Document:

RECORDING REQUESTED BY AND

Exhibit 10.3

RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

MURPHY LAW OFFICE, PLLC

847 EAST FAIRVIEW

MERIDIAN, IDAHO 83680

(Space Above For Recorder’s Use)

DEED OF TRUST

BORROWER:

SILVER FALCON MINING, INC.

TRUSTEE:

PIONEER TITLE COMPANY 

BENEFICIARY:

JOYCE LIVESTOCK COMPANY LIMITED PARTNERSHIP

DATE:

November_____, 2009

DEED OF TRUST - PAGE 1

 

DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (the “Deed of Trust”) effective as of November ____, 2009, by SILVER FALCON MINING, INC., a Delaware corporation, with an address of 14877 Silver City Rd., Murphy, ID 83650 (the “Borrower”), PIONEER TITLE COMPANY., whose address is 100 10TH Ave. South, Nampa, Idaho 83651, as trustee (the “Trustee”), and JOYCE LIVESTOCK COMPANY LIMITED PARTNERSHIP, an Idaho limited partnership, its successors and assigns, with an address of 14568 Joyce Ranch Rd., Murphy, Idaho 83650, as beneficiary (the “Lender”).

RECITALS

A.

Borrower is indebted to Lender in the original principal sum of Two Hundred Twenty Five Thousand Dollars and no/100s ($225,000.00), which indebtedness is evidenced and represented by that certain Promissory Note of even date from Borrower to Lender, with final payment due and payable on January 1, 2020 (the Promissory Note together with all substitutions, consolidations, modifications, replacements, restatements, increases, renewals, and extensions thereof, in whole or in part, shall collectively be referred to as the “Note”).

B.

Lender, as a condition precedent to the extension of credit and the making of the loan evidenced by the Note, has required that Borrower provide Lender with security for the repayment of the indebtedness evidenced by the Note as well as for the performance, observance and discharge by Borrower of various covenants, conditions and agreements made by Borrower to, with, in favor of, and for the benefit of, Lender with respect to such indebtedness and security.

1.

Grants of Security.

1.1

Property Granted.  In consideration of and in order to secure the repayment, observance, performance and discharge by Borrower of the Secured Obligations (as defined in Section 1.4 below), Borrower grants, bargains, sells, aliens, remises, releases, conveys, assigns, transfers, pledges, delivers, sets over, hypothecates, warrants, and confirms to Trustee, in trust, with power of sale, for the benefit and security of Lender, as beneficiary hereunder, subject to the terms and conditions of this Deed of Trust, all estate, right, title and interest that Borrower now has or may later acquire in and to the following described properties, rights and interests and all replacements of, substitutions for, and additions thereto (all of which are referred to below as the “Property”):

1.1.1

Real Property.  The real property in Owyhee County, Idaho, described in Exhibit A attached hereto and made a part hereof (the “Real Property”), which Real Property either is located within an incorporated city or village, or does not exceed forty (40) acres.

1.1.2

Improvements.  All buildings, structures and other improvements of any kind, nature or description now or hereafter erected, constructed, placed or located upon the Real Property (the “Improvements”).

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1.1.3

Appurtenances.  All tenements, hereditaments, strips and gores of land, rights-of-way, easements, licenses, privileges and other appurtenances now or hereafter belonging or in any way appertaining to the Real Property, including, without limitation, all right, title and interest of the Borrower in any after-acquired right, title, interest, remainder or reversion, in and to the beds of any ways, streets, avenues, roads, alleys, passages and public places, open or proposed, in front of, running through, adjoining or adjacent to the Real Property; to the extent owned by or licensed to Borrower.  Also included are all minerals, royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn plants, crops, trees, timber and other emblements now or hereafter located on, under, or above all or any part of the Real Property (the “Appurtenances”).

1.1.4

Leases and Rents.  All leases and other agreements affecting the use, enjoyment or occupancy of all or any part of the Real Property or the Improvements heretofore or hereafter entered into whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), as the same may be amended from time to time (the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Real Property and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Secured Obligations (defined below).

1.1.5

Condemnation Awards.  Any and all awards, payments or settlements, including interest thereon, and the right to receive the same, as a result of (a) the exercise of the right of eminent domain, (b) the alteration of the grade of any street, and (c) any other injury, damage or casualty to, taking of, or decrease in the value of, the Property, to the extent of all amounts that may be secured by this Deed of Trust at the date of any such award or payment, including but not limited to Reasonable Attorneys’ Fees (as defined below), costs, and disbursements incurred by Lender in connection with the collection of such award or payment.

1.1.6

Fixtures and Personal Property.  All machinery, equipment, fixtures (including, but not limited to all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Real Property or the Improvements, or appurtenant thereto, and used in connection with the present or future operation and occupancy of the Real Property and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Real Property and the Improvements, or appurtenant thereto, or used in connection with the present or future operation and occupancy of the Real Property and the Improvements (together referred to as the “Fixtures and Personal Property,” which term expressly excludes any toxic waste or substance deemed hazardous under federal, regional, state, or local laws).

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1.1.7

Insurance Proceeds.  All proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance judgments, or settlements made in lieu thereof, for damage to the Property.

1.1.8

Agreements.  All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Real Property and any part thereof and any Improvements or respecting any business or activity conducted on the Real Property and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right to receive and collect any sums payable to Borrower thereunder.

1.1.9

Intangibles.  All trade names, trademarks, service marks, logos, copyrights, goodwill, books and records and all other general intangibles specific to or used in connection with the operation of the Property.

1.2

Assignment of Leases and Rents.  Borrower absolutely and unconditionally assigns to Lender all of Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only.  Nevertheless, subject to the terms of this Deed of Trust, Lender grants to Borrower a revocable license to collect and receive the Rents.  Borrower shall hold a portion of the Rents sufficient to discharge all current sums due on the Note, for use in the payment of such sums.

1.3

Secured Obligations.  This Deed of Trust and the grants, assignments and transfers made herein are given for the purpose of securing all of the following, in such order of priority as Lender may determine in its sole discretion (the “Secured Obligations”):

1.3.1

The payment of the indebtedness evidenced by the Note in lawful money of the United States of America, including any amounts that may be repaid from time to time and made available for reborrowing to the extent authorized by the Note or the other Loan Documents (defined in Section 2.1 below).

1.3.2

The payment of interest, default interest, late charges and other sums, as provided in the Note, this Deed of Trust or the other Loan Documents.

1.3.3

The payment of all other monies agreed or provided to be paid by Borrower in the Note, this Deed of Trust or the other Loan Documents.

1.3.4

The payment of all sums advanced pursuant to this Deed of Trust to protect and preserve the Property and the lien and the security interest created hereby.

1.3.5

The payment of all sums advanced and costs and expenses incurred by Lender in connection with the Secured Obligations or any part thereof, any renewal, extension, modification, consolidation, change, substitution, replacement, restatement or increase of the Secured Obligations or any part thereof, or the acquisition or perfection of the security therefore, whether made or incurred at the request of Borrower or Lender.

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1.3.6

 

 

 

The payment of all other sums that may hereafter be loaned or advanced by Lender to Borrower.  

1.3.7

The performance of all other obligations of Borrower herein.

1.3.8

The performance of each obligation of Borrower in the Loan Documents in addition to the payment of the Note.

1.3.9

The performance of each obligation in the Loan Documents of any person guaranteeing the payment of the Note or any portion thereof or performance by Borrower of any terms of this Deed of Trust, if any.

1.3.10

The performance of each obligation of Borrower and any guarantor in any renewal, extension, modification, consolidation, change, substitution, replacement for, restatement or increase of all or any part of the Note, this Deed of Trust or the other Loan Documents.

2.

Borrower Covenants.  Borrower covenants and agrees as follows:

2.1

Payment of Principal and Interest.  Borrower shall pay the Note, together with all interest, if any, thereon, in accordance with the terms of the Note, promptly at the times, at the place and in the manner that said principal and interest shall become due, and to promptly and punctually pay all other sums required to be paid by Borrower pursuant to the terms of the Note, this Deed of Trust, and all other documents and instruments executed as further evidence of, as additional security for, or executed in connection with, the indebtedness evidenced by the Note and secured by this Deed of Trust are collectively referred to as the “Loan Documents.”

2.2

Performance of Other Obligations.  Borrower shall perform, comply with, and abide by each and every one of the covenants, agreements and conditions contained and set forth in the Note, this Deed of Trust, and the other Loan Documents and shall comply with all laws, ordinances, rules, regulations and orders of any governmental authorities having jurisdiction over the Property that now or hereafter affect the Property or requires any alterations or improvements to be made thereon, and shall perform all of its obligations under any covenant, condition, restriction or agreement of record affecting the Property and shall insure that at all times the Property constitutes one or more legal lots capable of being conveyed without violation of any subdivision or platting laws, ordinances, rules or regulations, or other laws relating to the division or separation of real property.

2.3

Preservation and Maintenance of Property.  Borrower shall keep all Improvements now existing or hereafter erected on the Real Property in good order and repair and shall not do or permit any waste, impairment or deterioration thereof or thereon, nor alter, remove, or demolish any of the Improvements or any Fixtures or Personal Property attached or appertaining thereto, without the prior written consent of Lender.  Borrower shall not initiate,
join in, or consent to any change in any private restrictive covenant, zoning ordinance or other public or private restrictions limiting or defining the uses that may be made of the Property or any part thereof, nor do or permit any other act whereby the Property shall become less valuable, be used for purposes contrary to applicable law, or be used in any manner that will increase the premium for or result in a termination or cancellation of the insurance policies hereinafter required to be kept and maintained on the Property.  Borrower shall effect such repairs as Lender may reasonably require, and from time to time make all needful and proper replacements so that the Improvements, Appurtenances, Fixtures and Personal Property will, at all times, be in good condition, fit and proper for the respective purposes for which they were originally erected or installed.

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2.4

Hazardous Waste.

2.4.1

Borrower at all times shall keep the Property and ground water of the Property free of Hazardous Materials (as defined below), excluding any milling operation hazardous material.  The Idaho Department of Environmental Quality and the Environmental Protection Agency shall govern any Hazardous Waste created by the milling operation and Borrower shall comply with their direction and requirements.  Borrower shall not and shall not knowingly permit its tenants or any third party requiring the consent of Borrower to enter the Property, to use, generate, manufacture, treat, store, release, threaten release, or dispose of Hazardous Materials in, on, or about the Property or the ground water of the Property in violation of any federal, regional, state, or local law, decision, statute, rule, ordinance or regulation currently in existence or hereinafter enacted or rendered (collectively the “Hazardous Waste Laws”).  Borrower shall give Lender prompt written notice of any claim by any person, entity, or governmental agency that a significant release or disposal of Hazardous Materials has occurred in, on, or under the Property in excess of legal limits. Borrower, through its professional engineers and at its cost, shall promptly and thoroughly investigate suspected Hazardous Materials contamination of the Property.  Borrower shall forthwith remove, repair, clean up, and/or detoxify any Hazardous Materials found on the Property or in the ground water of the Property if such actions are required by Hazardous Waste Laws, and whether or not Borrower was responsible for the existence of the Hazardous Materials in, on or about the Property or the ground water of the Property.  Hazardous Materials shall include but not be limited to substances defined as “hazardous substances,” “hazardous materials,” or “toxic substances” in The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, by the Superfund Amendments and Reauthorization Act of 1986, The Hazardous Materials Transportation Act of 1994, The Resource Conservation and Recovery Act of 1976, as amended by The Used Oils Recycling Act of 1980, The Solid Waste Disposal Act amendment of 1984, The Toxic Substances Control Act, The Clean Air Act, The Clean Water Act, Idaho Environmental Protection and Health Act (Idaho Code §§ 39-101 to 39-130), Idaho Radiation and Nuclear Material Act (Idaho Code §§ 39-3001 to 39-3030), Idaho Water Quality Act (Idaho Code §§ 39-3601 to 39-3639), Idaho Hazardous Waste Management Act (Idaho Code §§ 39-4401 to 39-4432), Idaho Hazardous Substance Emergency Response Act (Idaho Code §§ 39-7101 to 39-7115), Idaho Petroleum Clean Water Trust Fund Act (Idaho Code §§ 41-4901 to 41-4948), Idaho Land Reclamation Act (Idaho Code §§ 39-7201 to 39-7210), Idaho Solid Waste Facilities Act (Idaho Code §§ 39-7401 to 39-7420), Idaho Sale and Disposal of Batteries Act (Idaho Code §§ 39-7001 to 39-7004), Idaho PCB Waste Disposal Act (Idaho Code §§ 39-6201 to 39-6216) or in any other Hazardous Waste Laws. Hazardous materials shall not include small quantities of paints, solvents, lubricants or cleaning materials used in the maintenance or operation of the Property.  

2.4.2

Borrower shall indemnify Lender and hold Lender harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Lender for, with respect to, or as a direct or indirect result of, the presence in, on, or under, or the escape, seepage, leakage, spillage, discharge, emission, or release from, the Property of any Hazardous Materials (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Hazardous Waste Laws), regardless of the source of origination and whether or not caused by, or within the control of, Borrower.

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2.4.3

Liability under this Section 2.4 and similar provisions in this Deed of Trust and the other Loan Documents concerning Hazardous Materials shall survive repayment of the Note and satisfaction of this Deed of Trust; provided, however, Borrower shall have no liability under this Section 2.4 regarding Hazardous Materials if the Property becomes contaminated subsequent to Lender’s acquisition of the Property by foreclosure, acceptance by Lender of a deed in lieu thereof, or subsequent to any transfer of ownership of the Property that was approved or authorized by Lender in writing, pursuant to this Deed of Trust, provided that such transferee assumes in writing all of the obligations of Borrower under the Loan Documents with respect to Hazardous Materials. The burden of proof under this section with regard to establishing the date upon which any Hazardous Material was placed or appeared in, on, or under the Property shall be upon Borrower.

2.5

Use of Property.  The Property shall be used for legal purposes and for no other use without the prior written consent of Lender. 

2.6

Payment of Taxes, Assessments and Other Charges.  Borrower shall pay all taxes, assessments, and other charges that are or may be hereafter levied or assessed upon or against the Property, when the same shall become due and payable according to law, before the same become delinquent, and before any interest or penalty shall attach thereto.  Borrower shall deliver official receipts evidencing the payment of the same to Lender not later than thirty (30) days following payment.  Borrower shall have the right to contest, in good faith, the proposed assessment of ad valorem taxes or special assessments by governmental authorities having jurisdiction over the Property; provided, however, Borrower shall give written notice thereof to Lender and Lender may, in its sole discretion, require Borrower to post a bond or other collateral satisfactory to Lender in connection with any such action by Borrower.

2.7

Payment of Liens, Charges and Encumbrances.  Borrower shall immediately pay and discharge from time to time when the same shall become due all lawful claims and demands of mechanics, materialmen, laborers and others that, if unpaid, might result in, or permit the creation of, a lien, charge or encumbrance upon the Property or any part thereof, or on the rents, issues, income, revenues, profits and proceeds arising therefrom and, in general, to do or cause to be done everything necessary so that the lien of this Deed of Trust shall be fully preserved, at the cost of Borrower, without expense to Lender.  Borrower shall have the right to contest, in good faith and in accordance with applicable laws and procedures, mechanics’ and materialmens’ liens filed against the Property; provided however, that Borrower shall give written notice thereof to Lender, and Lender may, in its sole discretion, require Borrower to post a bond or other collateral satisfactory to Lender (and acceptable to the title insurance company insuring this Deed of Trust) in connection with any such action by Borrower.

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2.8

Payment of Junior Encumbrances.  Borrower shall not permit default or delinquency under any lien, imposition, charge or encumbrance against the Property, even though junior and inferior to the lien of this Deed of Trust; provided however, the foregoing shall not be construed to permit any other lien or encumbrance against the Property.

2.9

Insurance.

2.9.1

Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the following coverages:

(a)

Property Insurance.  Insurance with respect to the Improvements and building equipment insuring against any peril as set forth under the Causes of Loss-Special Form in an amount equal to amounts at all times sufficient to prevent Lender from becoming a co-insurer within the terms of the applicable policies and under applicable law, but in any event such insurance shall be maintained in an amount equal to the full insurable value of the Improvements and building equipment on the Property.  The term “full insurable value” means the actual replacement cost of the Improvements and building equipment (without taking into account any depreciation, and exclusive of excavations, footings and foundations, landscaping, and paving).

(b)

Liability Insurance.  Commercial general liability insurance, including bodily injury, death and property damage liability insurance, against any and all claims, including all legal liability to the extent insurable and imposed upon Lender and all court costs and attorneys’ fees and expenses, arising out of or connected with the possession, use, leasing, operation, maintenance or condition of the Property in such amounts as are generally available at commercially reasonable premiums and are generally required by institutional lenders for properties comparable to the Property but in no event for a combined single limit of less than $1,000,000.00.

(c)

Other Insurance.  Such other insurance with respect to the Property against loss or damage of the kinds from time to time customarily insured against and in such amounts as are generally available at commercially reasonable premiums and are generally required by institutional lenders for properties comparable to the Property.

2.9.2

All insurance provided for in Subsection 2.11.1 shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), and shall be issued by one or more domestic primary insurer(s) having (i) an investment grade rating or claims paying ability assigned by one or more credit rating agencies approved by Lender (a “Rating Agency”) and (ii) a general policy rating of A or better and a financial class of VI or better by A.M. Best Company, Inc. (each such insurer shall be referred to below as a “Qualified Insurer”).  All insurers providing insurance required by this Deed of Trust shall be authorized to issue insurance in the state in which the Property is located.  The Policy referred to in Paragraph (b) above shall name Lender as an additional named insured and the Policy referred to in Paragraphs (a), (c), (d), and (e) above shall provide that all proceeds be payable to Lender as set forth in this Deed of Trust.  The Policies referred to in Paragraphs (a), (d), and (e) shall also contain:  (i) a standard “non-contributory mortgagee” endorsement or its equivalent (such as the Lender’s Loss Payable endorsement 438 BFU, in long form) relating, inter alia, to recovery by Lender notwithstanding the negligent or willful acts or omission of Borrower; (ii) to the extent available at commercially reasonable rates, a waiver of subrogation endorsement as to Lender; and (iii) an endorsement providing for a deductible per loss of an amount not more than that which is customarily maintained by prudent owners of similar properties in the general vicinity of the Property, but in no event in excess of an amount approved by Lender.  All Policies described in Subsection 2.11.1 shall contain (i) a provision that such policies shall not be canceled or terminated, nor shall they expire, without at least thirty (30) days’ prior written notice to Lender in each instance; and (ii) include effective waivers by the insurer of all claims for Insurance Premiums (defined below) against any loss payees, additional insureds and named insureds (other than Borrower).  Certificates of insurance with respect to all renewal and replacement Policies shall be delivered to Lender not less than thirty (30) days prior to the expiration date of any of the Policies required to be maintained hereunder which certificates shall bear notations evidencing payment of applicable premiums (the “Insurance Premiums”).  Originals or certificates of such replacement Policies shall be delivered to Lender promptly after Borrower’s receipt thereof but in any case within thirty (30) days after the effective date thereof.  If Borrower fails to maintain and deliver to Lender the original Policies or certificates of insurance required by this Deed of Trust, Lender may procure such insurance at Borrower’s sole cost and expense.

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2.9.3

Borrower shall comply with all insurance requirements and shall not bring or keep or permit to be brought or kept any article upon any of the Property or cause or permit any condition to exist thereon that would be prohibited by an insurance requirement, or would invalidate the insurance coverage required hereunder to be maintained by Borrower on or with respect to any part of the Property pursuant to this Section.

2.9.4

If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Borrower shall give prompt notice of such damage to Lender and provided that Borrower shall have received the Net Proceeds (defined below), Borrower shall promptly commence and diligently prosecute the completion of the repair and restoration of the property as nearly as possible to the condition the Property was in immediately prior to such fire or other casualty, with such alterations as may be approved by Lender (the “Restoration”) and otherwise in accordance with Section 2.13 of this Deed of Trust.

2.9.5

The insurance coverage required under Subsection 2.11.1 may be effected under a blanket policy or policies covering the Property and other properties and assets not constituting a part of the security hereunder; provided that any such blanket policy shall specify, except in the case of public liability insurance, the portion of the total coverage of such policy that is allocated to the Property, and any sublimit in such blanket policy applicable to the Property, and shall in any case comply in all other respects with the requirements of this Section.

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2.9.6

Borrower waives any and all right to claim or recover against Lender, its officers, employees, agents and representatives, by way of subrogation or otherwise, for any loss sustained by Borrower, or any loss or damage to the Property, Borrower’s property or the property of others under Borrower’s control from any cause insured against or required to be insured against by the provisions of this Deed of Trust.

2.10

Condemnation.  Borrower shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding and shall deliver to Lender copies of any and all papers served in connection with such proceedings.  Lender may participate in any such proceedings to the extent permitted by law.  Upon an Event of Default, Borrower shall deliver to Lender all instruments requested by it to permit such participation.  Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise (including, but not limited to any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Secured Obligations at the time and in the manner provided for its payment in the Note and in this Deed of Trust and the Secured Obligations shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of such obligations.  Lender shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided herein or in the Note.  If the property or any portion thereof is taken by the power of eminent domain, Borrower shall promptly commence and diligently prosecute the Restoration of the Property in accordance with this Deed of Trust.  If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the award or payment, or a portion thereof sufficient to pay the Secured Obligations.

2.11

Restoration After Casualty or Condemnation.

In the event of a casualty or a taking by eminent domain, the following provisions shall apply in connection with the Restoration of the Property:

2.11.1

If (i) the Net Proceeds (defined below) do not exceed Two Hundred Twenty Five Thousand dollars $225,000.00 (“Casualty Amount”); (ii) the costs of completing the Restoration as reasonably estimated by Borrower shall be less than or equal to the Casualty Amount; (iii) no Event of Default shall have occurred and be continuing under the Note, this Deed of Trust or any of the other Loan Documents; (iv) the Property and the use thereof after the Restoration will be in compliance with, and permitted under, all applicable zoning laws, ordinances, rules and regulations; and (v) such fire or other casualty or taking, as applicable, does not materially impair access to the Property or the Improvements, then the Net Proceeds will be disbursed directly to Borrower and Borrower shall commence and diligently prosecute to completion, the Restoration of the Property to as nearly as possible the condition it was in immediately prior to such fire or other casualty or such taking.  Except upon the occurrence and continuance of an Event of Default, Borrower shall settle any insurance claims with respect to the Net Proceeds which in the aggregate are less than or equal to the Casualty Amount.  Lender shall have the right to participate in and reasonably approve any settlement for insurance claims with respect to the Net Proceeds that in the aggregate are equal to or greater than the Casualty Amount.  If an Event of Default shall have occurred and be continuing, Borrower irrevocably empowers Lender, in the name of Borrower as its true and lawful attorney-in-fact, to file and prosecute such claim and to collect and to make receipt for any such payment.  If the Net Proceeds are received by Borrower, such Net Proceeds shall, until the completion of the related work, be held in trust for Lender and shall be segregated from other funds of Borrower to be used to pay for the cost of the Restoration in accordance with the terms hereof.

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2.11.2

If the Net Proceeds are greater than the Casualty Amount, such Net Proceeds shall be paid to Lender to be held by Lender to be made available to Borrower for the Restoration in accordance with the provisions of this Subsection.  Borrower shall commence and diligently prosecute to completion the Restoration (in the case of a taking, to the extent the Property is capable of being restored).  The term “Net Proceeds” for purposes of this Section shall mean:  (i) the net amount of all insurance proceeds under the Policies carried pursuant to Paragraphs 2.11.1(a), (d), (e), and (f) of this Deed of Trust as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to reasonable counsel fees), if any, in collecting the same, or (ii) the net amount of all awards and payments received by Lender with respect to a taking referenced in Section 2.12 of this Deed of Trust, after deduction of its reasonable costs and expenses (including, but not limited to reasonable counsel fees), if any, in collecting the same, whichever the case may be.

(a)

The Net Proceeds shall be made available to Borrower for payment of, or reimbursement of Borrower’s expenses in connection with, the Restoration, subject to the following conditions:

(i)

No Event of Default shall have occurred and be continuing under the Note, this Deed of Trust or any of the other Loan Documents;

(ii)

Lender shall, within a reasonable period of time prior to request for initial disbursement, be furnished with an estimate of the cost of the Restoration accompanied by an architect’s certification as to such costs and appropriate plans and specifications for the Restoration;

(iii)

The Net Proceeds, together with any cash or cash equivalent deposited by Borrower with Lender, are sufficient to cover the cost of the Restoration as such costs are certified by the architect;

(iv)

Lender shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note which will be incurred
with respect to the Property as a result of the occurrence of any such fire or other casualty or taking, whichever the case may be, will be covered out of (1) the Net Proceeds, or (2) other funds of Borrower;

(v)

Lender shall be satisfied that, upon the completion of the Restoration and related lease-up, if applicable, the Property will achieve the Debt Service Coverage required by the Term Loan Agreement;

(vi)

The Property and the use thereof after the Restoration will be in compliance with, and permitted under, all applicable zoning laws, ordinances, rules and regulations; and

(vii)

Such fire or other casualty or taking, as applicable, does not materially impair access to the Property or the Improvements.

(b)

The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Subsection, shall constitute additional security for the Secured Obligations.  The Net Proceeds other than the Net Proceeds paid under the Policy described in Paragraph 2.11.1(c) shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be directly paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title insurance company insuring the lien of this Deed of Trust.

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(c)

Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration.  The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to prior review and acceptance by Lender and an independent consulting engineer selected by Lender (the “Casualty Consultant”), such acceptance not to be unreasonably withheld or delayed.  All costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.

(d)

Lender shall not be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant.

(e)

Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

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(f)

If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made.  The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Paragraph shall constitute additional security for the Secured Obligations.

(g)

The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section, and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, this Deed of Trust or any of the other Loan Documents.

2.12

Compliance with Laws.  Borrower shall observe, abide by, and comply with all statutes, ordinances, laws, orders, requirements or decrees relating to the Property enacted, promulgated or issued by any federal, state, county or local governmental authority or any agency or subdivision thereof having jurisdiction over Borrower or the Property.  Borrower shall observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits (including, but not limited to, zoning, variances, special exceptions and nonconforming uses), privileges, franchises and concessions that are applicable to the Property or that have been granted to or contracted for by Borrower in connection with any existing, presently contemplated or future use of the Property.

2.13

Maintenance of Permits.  Borrower shall obtain, keep, and constantly maintain in full force and effect during the entire term of this Deed of Trust all certificates, licenses and permits necessary to keep the Property operating.  Except as specifically provided for in this Deed of Trust, Borrower shall not assign, transfer or in any manner change such certificates, licenses or permits without first receiving the written consent of Lender.

2.14

Funds Held by Lender for Taxes, Insurance Premiums, and Other Charges.  In order to more fully protect the security of this Deed of Trust, Borrower shall, upon the request of Lender, deposit with Lender, together with and in addition to each monthly payment due on account of the indebtedness evidenced by the Note, an amount equal to one-tenth of the annual total of such taxes, assessments, insurance premiums, and other charges (all as estimated by Lender in its sole discretion) so that, at least fifteen (15) days prior to the due date thereof, Lender shall be able to pay in full all such taxes, assessments, insurance premiums, and other charges as the same shall become due, and Lender may hold without paying interest and commingle with its general funds the sums so deposited and apply the same to the payment of such taxes, assessments, insurance premiums, or other charges as they become due and payable.  If at any time the funds so held by Lender are insufficient to pay such taxes, assessments, insurance premiums, or other charges as they become due and payable, Borrower shall immediately, upon notice and demand by Lender, deposit with Lender the amount of such deficiency, and the failure on the part of Borrower to do so shall entitle Lender, at its sole option, to make such payments in accordance with its right and pursuant to the conditions elsewhere provided in this Deed of Trust.  Whenever any default exists under this Deed of Trust, Lender may, at its sole option but without an obligation so to do, apply any funds so held by it pursuant to this Section toward the payment of the indebtedness secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness may otherwise be adequately secured in such order and manner of application as Lender may elect.

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2.15

Examination of Borrower’s Records.  Borrower shall maintain complete and accurate books and records showing in detail the income and expenses of the Property, and shall permit Lender and its representatives to examine such books and records and all supporting vouchers and data during normal business hours and from time to time upon request by Lender, in such place as such books and records are customarily kept, and shall furnish to Lender, within ninety (90) days after the close of each fiscal year of Borrower, annual statements (income statements and a balance sheet) for the Borrower and the Property in a form acceptable to Lender and shall be prepared in accordance with generally accepted accounting principles, and shall include a rent roll, certified as true and correct by Borrower and showing in detail all income derived from and expenses incurred in connection with the ownership of the Property.  Upon the occurrence of an Event of Default, Lender shall have the right to require that the financial statements be audited and certified by a certified public accountant acceptable to Lender, at the sole cost and expense of Borrower.

3.

Representations and Warranties.  Borrower represents and warrants to Lender that:

3.1

Warranty of Title.  Borrower has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the same and that Borrower possesses an unencumbered fee simple absolute estate in the Real Property and the Improvements and that it owns the Property free and clear of all liens, encumbrances and charges whatsoever except for real property taxes for years subsequent to 2009 (which are not yet due and payable) and those matters set forth in the Lender’s Policy of Title Insurance insuring the first priority lien of this Deed of Trust (the “Permitted Exceptions”).  Borrower shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Deed of Trust and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

3.2

Status of Property.

3.2.1

Borrower has obtained all necessary certificates, licenses and other approvals, governmental and otherwise, necessary for the operation of the Property and the conduct of its business and all required zoning, building code, land use, environmental and other similar permits or approvals, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification.

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3.3

Taxes.  Borrower has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by it and have paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it.  Borrower does not know of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

4.

Further Assurances.

4.1

Inspection by Lender.  Lender, and/or its agents, shall have the right and shall be permitted, but shall not be required, at all reasonable times, to enter upon and inspect the Property to insure compliance with the covenants, agreements, and conditions set forth in this Deed of Trust.

4.2

Execution of Additional Documents.  Borrower shall, at the cost of Borrower, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, assurances and other instruments, including security agreements and financing statements, as Lender shall from time to time require for the purpose of better assuring, conveying, assigning, transferring and confirming unto Lender the Property and rights hereby encumbered, created, conveyed, assigned or intended now or hereafter so to be encumbered, created, conveyed or assigned or that Borrower may now be or may hereafter become bound to encumber, create, convey, or assign to Lender, or for the purpose of carrying out the intention or facilitating the performance of the terms of this Deed of Trust, or for filing, registering, or recording this Deed of Trust, and to pay all filing, registration, or recording fees and all taxes, costs and other expenses, including Reasonable Attorneys’ Fees, incident to the preparation, execution, acknowledgment, delivery, and recordation of any of the same.

5.

Further Encumbrance Prohibited.  Borrower shall not, without the prior written consent of Lender, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred.  A sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Section shall be deemed to include, but not limited to an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments or an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents.

6.

Default.  The occurrence of any one or more of the following events shall constitute an “Event of Default”:

6.1

Failure to make any payment of (i) interest or principal when due, (ii) any other amount of the Secured Obligations when due, or (iii) the entire amount of the Secured Obligations on or before the Maturity Date.

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6.2

Failure to obtain Lender’s written approval and authorization prior to any transfer of Borrower’s interest in the Property.

6.3

If any representation or warranty of Borrower or any Guarantor, or any member, general partner, principal or beneficial owner of any of the foregoing, made herein, or in any other Loan Document, or in any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender shall have been false or misleading in any material respect when made.

6.4

If Borrower or any Guarantor shall make an assignment for the benefit of creditors or if Borrower shall generally not be paying its debts as they become due.

6.5

If (i) Borrower or any Guarantor shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any Guarantor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower or any Guarantor any case, proceeding or other action of a nature referred to in clause (i)above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Borrower or any Guarantor any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Borrower or any Guarantor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Guarantor shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due.

6.6

Except for the specific defaults set forth in this Section, any other default under any Loan Document by Borrower, which default is not cured within thirty (30) days after written notice from Lender to Borrower; provided that if such default cannot reasonably be cured within such thirty (30) day period and Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed that no such extension shall be for a period in excess of one hundred twenty (120) days, unless, only in the case of cures that require construction or remedial work, such cure cannot with diligence be completed within such one hundred twenty (120) day period, in which case such period shall be extended for an additional one hundred twenty (120) days.

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7.

Rights and Remedies.

7.1

Remedies.  Upon the occurrence of any Event of Default, Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to the following actions, each of which may, to the extent permitted by applicable law, be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender:

7.1.1

Declare the entire unpaid Secured Obligations to be immediately due and payable.

7.1.2

Institute proceedings, judicial or otherwise, for the complete foreclosure of this Deed of Trust under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner.

7.1.3

Sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law.

7.1.4

Institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note or in the other Loan Documents.

7.1.5

Apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Secured Obligations and without regard for the solvency of Borrower or of any person, firm or other entity liable for the payment of the Secured Obligations.

7.1.6

Subject to any applicable law, the license granted to Borrower under Subsection 1.2 shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect, and receive all Rents of the Property and every part thereof; (v) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Secured Obligations, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, insurance and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees.

 

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7.1.7

Apply the undisbursed balance of any Net Proceeds or any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Secured Obligations in such order, priority and proportions as Lender shall deem to be appropriate in its discretion.

7.1.8

Pursue such other remedies as Lender may have under applicable law.

Notwithstanding the provisions of this Section to the contrary, if any Event of Default as described in Subsection 6.4(i) or (ii) shall occur, the entire unpaid Secured Obligations shall be automatically due and payable, without any further notice, demand or other action by Lender.

7.2

Foreclosure by Power of Sale.  If Lender elects to foreclose by exercise of the power of sale herein contained, Lender shall notify Trustee and shall deposit with the Trustee this Deed of Trust, the Note and such receipts and evidence of expenditures made and secured hereby as Trustee may require.  Upon receipt of such notice from Lender, Trustee shall cause to be recorded and given all notices required by law.  Trustee shall, without demand on Borrower, after lapse of such time as may then be required by law and after recordation of such Notice of Default and after Notice of Sale having been given as required by law, sell the Property at the time and place of sale fixed by it in said Notice of Sale either as a whole, or in separate lots or parcels as Trustee shall deem expedient, unless Lender specifies certain terms and conditions that are permitted by applicable law, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale.  The Trustee may postpone any sale by public announcement at the time and place noticed for the sale.  Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied.  The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.  Any person, including without limitation, Borrower, Trustee or Lender, may purchase at such sale.  At any judicial or trustee sale of the Property, Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or any portion of the Secured Obligations.

7.3

Application of Proceeds.  The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant
to the Note, this Deed of Trust or the other Loan Documents, may be applied by Lender to the payment of the Secured Obligations in such priority and proportions as Lender in its discretion shall deem proper, subject to any applicable law.

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7.4

Right to Cure Defaults.  Upon the occurrence of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, cure the same in such manner and to such extent as Lender may deem necessary to protect the security hereof.  Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Deed of Trust or collect the Secured Obligations, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section, shall constitute a portion of the Secured Obligations and shall be due and payable to Lender upon demand.  All such costs and expenses incurred by Lender in remedying such Event of Default or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the default rate specified in the Note (the “Default Rate”), for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender.  All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Secured Obligations and be secured by this Deed of Trust and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

7.5

Examination of Books and Records.  In the event of a monetary default, Lender, its agents, accountants and attorneys shall have the right upon prior written notice to examine the records, books, management and other papers of Borrower and its affiliates that reflect upon their financial condition, at the Property or at any office regularly maintained by Borrower, its affiliates or any guarantor where the books and records are located.  Lender and its agents shall have the right upon notice to make copies and extracts from the foregoing records and other papers.  In addition, Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower and its affiliates or of any guarantor pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower, its affiliates or any guarantor where the books and records are located.

7.6

Other Rights.

7.6.1

The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Deed of Trust.  Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower to take any action to foreclose this Deed of Trust or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Secured Obligations or any portion thereof, or (iii) any agreement or stipulation by Lender extending 

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7.6.2

The risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession.

7.6.3

Lender may resort for the payment of the Secured Obligations to any other security held by Lender in such order and manner as Lender, in its discretion, may elect.  Lender may take action to recover the Secured Obligations, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Deed of Trust.  The rights of Lender under this Deed of Trust shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others.  No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.  Lender shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

7.7

Lender’s Power.  Lender may release or reconvey any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Deed of Trust, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release or reconveyance, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder.  This Deed of Trust shall continue as a lien and security interest in the remaining portion of the Property. Without affecting the liability of any other person liable for the payment and/or performance of the Obligations and without in any way impairing or affecting the lien or priority of this Deed of Trust, Lender may, from time to time and without notice (i) release any person so liable; (ii) extend the maturity or alter any of the terms of any Secured Obligation; (iii) grant other indulgences; or (iv) make compositions or other arrangements with debtors in relation thereto.

7.8

Right of Entry.  Lender and its agents shall have the right upon prior written notice to enter and inspect the Property at all reasonable times upon notice to Borrower.

7.9

Acceptance of Trust; Powers and Duties of Trustee.  Trustee accepts this trust when this Deed of Trust is recorded.  From time to time upon written request of Lender and presentation of this Deed of Trust, or a certified copy thereof, for endorsement, and without affecting the personal liability of any person for payment of any indebtedness or performance of any other Obligation, Trustee may, without liability therefor and without notice:  (a) reconvey all or any part of the Property; (b) consent to the making of any map or plat of the Property; (c) join in granting any easement on the Property; (d) join in any declaration of covenants and restrictions; or (e) join in any extension agreement or any agreement subordinating the lien or charge of this Deed of Trust.  Nothing contained in the immediately preceding sentence shall be construed to limit, impair or otherwise affect the rights of Trustee in any respect.  Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Borrower, Lender, or Trustee shall be a party unless brought by Trustee.

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7.10

Substitution of Trustee.  Lender may at any time, and from time to time, and without notice, replace and substitute a new trustee in place of the existing Trustee under this Deed of Trust, in the manner provided for under, and as allowed by, current Idaho law.

7.11

Reconveyance by Trustee.  Upon written request of Lender stating that all sums secured hereby have been paid and upon surrender of this Deed of Trust to Trustee for cancellation and retention and upon payment by Borrower of Trustee’s fees, Trustee shall reconvey to Borrower, or the person or persons legally entitled thereto, without warranty, any portion of the Property then held hereunder.  The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof.

8.

Indemnification.  If Lender shall become a party either as plaintiff or as defendant, in any action, suit, appeal or legal proceeding (including, without limitation, foreclosure, condemnation, bankruptcy, administrative proceedings or any proceeding wherein proof of claim is by law required to be filed), hearing, motion or application before any court or administrative body in relation to the Property or the lien and security interest granted or created hereby or herein, or for the recovery or protection of said indebtedness or the Property, or for the foreclosure of this Deed of Trust, Borrower shall save and hold Lender harmless from and against any and all costs and expenses incurred by Lender on account thereof, including, but not limited to, Reasonable Attorneys’ Fees, title searches and abstract and survey charges, at all trial and appellate levels, and Borrower shall repay, on demand, all such costs and expenses, together with interest thereon until paid at the then applicable rate of interest of the Note plus ten (10) basis points; all of which sums, if unpaid, shall be added to and become a part of the indebtedness secured hereby.

9.

Usury Savings Clause.   Notwithstanding any provisions in the Note or in this Deed of Trust to the contrary, the total liability for payments in the nature of interest including but not limited to default interest and late payment charges shall not exceed the limits imposed by the laws of the State of Idaho or, if controlling, the United States relating to maximum allowable charges of interest.  Lender shall not be entitled to receive, collect or apply, as interest on the indebtedness evidenced by the Note, any amount in excess of the maximum lawful rate of interest permitted to be charged by applicable law.  If Lender ever receives, collects or applies as interest any such excess, such amount that would be excessive interest shall be applied to reduce the unpaid principal balance of the indebtedness evidenced by the Note.  If the unpaid principal balance of such indebtedness has been paid in full, any remaining excess shall be paid to Borrower.

10.

Notices.  All notices or other written communications hereunder shall be deemed to have been properly given (a) upon delivery, if delivered in person or by facsimile transmission with receipt acknowledged by the recipient thereof, (b) one (1) business day after having been deposited for overnight delivery with any reputable overnight courier service, or (c) three (3) business days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

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If to Borrower:

Silver Falcon Mining, Inc.

7322 Manatee Ave., West #299                                      

Bradenton, FL  34209

With a copy to:

Murphy Law Office, PLLC

847 E. Fairview Ave.

Meridian, Idaho  83680

Attention: Mia Murphy

Facsimile No.: 208-855-0873

If to Lender:

Joyce Livestock Company Limited Partnership

14568 Joyce Ranch Rd. 

  Murphy, Idaho  83650

With a copy to:

Barry Peters

 

101 Eagle Glen Ln. Ste. A              

Eagle, ID  83616

or addressed as such party may from time to time designate by written notice to the other parties. Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

11.

Governing Law.  This Deed of Trust is to be governed by and construed in accordance with the laws of the state where the Property is located and, if controlling, by the laws of the United States and shall be binding upon Borrower, its heirs, personal representatives, successors and assigns and shall inure to the benefit of Lender, its successors and assigns.

12.

Miscellaneous.

12.1

Successors and Assigns:  Terminology.  The provisions hereof shall be binding upon Borrower and the heirs, personal representatives, successors and assigns of Borrower, and shall inure to the benefit of Lender, its successors and assigns.  Where more than one Borrower is named herein, the obligations and liabilities of said Borrower shall be joint and several.  Wherever used in this Deed of Trust, unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, the word “Borrower” shall mean Borrower and/or any subsequent owner or owners of the Property, the word “Lender” shall mean Lender or any subsequent holder or holders of this Deed of Trust, the word “Note” shall mean Note(s) secured by this Deed of Trust, and the word “person” shall mean an individual, trustee, trust, corporation, partnership or unincorporated association.  As used herein, the phrase “Reasonable Attorneys’ Fees” shall mean fees charged by attorneys selected by Lender based upon such attorneys’ then prevailing hourly rates as opposed to any statutory presumption specified by any statute then in effect in the State of Idaho.

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12.2

Provisions Subject to Applicable Law.  All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any Applicable Law.

12.3

Inapplicable Provision.  If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

12.4

Attorney’s Fees for Enforcement.  Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorney’s fees, incurred or paid by Lender in protecting its interest in the Property or Personal Property or in collecting any amount payable hereunder or in enforcing its rights hereunder with respect to the Property or Personal Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

12.5

Modifications.  This Deed of Trust cannot be changed, altered, amended or modified except by an agreement in writing and in recordable form, executed by both Borrower and Lender.

12.6

Captions.  The captions set forth at the beginning of the various sections of this Deed of Trust are for convenience only and shall not be used to interpret or construe the provisions of this Deed of Trust.

12.7

Liability.  If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several.

12.8

Duplicate Originals; Counterparts.  This Deed of Trust may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  This Deed of Trust may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Deed of Trust.  The failure of any party hereto to execute this Deed of Trust, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

12.9

Entire Agreement.  The Note, this Deed of Trust and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Secured Obligations and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto.

IN WITNESS WHEREOF, Borrower has executed this Deed of Trust as of the day and year first written above.

-23-

BORROWER:

SILVER FALCON MINING, INC., a Delaware corporation

By:  

Pierre Quilliam, President

STATE OF IDAHO

)

)  ss.

County of Owyhee

)

On this _____ day of November 2009, before me __________________________, personally appeared PIERRE QUILLIAM, President of SILVER FALCON MINING, INC., known or identified to me (or proved to me on the oath of ______________________________), to be the person whose name is subscribed to the within instrument for Silver Falcon Mining, Inc., and acknowledged to me that he executed the same.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.

 

NOTARY PUBLIC FOR _______________ 

Residing at 

 

My Commission Expires 

 

-24-

EXHIBIT A

LEGAL DESCRIPTION OF REAL PROPERTYibii8k20100127ex4-6.htm

    
      

      

    

    Exhibit
4.6

    

     

    DRAWDOWN EQUITY FINANCING
AGREEMENT

     

    THIS AGREEMENT dated as of the
day of January 25, 2009 (the “Agreement”) between
Auctus Private Equity Fund,
LLC a Massachusetts corporation (the “Investor”), and Island Breeze International,
Inc. a corporation organized and existing under the laws of the Delaware
(the “Company”).

     

    WHEREAS, upon the terms and
subject to the conditions contained herein, the Company shall issue and sell to
the Investor, from time to time as provided herein, and the Investor shall
purchase from the Company, up to Ten
Million  Dollars ($10,000,000) of the Company’s Class A common
stock, $0.001 par value per share (the “Common Stock”);
and

     

    WHEREAS, the purchase and sale
of the Company’s Common Stock by the Investor will be made in reliance upon the
provisions of Regulation D (“Regulation D”) of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the “Securities
Act”), and or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or
all of the investments to be made hereunder.

     

    WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement substantially in the
form attached hereto (the "Registration Rights Agreement") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act,
and the rules and regulations promulgated thereunder, and applicable state
securities laws.

     

    NOW, THEREFORE, the parties hereto
agree as follows:

     

    ARTICLE
I.

    Certain
Definitions

     

    Section
1.1.                      “Advance” shall mean
the portion of the Commitment Amount requested by the Company in the Drawdown
Notice.

     

    Section
1.2.               
       “Advance Date” shall
mean the first (1st)
Trading Day after expiration of the applicable Pricing Period for each
Advance.

     

    Section
1.3.                      “Drawdown Notice”
shall mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the Investor.

     

    Section
1.4.                      “Drawdown Notice Date”
shall mean each date the Company delivers (in accordance with Section 2.2(b) of
this Agreement) to the Investor a Drawdown Notice requiring the Investor to
advance funds to the Company, subject to the terms of this
Agreement.  No Drawdown Notice Date shall be less than five (5)
Trading Days after the prior Drawdown Notice Date.

     

    Section
1.5.                      “Bid Price” shall
mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of the
Common Stock on the Principal Market or if the Common Stock is not traded on a
Principal Market, the highest reported bid price for the Common Stock, as
furnished by the National Association of Securities Dealers, Inc.

     

    Section
1.6.              
        “Closing” shall mean
one of the closings of a purchase and sale of Common Stock pursuant to Section
2.3.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
1.7.                      “Commitment Amount”
shall mean the aggregate amount of up to Ten Million Dollars ($10,000,000) which
the Investor has agreed to provide to the Company in order to purchase the
Company’s Common Stock pursuant to the terms and conditions of this
Agreement.

     

    Section
1.8.           
           “Commitment Period”
shall mean the period commencing on the earlier to occur of (i) the Effective
Date, or (ii) such earlier date as the Company and the Investor may mutually
agree in writing, and expiring on the earliest to occur of (x) the date on which
the Investor shall have made payment of Advances pursuant to this Agreement in
the aggregate amount of the Commitment Amount, (y) the date this Agreement is
terminated pursuant to Section 10.2 or (z) the date occurring thirty-six (36)
months after the Effective Date.

     

    Section
1.9.           
           “Common Stock” shall
mean the Company’s common stock, $0.001 par value per share.

     

    Section
1.10.                     “Condition Satisfaction
Date” shall have the meaning set forth in Section 7.2.

     

    Section
1.11.                   “Damages” shall mean
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorney’s fees and disbursements and costs and expenses
of expert witnesses and investigation).

     

    Section
1.12.                    “Effective Date” shall
mean the date on which the SEC first declares effective a Registration Statement
registering the resale of the Registrable Securities as set forth in Section
7.2(a).

     

    Section
1.13.                    
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

     

    Section
1.14                      “FINRA” shall mean
the Financial Industry Regulatory Authority.

     

    Section
1.15.                     “Floor” shall mean the
Investor shall immediately cease selling any shares within the Drawdown Notice
if, and for such time as, the price falls below a predetermined level (“Floor
Price”). The Floor Price is defined as  the price specified by the Company
in the Drawdown Notice or, if no such price is specified, Seventy-Five (75%) of
the average closing bid price of the stock over the preceding ten (10) trading
days prior to the Drawdown Notice Date. The “Floor” can be waived at the
discretion of the Company.

     

    Section
1.16.                    “Material Adverse
Effect” shall mean any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement or the
Registration Rights Agreement in any material respect.

     

    Section
1.17.                    “Market Price” shall
mean the lowest closing Bid Price of the Common Stock during the Pricing
Period.

     

    Section
1.18.                    “Maximum Advance
Amount” shall not exceed One Hundred Fifty Thousand
Dollars ($150,000) or two hundred (200%) percent of the average daily
volume based on the trailing ten (10) days preceding the Drawdown Notice date,
whichever is of a larger value.

     

    Section
1.19.                    “Person” shall mean an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

     

    Section
1.20.                    “Pricing Period” shall
mean the five (5) consecutive Trading Days after the Drawdown Notice
Date.

     

    Section
1.21.                    “Principal Market”
shall mean the Nasdaq National Market, the Nasdaq Capital Market, the American
Stock Exchange, the OTC Bulletin Board, OTC Pink Sheets or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
1.22.                     “Purchase Price” shall
be set at Ninety-Five percent (95%) of the lowest closing bid price of the
common stock during the Pricing Period.

     

    Section
1.23.                     “Registrable
Securities” shall mean the shares of Common Stock to be issued
hereunder (i) in
respect of which the Registration Statement has not been declared effective by
the SEC, (ii) which have not been sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act (“Rule 144”) or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

     

    Section
1.24.                    “Registration Rights
Agreement” shall mean the Registration Rights Agreement dated the date
hereof, regarding the filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company and the
Investor.

     

    Section
1.25.                    “Registration
Statement” shall mean a registration statement on Form S-1  (if
use of such form is then available to the Company pursuant to the rules of the
SEC and, if not, on such other form promulgated by the SEC for which the Company
then qualifies and which counsel for the Company shall deem appropriate, and
which form shall be available for the resale of the Registrable Securities
covered by any applicable Drawdown Notice to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

     

    Section
1.26.                     “Regulation D” shall
have the meaning set forth in the recitals of this Agreement.

     

    Section
1.27.                     “SEC” shall mean the
United States Securities and Exchange Commission.

     

    Section
1.28.                     “Securities Act” shall
have the meaning set forth in the recitals of this Agreement.

     

    Section
1.29.                    “SEC Documents” shall
mean Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and Proxy Statements of the Company as supplemented to the
date hereof, filed by the Company for a period of at least twelve (12) months
immediately preceding the date hereof or the Advance Date, as the case may be,
until such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.

     

    Section
1.30.                     “Trading Day” shall
mean any day during which the New York Stock Exchange shall be open for
business.

     

    ARTICLE
II.

    Advances

     

    Section
2.1.                      Advances.

     

    (a)                    
 Subject to the terms and conditions of this Agreement (including, without
limitation, the provisions of Article VII hereof), the Company, at its sole and
exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company, shares of the Company’s Common Stock by the delivery,
in the Company’s sole discretion, of Drawdown Notices.  The number of
shares of Common Stock that the Investor shall purchase pursuant to each Advance
shall be determined by dividing the amount of the Advance by the Purchase
Price.  No fractional shares shall be issued. Fractional shares shall
be rounded to the next higher whole number of shares.  The aggregate
maximum amount of all Advances that the Investor shall be obligated to make
under this Agreement shall not exceed the Commitment Amount.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)                 
   The Investor shall immediately cease selling any shares within
the Drawdown Notice if the price falls below the Floor Price. The Company, in
its sole and absolute discretion, may waive its right with respect to the Floor
and allow the Investor to sell any shares below the Floor Price.

     

    Section
2.2.                       Mechanics.

     

    (a)              
       Drawdown
Notice.  At any time during the Commitment Period, the Company
may request the Investor to purchase shares of Common Stock by delivering a
Drawdown Notice to the Investor, subject to the conditions set forth in
Section 7.2; provided, however, the amount for each Advance as designated
by the Company in the applicable Drawdown Notice shall not be more than the
Maximum Advance Amount and the aggregate amount of the Advances pursuant to this
Agreement shall not exceed the Commitment Amount.  The Company
acknowledges that the Investor may sell shares of the Company’s Common Stock
corresponding with a particular Drawdown Notice after the Drawdown Notice is
received by the Investor.  There shall be a minimum of five (5)
Trading Days between each Drawdown Notice Date.

     

    (b)              
     Date of Delivery of Drawdown
Notice.  A Drawdown Notice shall be deemed delivered on: (i)
the Trading Day it is received by email to louposner@auctusfund.com and
als@auctusfund.com if such notice is received prior to 5:00 pm Eastern Time; or
(ii) the immediately succeeding Trading Day if Drawdown Notice is received by
facsimile or otherwise after 5:00 pm Eastern Time on a Trading Day or at any
time on a day which is not a Trading Day.  No Drawdown Notice may be
deemed delivered on a day that is not a Trading Day or if positive receipt is
not acknowledged by the Investor, which receipt the Investor will send to the
Company promptly on receipt of the Drawdown Notice.

     

    Section
2.3.                      Closings.  On
each Advance Date (i) the Company shall deliver to the Investor such number of
shares of the Common Stock registered in the name of the Investor as shall equal
(x) the amount of the Advance specified in such Drawdown Notice pursuant to
Section 2.1 herein, divided by (y) the Purchase Price and (ii) upon receipt of
such shares, the Investor shall deliver to the Company the amount of the Advance
specified in the Drawdown Notice by wire transfer of immediately available
funds.  In addition, on or prior to the Advance Date, each of the
Company and the Investor shall deliver to the other all documents, instruments
and writings required to be delivered by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated
herein.  To the extent the Company has not paid the fees, expenses,
and disbursements of the Investor in accordance with Section 12.4, the amount of
such fees, expenses, and disbursements may be deducted by the Investor (and
shall be paid to the relevant party) directly out of the proceeds of the Advance
with no reduction in the amount of shares of the Company’s Common Stock to be
delivered on such Advance Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (a)

            	
              Company’s Obligations
      Upon Closing.

            

    

     

    (i)              
    The Company shall use commercially reasonable efforts to
deliver to the Investor, through the use of a Deposit Withdrawal Agent
Commission system from a Deposit Trust Company method or commonly referred to as
“DWAC/DTC” of the Investor’s choosing, the shares of Common Stock applicable to
the Advance in accordance with Section 2.3.  In the event that the
Company or its transfer agent is not participating in the DWAC system or is not
eligible to participate, the Company will endeavor to participate or become
eligible to participate within a reasonable time from the date hereof, but in no
event later than the effectiveness of the Registration Statement.
Notwithstanding, the Investor will accept physical certificates representing the
Company’s Common Stock applicable to any Advance in the event DWAC/DTC is not
available. Any such certificates shall be free of restrictive
legends.  Upon receipt, Investor will perform a wire transfer on the
same business day provided that the shares have been received in sufficient time
to perform such transfer.  In the event that the Investor is no longer
able, due to time constraints beyond his control, to perform a wire on the day
of receipt, the wire will be promptly executed the following business
day.

     

    (ii)              
   the Company’s Registration Statement with respect to the
resale of the shares of Common Stock delivered in connection with the Advance
shall have been declared effective by the SEC;

     

    (iii)            
    the Company shall have obtained all material permits and
qualifications required by any applicable state for the offer and sale of the
Registrable Securities, or shall have the availability of exemptions
therefrom.  The sale and issuance of the Registrable Securities shall
be legally permitted by all laws and regulations to which the Company is
subject;

     

    (iv)          
      the Company shall have filed with the SEC in
a timely manner all reports, notices and other documents required of a
“reporting company” under the Exchange Act and applicable Commission
regulations;

     

    (v)             
    the fees as set forth in Section 12.4 below shall have
been paid or can be withheld as provided in Section 2.3; and

     

    (b)           Investor’s Obligations Upon
Closing.   Upon receipt of the shares referenced in
Section 2.3(a)(i) above and provided the Company is in compliance with its
obligations in Section 2.3, the Investor shall deliver to the Company the amount
of the Advance specified in the Drawdown Notice by wire transfer of immediately
available funds.

     

    Section
2.4.                      Hardship.  In
the event the Investor sells shares of the Company’s Common Stock after receipt
of an Drawdown Notice and the Company fails to perform its obligations as
mandated in Section 2.3, and specifically the Company fails to deliver to the
Investor on the Advance Date the shares of Common Stock corresponding to the
applicable Advance pursuant to Section 2.3(a)(i), the Company acknowledges that
the Investor shall suffer financial hardship and therefore shall be liable for
any and all losses, commissions, fees, interest, legal fees or any other
financial hardship caused to the Investor.

     

    The
Company understands that a delay in the delivery of the securities in the form
required pursuant to this registration statement beyond the Closing could result
in economic loss to the Investor.  After the Effective Date, as
compensation to the Investor for late issuance of such shares (delivery of
securities after the applicable closing), the Company agrees to make payments to
the Investor in accordance with the schedule below where the number of days
overdue is defined as the number of business days beyond the close with amount
due being cumulative.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand.  Nothing herein shall limit the right of
the Investor to pursue damages for the Company’s failure to comply with the
issuance and delivery of securities to the Investor.

     

    
      
        	
                Payments
      for Each Number of Days Overdue

              	
                $10,000
      Worth of Common Stock

              
	 
      	 
      
	
                1

              	
                $100

              
	
                2

              	
                $200

              
	
                3

              	
                $300

              
	
                4

              	
                $400

              
	
                5

              	
                $500

              
	
                6

              	
                $600

              
	
                7

              	
                $700

              
	
                8

              	
                $800

              
	
                9

              	
                $900

              
	
                10

              	
                $1000

              
	
                Over
      10

              	
                $1000
      + $200 for each Business Day beyond the tenth
  day

              

      

    

     

     

    ARTICLE
III.

    Representations
and Warranties of Investor

     

    Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof and as of each Advance
Date:

     

    Section
3.1.                      Organization and
Authorization.  The Investor is duly incorporated or organized
and validly existing in the jurisdiction of its incorporation or organization
and has all requisite power and authority to purchase and hold the securities
issuable hereunder.  The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by such Investor of
its obligations hereunder and the consummation by such Investor of the
transactions contemplated hereby have been duly authorized and requires no other
proceedings on the part of the Investor.  The undersigned has the
right, power and authority to execute and deliver this Agreement and all other
instruments (including, without limitations, the Registration Rights Agreement),
on behalf of the Investor.  This Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

     

    Section
3.1.1.                    Evaluation of
Risks.  The Investor has such knowledge and experience in
financial, tax and business matters as to be capable of evaluating the merits
and risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this
transaction.  It recognizes that its investment in the Company
involves a high degree of risk.

     

    Section
3.2.                      No Legal Advice From the
Company.  The Investor acknowledges that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax
advisors.  The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
3.3.                      Investment Purpose.
The securities are being purchased by the Investor for its own account, and for
investment purposes.   Any resale or other disposition of the
Common Stock will be solely in accordance with the registration provisions of
the Securities Act or pursuant to an exemption from such registration
provisions. The Investor is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D of the Securities
Act.

     

    Section
3.4.                      Information.  The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment
decision.  The Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and its
management.  Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in this
Agreement.  The Investor understands that its investment involves a
high degree of risk.  The Investor is in a position regarding the
Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Investor to obtain information from
the Company in order to evaluate the merits and risks of this
investment.  The Investor has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to this transaction.

     

    Section
3.5.                      Receipt of Documents.
The Investor and its counsel have received and read in their
entirety:  (i) this Agreement and the Exhibits annexed hereto; (ii)
all due diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; and (iii)
answers to all questions the Investor submitted to the Company regarding an
investment in the Company; and the Investor has relied on the information
contained therein and has not been furnished any other documents, literature,
memorandum or prospectus.

     

    Section
3.6.                      Registration Rights
Agreement.  The parties have entered into the Registration
Rights Agreement dated the date hereof.

     

    Section
3.7.                      Not an
Affiliate.  The Investor is not an officer, director or a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the Company or any “Affiliate” of the
Company (as that term is defined in Rule 405 of the Securities
Act).

     

    Section
3.8.                      Trading
Activities.  The Investor’s trading activities with respect to the
Company’s Common Stock shall be in compliance with all applicable federal and
state securities laws, rules and regulations and the rules and regulations of
the Principal Market on which the Company’s Common Stock is listed or traded and
Investor will comply with any requests that the SEC makes in connection with the
Filing of the Registration Agreement to ensure such compliance. Neither
the Investor nor its affiliates has an open short position in the Common Stock
of the Company, the Investor agrees that it shall not, and that it will cause
its affiliates not to, engage in any short sales of or hedging transactions with
respect to the Common Stock, provided that the Company acknowledges and agrees
that upon receipt of an Drawdown Notice the Investor has the right to sell the
shares to be issued to the Investor pursuant to the Drawdown Notice during the
applicable Pricing Period.  At the request of the Company, the
Investor will provide the Company with periodic reports no less often than
bi-monthly that reflects all of its trading activity during the period as well
as the current location, accounts and status of all shares of Common Stock
delivered to Investor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
3.11                      No Registration as a
Dealer. The Investor is not and will not be required to be
registered as a "dealer" under the 1934 Act, either as a result of its execution
and performance of its obligations under this Agreement or
otherwise.

     

    Section
3.12                   
 Good
Standing. The Investor is a limited liability company, duly organized,
validly existing and in good standing under the laws of its state of formation
and any jurisdiction in which it is conducting business.

     

    ARTICLE
IV.

    Representations
and Warranties of the Company

     

    Except as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as of
the date hereof:

     

    Section
4.1.                      Organization and
Qualification.  The Company is duly incorporated or organized
and validly existing in the jurisdiction of its incorporation or organization
and has all requisite corporate power to own its properties and to carry on its
business as now being conducted.  Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect on the Company and its subsidiaries taken as a
whole.

     

    Section
4.2.                      Authorization, Enforcement,
Compliance with Other Instruments.  (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement, and any related agreements by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement, the Registration
Rights Agreement, and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Registration Rights
Agreement, and assuming the execution and delivery thereof and acceptance by the
Investor and any related agreements constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.

     

    Section
4.2.1.                   Capitalization.  The
authorized capital stock of the Company consists of Class A common stock, $0.001
par value per share: 100,000,000 authorized; 23,571,344 shares issued and
outstanding for September 30, 2009. Class B common stock - $0.001 par value per
share, 16,110,500 authorized; 16,110,500 shares issued and outstanding for
September 30, 2009. Preferred stock, $0.001 par value per share, 1,000,000
authorized and none issued.  All of such outstanding shares have been
validly issued and are fully paid and nonassessable.  Except as
disclosed in the SEC Documents, no shares of Common Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company.   Except as disclosed in
the SEC Documents, or as set forth on Exhibit 4.2 attached hereto, as of the
date hereof, (i) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities (iii) there are no
outstanding registration statements other than on Form S-1and (iv) there are no
agreements or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the Securities
Act (except pursuant to the Registration Rights Agreement).  There are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the consummation
of the transactions described herein or therein.  The Company has
furnished to the Investor true and correct copies of the Company’s Certificate
of Incorporation, as amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s By-laws, as in effect on the date
hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.3.                      No
Conflict.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or By-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is quoted) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company or any of its subsidiaries is bound or affected and which would cause a
Material Adverse Effect.  Except as disclosed in the SEC Documents,
neither the Company nor its subsidiaries is in violation of any term of or in
default under its Articles of Incorporation or By-laws or their organizational
charter or by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its subsidiaries.  The
business of the Company and its subsidiaries is not being conducted in violation
of any material law, ordinance, regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof.  All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.  The Company and its subsidiaries are
unaware of any fact or circumstance which might give rise to any of the
foregoing.

     

    Section
4.4.                      SEC Documents; Financial
Statements.   As of the date hereof, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act.    As of their
respective dates, to the Company’s knowledge, the financial statements of the
Company disclosed in the SEC Documents (the “Financial
Statements”) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and, fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  No other
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.5.                      No
Default.  Except as disclosed in Exhibit 4.5, the Company is
not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound and neither the execution, nor the delivery
by the Company, nor the performance by the Company of its obligations under this
Agreement or any of the exhibits or attachments hereto will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company’s
business or financial condition.

     

    Section
4.6.                      Absence of Events of
Default.  Except for matters described in Exhibit 4.6 and/or
this Agreement, no Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse Effect on
the Company’s business, properties, prospects, financial condition or results of
operations.

     

    Section
4.7.                      Intellectual Property
Rights.  The Company and its subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted.   The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

     

    Section
4.8.                      Employee
Relations.  Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened.  None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.9.                      Environmental
Laws.  The Company and its subsidiaries are (i) in compliance
with any and all applicable material foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses,
except where failure to comply would not have a Material Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries taken as a whole.

     

     and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval.

     

    Section
4.10.                    Title.  Except
as set forth in Exhibit 4.10, the Company has good and marketable title to its
properties and material assets owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest other than such as
are not material to the business of the Company.  Any real property
and facilities held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.

     

    Section
4.11.                    Insurance.  The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged.  Neither the
Company nor any such subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

     

    Section
4.12.                    Regulatory
Permits.  The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where failure to comply would not have a Material Effect on
the business, properties, operations, financial condition, results of operations
or prospects of the Company or its subsidiaries, and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.

     

    Section
4.13.                    Internal Accounting
Controls.  The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Representation by the company relating
to internal controls will be made on the Effective Date.

     

    Section
4.14.                    No Material Adverse
Breaches, etc.  Except as set forth in Exhibit 4.14, neither
the Company nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company’s officers has or is expected in the future
to have a Material Adverse Effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company or its
subsidiaries.  Except as set forth in the SEC Documents, neither the
Company nor any of its subsidiaries is in breach of any contract or agreement
which breach, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company or its
subsidiaries taken as a whole.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.15.                    Absence of
Litigation.  Except as set forth in Exhibit 4.15 , there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would (i) have
a Material Adverse Effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect on the business, operations,
properties, financial condition or results of operation of the Company and its
subsidiaries taken as a whole.

     

    Section
4.16.                    Subsidiaries.  Except
as disclosed in Exhibit 4.16, the Company does not presently own or control,
directly or indirectly, any interest in any other corporation, partnership,
association or other business entity.

     

    Section
4.17.                     Tax
Status.  Except as disclosed in Exhibit 4.17, the Company and
each of its subsidiaries has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

     

    Section
4.18.                     Certain
Transactions.  Except as set forth in Exhibit 4.18 none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

     

    Section
4.19.                     Fees and Rights of First
Refusal.  The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.

     

    Section
4.20.                     Use of
Proceeds.  The Company shall use the net proceeds from this
offering for general corporate purposes, including, without limitation, the
payment of loans incurred by the Company, including loans owed to officers,
directors and/or affiliates of the Company.  However, in no event
shall the Company use the net proceeds from this offering for the payment (or
loan to any such person for the payment) of any judgment, or other liability,
incurred by any executive officer, officer, director or employee of the Company,
except for any liability owed to such person for services rendered, or if any
judgment or other liability is incurred by such person originating from services
rendered to the Company, or the Company has indemnified such person from
liability.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.21.                  
 Further
Representation and Warranties of the Company.  For so long as
any securities issuable hereunder held by the Investor remain outstanding, the
Company acknowledges, represents, warrants and agrees that it will maintain the
listing of its Common Stock on the Principal Market.

     

    Section
4.22.                     Intentionally
Left Blank.

     

    Section
4.23.                    Opinion of
Counsel.  The Company will obtain for the Investor, at the
Company’s expense, any and all opinions of counsel which may be reasonably
required in order to sell the securities issuable hereunder without
restriction.

     

    Section
4.24.                    Dilution.  The
Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common
Stock.

     

    Section
4.25.                    No General
Solicitation.  Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the shares of Common
Stock offered hereby.

     

    ARTICLE
V.

    Indemnification

     

    The
Investor and the Company represent to the other the following with respect to
itself:

     

    Section
5.1.              
        Indemnification.

     

    (a)              
       In consideration of the Investor’s
execution and delivery of this Agreement, and in addition to all of the
Company’s other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Investor, and all of its officers,
directors, partners, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Investor
Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith, and including reasonable attorneys’ fees and
disbursements (the “Indemnified
Liabilities”), incurred by the Investor Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made against
such Investor Indemnitee not arising out of any action or inaction of an
Investor Indemnitee, and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Investor
Indemnitees.  To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)                
    In consideration of the Company’s execution and delivery
of this Agreement, and in addition to all of the Investor’s other obligations
under this Agreement, the Investor shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors, shareholders, employees
and agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement,  the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed by
the Investor, or (c) any cause of action, suit or claim brought or made against
such Company Indemnitee based on  misrepresentations or due to
a  breach by the Investor and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the Company
Indemnitees.  To the extent that the foregoing undertaking by the
Investor may be unenforceable for any reason, the Investor shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

     

    (c)                   
  The obligations of the parties to indemnify or make contribution
under this Section 5.1 shall survive termination.

     

    ARTICLE
VI.

    Covenants
of the Company

     

    Section
6.1.                      Registration
Rights.  The Company shall cause the Registration Rights
Agreement to remain in full force and effect and the Company shall comply in all
material respects with the terms thereof.

     

    Section
6.2.                      Listing of Common
Stock.  The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market.

     

    Section
6.3.                      Exchange Act
Registration.  The Company will cause its Common Stock to
continue to be registered under Section 12(g) of the Exchange Act, will file in
a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.

     

    Section
6.4.                      Transfer Agent
Instructions.  Upon effectiveness of the Registration Statement
the Company shall deliver instructions to its transfer agent to issue shares of
Common Stock to the Investor free of restrictive legends on or before each
Advance Date.

     

    Section
6.5.                      Corporate
Existence.  The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.

     

    Section
6.6.                      Notice of Certain Events
Affecting Registration; Suspension of Right to Make an
Advance.  The Company will immediately notify the Investor upon
its becoming aware of the occurrence of any of the following events in respect
of a registration statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the registration statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of  any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt 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; (iv) the happening of any event that makes any material statement made
in the Registration Statement or related prospectus of any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in the Registration Statement,
related prospectus or documents so that, in the case of the Registration
Statement, 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 not misleading, and that in the case of the related
prospectus, 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; and (v) the Company’s reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate; and
the Company will promptly make available to the Investor any such supplement or
amendment to the related prospectus.  The Company shall not deliver to
the Investor any Drawdown Notice during the continuation of any of the foregoing
events.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
6.7.                      Restriction on Sale of
Capital Stock.  During the Commitment Period, the Company shall
not, without the prior written consent of the Investor, (i) except on exercise
of  the type of instruments referred to in (ii) of this subsection,
below, issue or sell any Common Stock or Preferred Stock without consideration
or for a consideration per share less than the Bid Price of the Common Stock
determined immediately prior to its issuance, (ii) issue or sell any
Preferred Stock
warrant, option, right, contract, call, or other security or instrument granting
the holder thereof the right to acquire Common Stock without consideration or
for a consideration per share less than the Bid Price of the Common Stock
determined immediately prior to the issuance of such security or instrument.
Consent will not be unreasonably withheld.

     

    Section
6.8.                      Consolidation;
Merger.  The Company shall not, at any time after the date
hereof, effect any merger or consolidation of the Company with or into, or a
transfer of all or substantially all the assets of the Company to another entity
(a “Consolidation
Event”) unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to the Investor
such shares of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement.

     

    Section
6.9.                      Issuance of the Company’s
Common Stock.  The sale of the shares of Common Stock shall be
made in accordance with the provisions and requirements of Regulation D and
any applicable state securities law.

     

    Section
6.10.                    Review of Public
Disclosures.  All SEC filings (including, without limitation,
all filings required under the Exchange Act, which include Forms 10-Q and
10-QSB, 10-K and 10K-SB, 8-K, etc) and other public disclosures made by the
Company, including, without limitation, all press releases, investor relations
materials, and scripts of analysts meetings and calls, shall be reviewed and
approved for release by the Company’s attorneys and, if containing financial
information, the Company’s independent certified public
accountants.

     

    Section
6.11.                    Market
Activities.  The Company will not, directly or indirectly, (i)
take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Common Stock or (ii) sell, bid for or purchase the Common Stock, or pay anyone
any compensation for soliciting purchases of the Common Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
VII.

    Conditions
for Advance and Conditions to Closing

     

    Section
7.1.                      Conditions Precedent to the
Obligations of the Company.  The obligation hereunder of the
Company to issue and sell the shares of Common Stock to the Investor incident to
each Closing is subject to the satisfaction, or waiver by the Company, at or
before each such Closing, of each of the conditions set forth
below.

     

    (a)                
     Accuracy of the Investor’s
Representations and Warranties.  The representations and
warranties of the Investor shall be true and correct in all material
respects.

     

    (b)               
     Performance by the
Investor.  The Investor shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Investor at or prior to such
Closing.

     

    Section
7.2.                      Conditions Precedent to the
Right of the Company to Deliver a Drawdown Notice.  The right
of the Company to deliver an Drawdown Notice is subject to the fulfillment by
the Company, on such Drawdown Notice (a “Condition Satisfaction
Date”), of each of the following conditions:

     

    (a)                  
   Registration of the Common
Stock with the SEC.  The Company shall have filed with the SEC
a Registration Statement with respect to the resale of the Registrable
Securities related to the shares covered by the Drawdown Notice in accordance
with the terms of the Registration Rights Agreement.  As set forth in
the Registration Rights Agreement, the Registration Statement shall have
previously become effective and shall remain effective on each Condition
Satisfaction Date and (i) neither the Company nor the Investor shall have
received notice that the SEC has issued or intends to issue a stop order with
respect to the Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened to do so (unless the SEC’s concerns
have been addressed and the Investor is reasonably satisfied that the SEC no
longer is considering or intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness of the Registration
Statement or related prospectus shall exist.  Such Registration
Statement must have been declared effective by the SEC prior to the first
Drawdown Notice Date.

     

    (b)               
     Authority.  The
Company shall have obtained all permits and qualifications required by any
applicable state in accordance with the Registration Rights Agreement for the
offer and sale of the shares of Common Stock, or shall have the availability of
exemptions therefrom.  The sale and issuance of the shares of Common
Stock shall be legally permitted by all laws and regulations to which the
Company is subject.

     

    (c)                      Fundamental Changes.
There shall not exist any fundamental changes to the information set forth in
the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.

     

    (d)               
      Performance by the
Company.  The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.

     

    (e)                  
   No
Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect of prohibiting or adversely affecting any of the transactions
contemplated by this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)              
       No Suspension of Trading in
or Delisting of Common Stock.  The trading of the Common Stock
is not suspended by the SEC or the Principal Market (if the Common Stock is
traded on a Principal Market).  The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market (if the Common Stock
is traded on a Principal Market).  The Company shall not have received
any notice threatening the continued listing of the Common Stock on the
Principal Market (if the Common Stock is traded on a Principal
Market).

     

    (g)                  
  Maximum
Advance Amount.  The amount of an Advance requested by the
Company shall not exceed the Maximum Advance Amount.  In addition, in
no event shall the number of shares issuable to the Investor pursuant to an
Advance cause the aggregate number of shares of Common Stock beneficially owned
by the Investor and its affiliates to exceed nine and 9/10 percent (9.9%) of the
then outstanding Common Stock of the Company.  For the purposes of
this section beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act.

     

    (h)                
    No
Knowledge.  The Company has no knowledge of any event which
would be more likely than not to have the effect of causing such Registration
Statement to be suspended or otherwise ineffective.

     

    (i)                 
     Executed Drawdown
Notice.  The Investor shall have received the Drawdown Notice
executed by an officer of the Company and the representations contained in such
Drawdown Notice shall be true and correct as of each Condition Satisfaction
Date.

     

    ARTICLE
VIII.

    Due
Diligence Review; Non-Disclosure of Non-Public Information

     

    Section
8.1.                      Non-Disclosure of Non-Public
Information.

     

    (a)                 
   The Company covenants and agrees that it shall refrain from
disclosing, and shall cause its officers, directors, employees and agents to
refrain from disclosing, any material non-public information to the Investor
without also disseminating such information to the public, unless prior to
disclosure of such information the Company identifies such information as being
material non-public information and provides the Investor with the opportunity
to accept or refuse to accept such material non-public information for
review.

     

    (b)            
        Nothing herein shall require the
Company to disclose non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not disseminate
non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts, provided, however,
that notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives of the
Investor and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading.  Nothing
contained in this Section 8.2 shall be construed to mean that such persons or
entities other than the Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain non-public information
in the course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of material fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
IX.

    Choice
of Law/Jurisdiction

     

    Section
9.1.                      Governing
Law.  This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts without regard to
the principles of conflict of laws.  The parties further agree that
any action between them shall be heard in Boston, MA for the adjudication of any
civil action asserted pursuant to this paragraph.

     

    ARTICLE
X.

    Assignment;
Termination

     

    Section
10.1.                    Assignment.  Neither
this Agreement nor any rights of the Company hereunder may be assigned to any
other Person.

     

    Section
10.2.                    Termination.

     

    (a)                     The
obligations of the Investor to make Advances under Article II hereof shall
terminate thirty-six (36) months after the Effective Date. (b)The obligation of the Investor to make an
Advance to the Company pursuant to this Agreement shall terminate permanently
(including with respect to an Advance Date that has not yet occurred) in the
event that (i) there shall occur any stop order or suspension of the
effectiveness of the Registration Statement for an aggregate of fifty (50)
Trading Days, other than due to the acts of the Investor, during the Commitment
Period, or (ii) the Company shall at any time fail materially to comply with the
requirements of Article VI and such failure is not cured within thirty (30) days
after receipt of written notice from the Investor, provided, however, that this
termination provision shall not apply to any period commencing upon the filing
of a post-effective amendment to such Registration Statement and ending upon the
date on which such post effective amendment is declared effective by the
SEC.

     

    ARTICLE
XI.

    Notices

     

    a.                      
 Section 11.0.0.1.  Notices.  Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same.  The addresses and
facsimile numbers for such communications shall be:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              If
      to the Company, to:

            	
              Island
      Breeze International, Inc.

              1001
      North America Way

            
	 
      	
              Suite
      201

            
	 
      	
              Miami,
      FL 33132

            
	 
      	
              Attention:
      Bradley Prader, CEO

            
	 
      	
              Telephone:
      (305) 416-6402

            
	 
      	
              Facsimile:   (305)
      416-6406

            
	 
      	 
      
	
              With
      a copy to:

            	 
      
	 
      	
              Eaton
      & Van Winkle LLP

              3
      Park Avenue 16th Floor

              New
      York, NY 10016

              Attention:  Joseph
      L. Cannella

              Telephone:
      (212)-561-3633

              Facsimile:
      (212) 779-9928

            
	 
      	 
      
	 
      	 
      
	
              If
      to the Investor, to:

            	
              Auctus
      Private Equity Fund, LLC

              One
      Beacon St. 34th
      Floor

              Boston,
      MA 02108

              ATTN:
      Louis Posner, Director

              Telephone:
      617-532-6408

              Facsimile:
      617-532-6402

            
	 
      	 
      
	
              With
      a copy to:

            	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

     

     

    Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.

     

    ARTICLE
XII.

    Miscellaneous

     

    Section
12.1.                    Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.  In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof, though
failure to deliver such copies shall not affect the validity of this
Agreement.

     

    Section
12.2.                    Entire Agreement;
Amendments.  This Agreement supersedes all other prior oral or
written agreements between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters.  No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
12.3.                    Reporting Entity for the
Common Stock.  The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on any
given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or
any successor thereto.  The written mutual consent of the Investor and
the Company shall be required to employ any other reporting entity.

     

    Section
12.4.                     Fees and
Expenses.  The Company hereby agrees to pay the following
fees:

     

    (a)                      Fees.  Each
of the parties shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated
hereby.

     

    (b)                
     Origination Fee.
Company has issued to the Investor a non-refundable origination fee equal to
Fifty Thousand (50,000) Shares of Restricted Common Stock.

     

    Section
12.5. Confidentiality.  If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information
obtained from any other party (except information publicly available or in such
party’s domain prior to the date hereof, and except as required by court order
or applicable laws) and shall promptly return to the other parties all
schedules, documents, instruments, work papers or other written information
without retaining copies thereof, previously furnished by it as a result of this
Agreement or in connection herein.

     

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

    

     

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
parties hereto have caused this Drawdown Equity Financing Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

     

    
      	 
      	
              COMPANY:

            
	 
      	
              Island
      Breeze International, Inc.

            
	 
      	 
      
	 
      
	 
      
	 
      	
              By:  _____________________________________

            
	 
      	
              Name: Bradley
      Prader

            
	 
      	
              Title:
      Chief Executive Officer and Director

            
	 
      	 
      
	 
      	 
      
	 
      	
              INVESTOR:

            
	 
      	
              Auctus
      Private Equity Fund, LLC

            
	 
      	 
      
	 
      
	 
      
	 
      	
              By:
      _____________________________________

            
	 
      	
              Name:  Louis
      Posner

            
	 
      	
              Title:
      Director

            
	 
      	 
      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    DRAWDOWN
NOTICE

     

    Island
Breeze International, Inc.

     

    The
undersigned, _______________________ hereby certifies, with respect to the sale
of shares of Common Stock of Island Breeze International, Inc. (the “Company”) issuable in
connection with this Drawdown Notice, delivered pursuant to the Drawdown Equity
Financing Agreement (the “Agreement”), as
follows:

     

    1.           The
undersigned is the duly elected ______________ of the Company.

     

    2.           There
are no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment to
the Registration Statement.

     

    3.           The
Company has performed in all material respects all covenants and agreements to
be performed by the Company and has complied in all material respects with all
obligations and conditions contained in the Agreement on or prior to the
Drawdown Notice Date, and shall continue to perform in all material respects all
covenants and agreements to be performed by the Company through the applicable
Advance Date.  All conditions to the delivery of this Drawdown Notice
are satisfied as of the date hereof.

     

    4.           The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”) required to be made by it pursuant to applicable securities
laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 10-K or 10-KSB, 8-K,
etc.).  All SEC Filings and other public disclosures made by the
Company, including, without limitation, all press releases, analysts meetings
and calls, etc. (collectively, the “Public Disclosures”),
have been reviewed and approved for release by the Company’s attorneys and, if
containing financial information, the Company’s independent certified public
accountants.  None of the Company’s Public Disclosures 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.

     

    5.           The
Advance requested is _____________________.

     

    The
undersigned has executed this Certificate this ____ day of
_________________.

     

    
      	
               

            	
              Island
      Breeze International, Inc.

            
	 
      	 
      
	 
      	 
      
	
               

            	
              By: 
      _____________________________________

            
	
               

            	
                  Name:
      Bradley Prader

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBITS

    

    EXHIBIT
4.2.

    

    1.           Convertible
Notes

    a) IBII
has issued $407,000 in Convertible Notes that, at the option of the note holder,
can be converted into 814,000 shares of IBII’s Class A Common Stock

    

    2.           Options,
Warrants, etc.

    a) In
July 2009 the Directors of IBII approved the Island Breeze International Stock
Incentive Plan which provides for the issuance of up to 5,000,000 shares of
Class A Common Stock to eligible persons pursuant to the plan.

    

    3.           SEC
Form SB-2 Registration

    a) The
predecessor company to IBII, Goldpoint Resources, Inc., which IBII merged with
on June 12, 2009, filed a registration statement on Form SB-2, which was
declared effective on December 28, 2007.

    

    EXHIBITS      4.5,    4.6,   4.10      4.14      and     4.15

    

    None

    

    EXHIBIT
4.16

    

    1.           Subsidiaries

    

    a) Island
Breeze International.  A wholly-owned Cayman Islands Exempted
Corporation formed on September 27, 2006.

    

    b) Island
Breeze International Asia Limited.  On August 14, 2009 the Company
incorporated a wholly-owned Hong Kong subsidiary.

    

    EXHIBIT
4.17

    

    1.           Tax
Status

    

    As
denoted in financial reports filed with the SEC, Goldpoint Resources, Inc. the
predecessor company to Island Breeze International, Inc. with whom the Company
merged with on June 12, 2009, had no taxable income since
inception.  Goldpoint Resources, Inc. has not filed federal or state
tax returns since inception.

    

    EXHIBIT
4.18

    

    1.           Certain
Transactions

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    a) On
December 1, 2008, Craig A. Szabo, a Director of the Company,  loaned
the Company $50,000 at an interest rate of 5% annum for a period of one
year.  On December 1, 2009 the Company extended the loan for an
additional three months.

    

    a) On
December 1, 2008, Michael C. Hovdestad, an Officer and Director of the Company,
loaned the Company $20,000 at an interest rate of 5% annum for a period of one
year.  On December 1, 2009 the Company extended the loan for an
additional three months.

    

     a)
On December 4, 2008, Steven G. Weismann. an Officer of the Company, loaned the
Company $20,000 at an interest rate of 5% annum for a period of one
year.  On December 4, 2009 the Company extended the loan for an
additional three months.

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