
      an
      amount of cash equal to the value of this Warrant as determined in accordance
      with the Black-Scholes option pricing formula using an expected volatility
      equal
      to the 100 day historical price volatility obtained from the HVT function on
      Bloomberg L.P. as of the trading day immediately prior to the public
      announcement of the Fundamental Transaction. 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    f)      
      Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    g)     
      [Intentionally
      Deleted].

     

    h)     
      Notice
      to Holder.
      

     

    i.  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. If the Company issues a variable rate
      security, despite the prohibition thereon in the Purchase Agreement, the Company
      shall be deemed to have issued Common Stock or Common Stock Equivalents at
      the
      lowest possible conversion or exercise price at which such securities may be
      converted or exercised in the case of a Variable Rate Transaction (as defined
      in
      the Purchase Agreement). 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    ii.  Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock; (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock; (C) the Company shall
      authorize the granting to all holders of the Common Stock rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights; (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property;
      (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Company; then, in each case,
      the
      Company shall cause to be mailed to the Holder at its last address as it shall
      appear upon the Warrant Register of the Company, at least 20 calendar days
      prior
      to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      period commencing on the date of such notice to the effective date of the event
      triggering such notice subject to the limitations set forth in Section
      2(d).

     

    Section
      4.    Transfer
      of Warrant.

     

    a)     
      Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, this Warrant and all rights hereunder (including, without limitation,
      any registration rights) are transferable, in whole or in part, upon surrender
      of this Warrant at the principal office of the Company or its designated agent,
      together with a written assignment of this Warrant substantially in the form
      attached hereto duly executed by the Holder or its agent or attorney and funds
      sufficient to pay any transfer taxes payable upon the making of such transfer.
      Upon such surrender and, if required, such payment, the Company shall execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination or denominations specified in such instrument of
      assignment, and shall issue to the assignor a new Warrant evidencing the portion
      of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
      A
      Warrant, if properly assigned, may be exercised by a new holder for the purchase
      of Warrant Shares without having a new Warrant issued. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    b)     
      New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice. All Warrants issued on transfers or exchanges shall be dated
      the original Issue Date and shall be identical with this Warrant except as
      to
      the number of Warrant Shares issuable pursuant thereto. 

     

    c)     
      Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d)     
      Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer, that the Holder or transferee of this
      Warrant, as the case may be, comply
      with the provisions of Section 5.7 of the Purchase Agreement.

     

    Section
      5.    Miscellaneous.

     

    a)     
      No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof as set forth in Section
      2(e)(i). 

     

    b)     
      Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    c)     
      Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    d)     
      Authorized
      Shares.
      

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      The Company covenants that all Warrant Shares which may be issued upon the
      exercise of the purchase rights represented by this Warrant will, upon exercise
      of the purchase rights represented by this Warrant, be duly authorized, validly
      issued, fully paid and nonassessable and free from all taxes, liens and charges
      created by the Company in respect of the issue thereof (other than taxes in
      respect of any transfer occurring contemporaneously with such issue).

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    e)      
      Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

     

    f)      
      Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    g)     
      Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    h)     
      Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    i)      
      Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    j)      
      Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive and not to assert the
      defense in any action for specific performance that a remedy at law would be
      adequate.

     

    k)      
      Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

     

    l)       
      Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    m)     
      Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    n)      Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    

    ********************

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized as of the date first above
      indicated.

     

     

     

    
      	 	 	 	
              CODA
                OCTOPUS GROUP, INC.

               

               

            
	 	 	 	By:__________________________________________
	
            	 	 	
            
	 	 	 	
              Name:

              Title:

            

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    NOTICE
      OF EXERCISE

    

    TO:
      CODA
      OCTOPUS GROUP, INC.

    

    

    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    [ 
       ] in lawful money of the United States; or

     

    [  ]
      [if permitted] the cancellation of such number of Warrant Shares as is
      necessary, in accordance with the formula set forth in subsection 2(c), to
      exercise this Warrant with respect to the maximum number of Warrant Shares
      purchasable pursuant to the cashless exercise procedure set forth in subsection
      2(c).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)  Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder’s
      Signature:    _____________________________

    

    Holder’s
      Address:      _____________________________

     

     

                                  
      _____________________________

    

    

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

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