Document:

Unassociated Document

    

    EXHIBIT 10.1

     

    ESCROW AGREEMENT 

     

    This
Escrow Agreement is dated and effective as of the 20th day of March, 2009
and is made by and among ICON Securities Corp. (the “Dealer-Manager”), ICON
Equipment and Corporate Infrastructure Fund Fourteen, L.P., a Delaware limited
partnership (the “Partnership”), ICON GP 14, LLC, a Delaware limited liability
company and the general partner of the Partnership (the “General Partner”) and
Deutsche Bank Trust Company Americas, a New York Banking Corporation and a
wholly-owned subsidiary of Deutsche Bank AG (the “Escrow Agent”). 

     

    RECITALS 

     

    A. The
Partnership proposes to offer and sell up to 400,000 limited partnership
interests (the “Interests”) to investors at $1,000 per Interest pursuant to a
registration statement (the “Registration Statement”) filed with, and declared
effective by, the United States Securities and Exchange Commission (the “SEC”).

     

    B. The
Partnership has agreed that the subscription price paid in cash by subscribers
will be refunded to subscribers if less than 1,200 Interests (the “Minimum
Offering”) have been sold and payment therefor received by the earlier to occur
of the date which is (1) the first anniversary of the date on which the
Offering Period (as defined in the Registration Statement) commenced or (2) any
earlier date on which the General Partner may elect to terminate the Offering
(as defined in Partnership’s Prospectus) (such date shall be referred to herein
as the “Escrow Termination Date”). 

     

    C. The
Partnership desires to establish an escrow account (the “Escrow Account”) with
Escrow Agent for subscription payments pending receipt of aggregate
subscriptions for not less than One Thousand Two Hundred (1,200) Interests
($1,200,000 of subscriptions) (the time at which the escrow established by this
Agreement as to subscriptions from residents of all States other than
Pennsylvania may be released) or Twenty Thousand (20,000) Interests ($20,000,000
of subscriptions) have been received (the time at which the escrow established
by this Agreement as to subscriptions from residents of all States, including
Pennsylvania may be released). 

     

    D. The
Escrow Agent is willing to serve as Escrow Agent upon the terms and conditions
hereinafter set forth. 

     

    NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the parties, the
parties covenant and agree as follows: 

     

    1. Deposit with Escrow
Agent. The Escrow Agent agrees that it will, from time to time, accept
subscription payments for Interests (the “Escrow Deposit”) received by it from
the General Partner or the Dealer-Manager. Until such time as (1) at least
1,200 Interests have been sold, all checks for such subscription payments
received from all subscribers shall be made payable to “DBTCA as
Escrow Agent for ICON Fund 14” and
(2) at least 20,000 Interests have been sold, all checks for subscription
payments from residents of the Commonwealth of Pennsylvania shall be made
payable to “DBTCA as Escrow Agent for ICON Fund 14”. Subscription Agreements for
the Interests received by the General Partner shall be reviewed for accuracy by
the General Partner and, immediately thereafter, the General Partner shall
deliver to Escrow Agent information describing the name, address and Federal Tax
Identification Number of the subscriber. 

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    2. Investment of the Escrow
Deposit. 

     

    2.1 The
Escrow Agent shall, upon receipt of the checks remitted to it, deposit all of
the Escrow Deposit in the Escrow Account. The Escrow Account shall be invested
in (a) such obligations issued or guaranteed by the United States
Government or any agency thereof, (b) such bank accounts, (c) such
short-term certificates of deposit issued by a bank, or (d) such bank
money-market accounts, as shall be designated in writing from time to time by
the Partnership, such writing to specify the particular investment. Periodic
statements will be provided to the Dealer-Manager and the Partnership reflecting
transactions executed on behalf of the Escrow Account. The Dealer-Manager and
the Partnership will receive a monthly statement of transaction details upon
completion of any securities transaction in the Escrow Account without any
additional cost.

     

    2.2 The
Escrow Agent shall have no obligation to invest or reinvest the Escrow Deposit
if deposited with the Escrow Agent after noon (E.S.T./E.D.T.) on such day of
deposit. Instructions received after noon (E.S.T./E.D.T.) will be treated as if
received on the following business day. The Escrow Agent shall have no
responsibility for any investment losses resulting for the investment,
reinvestment or liquidation of the Escrow Deposit. Any interest or other income
received on such investment and reinvestment of the Escrow Deposit shall become
part of the aggregate Escrow Deposit and any losses incurred on such investment
and reinvestment of the Escrow Deposit shall be debited against the Escrow
Deposit. If a selection is not made and a written direction is not given to the
Escrow Agent, the Escrow Deposit shall remain uninvested with no liability for
interest thereon. It is agreed and understood that the entity serving as the
Escrow Agent may earn fees associated with the investments outlined above in
accordance with the terms of such investments. Notwithstanding the foregoing,
the Escrow Agent shall have the power to sell or liquidate the foregoing
investments whenever the Escrow Agent shall be required to release all or any
portion of the Escrow Deposit pursuant to Section 3 hereof. In no event shall
the Escrow Agent be deemed an investment manager or adviser in respect of any
selection of investments hereunder. It is understood and agreed that the Escrow
Agent or its affiliates are permitted to receive additional compensation that
could be deemed to be in the Escrow Agent’s economic self-interest for (i)
serving as investment adviser, administrator, shareholder servicing agent,
custodian or sub-custodian with respect to certain of the investments, (ii)
using affiliates to effect transactions in certain investments and (iii)
effecting transactions in investments.

     

    3. Distribution of the Escrow
Deposit. The
Escrow Agent shall distribute the Escrow Deposit as set forth in this
Section 3, and the Escrow Agent’s obligations (other than those of
Sections 3.3 and 5 hereof which, by their nature, must survive this
Agreement) shall terminate upon such distributions, and the Escrow Agent shall
be irrevocably released and discharged from any and all further responsibility
or liability with respect to this Agreement. 

     

    3.1(a) At
any time following sale of at least 1,200 Interests (exclusive of
subscriptions from residents of the Commonwealth of Pennsylvania), the General
Partner shall (1) certify (in the form of Schedule A attached hereto) that
the sale of such Interests has satisfied the Minimum Offering required for the
Partnership to break escrow as to the subscription payments of residents of
states other than the Commonwealth of Pennsylvania and (2) stipulate the
date on which the Initial Closing Date and the release of the Escrow Deposit
with respect to such investors and all related earnings thereon to 

     

    

    
      
        
          
          

        

        
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    the
Partnership shall occur. Upon collection by the Escrow Agent of good funds for
such subscription payments, the Escrow Agent shall make such distributions on
the Initial Closing Date. Certification by an officer of the General Partner as
provided in Schedule D hereto shall constitute sufficient evidence for the
purposes of this Section 3.1(a) that such events have occurred.

     

    (b) At
any time following sale of at least 20,000 Interests (inclusive of subscriptions
by residents of all States including
subscriptions from residents of the Commonwealth of Pennsylvania), the General
Partner shall (a) certify (in the form of Schedule B attached hereto) that
the sale of such Interests has satisfied the Minimum Offering required for the
Partnership to break escrow as to all subscription payments (including those
from residents of the Commonwealth of Pennsylvania) and (b) stipulate the
date on which the next Closing Date of the Partnership and the release of the
Escrow Deposit then being held on behalf of all investors and all related
earnings thereon (including, without limitation, residents of the Commonwealth
of Pennsylvania) to the Partnership shall occur. Certification by an officer of
the General Partner as provided in Schedule D hereto shall constitute sufficient
evidence for the purposes of this Section 3.1 that such events have
occurred. 

     

    3.2 After
satisfaction of the conditions of Section 3.1(a) above as to residents of
all states other than residents of the Commonwealth of Pennsylvania, all checks
received that are made payable to the Escrow Agent, shall, upon receipt by
Escrow Agent, be endorsed (without recourse to Escrow Agent) for deposit into
such accounts as directed by the Partnership. The Escrow Agent shall have no
duty to solicit any payments which may be due it hereunder. After satisfaction
of the conditions of Section 3.1(b) above as to residents of all states
including residents of the Commonwealth of Pennsylvania, all checks received
that are made payable to the Escrow Agent, shall, upon receipt by Escrow Agent,
be endorsed (without recourse to Escrow Agent) for deposit into such accounts as
directed by the Partnership. 

     

    3.3 If
any Escrow Deposit does not become deliverable to the Partnership pursuant to
Section 3.1 above on or prior to the Escrow Termination Date, the Escrow
Agent shall return such Escrow Deposit to the applicable subscribers in an
amount equal to the subscription amount theretofore paid by each of them
together with interest earned thereon. In the event that (a) rescission of
an individual subscription is required to be offered to a subscriber under
provisions of applicable state law or (b) a subscription for a resident of
a state may only be held in escrow for a shorter period of time than provided in
the preceding sentence under provisions of applicable state law, then the Escrow
Agent shall promptly, following receipt of such subscriber’s duly executed
request for rescission (in the case of rescission) or the General Partner’s
direction to release such subscription (in the case of expiration of an
applicable state statutory maximum escrow period), return such subscriber’s
Escrow Deposit to him in an amount equal to the subscription amount theretofore
paid by him together with interest earned thereon. For purposes of the preceding
sentence, rescission must be offered to each Pennsylvania subscriber for whom an
Escrow Deposit is held by the Escrow Agent at the end of the 120-day period
which began with the Escrow Agent’s receipt of his or her subscription payment.
If such rescission offer is not accepted, such Escrow Deposit may continue to be
held for one or more successive 120-day periods at the end of each of which
rescission must again be offered to each such subscriber. 

     

    

    
      
        
          
          

        

        
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    In no
event shall any Escrow Deposit be held in escrow for more than one year before
either being (a) released to the Partnership (upon a closing pursuant to
Section 3.1 and 3.2) or (b) returned to the applicable subscriber (in
the event such Escrow Deposit shall be returned to the applicable subscriber for
whom it is being held pursuant to Section 3.3). The Escrow Agent will not
be required to communicate with any subscriber(s). All inquiries on behalf of
the subscriber(s) shall be coordinated through the Partnership. 

     

    4. Distribution of
Interest. If the
Escrow Deposit become deliverable to the Partnership pursuant to
Section 3.1 or to the subscribers pursuant to Section 3.3 above, the
General Partner shall compute the pro rata share of the investment earnings of
each Escrow Deposit for the distribution in accordance with such computations.
Each subscriber’s pro rata share of investment earnings shall be computed as
follows: 

     

    
      	
              Investment
      Earnings multiplied by

            	
                   

            	
               (individual
      subscription amount multiplied by the number of days held) 

            
	
               

            	
               (total
      subscription amount multiplied by the number of days
  held)

            

    

    Such pro
rata share of investment earnings shall be distributed to each subscriber by the
Partnership upon admission of the subscriber as a member of the Partnership or
upon return of his/her subscription amounts. 

     

    5. Duties and Liability of
Escrow Agent. 

     

    5.1 The
General Partner and the Partnership each represent that its correct Taxpayer
Identification Number (“TIN”) assigned by the Internal Revenue Service or any
other taxing authority is set forth in Schedule C. Upon execution of this
Agreement, each party shall provide the Escrow Agent with a fully executed
Internal Revenue Service Form W-8 or W-9. Any interest or other income earned
under the Escrow Account shall be allocated and paid as provided herein and
reported by the recipient to the Internal Revenue Service as having been so
allocated and paid. Notwithstanding such written directions, the Escrow Agent
shall report and, if required, withhold any taxes as it determines may be
required by any law or regulation in effect at the time of the distribution. In
the absence of timely direction, all proceeds of the Escrow Account shall be
retained in the Escrow Account and reinvested from time to time by the Escrow
Agent as provided in Section 3. In the event that any earnings remain
undistributed at the end of any calendar year, Escrow Agent shall report to the
Internal Revenue Service or such other authority such earnings as it deems
appropriate or as required by any applicable law or regulation or, to the extent
consistent therewith, as directed in writing by the General Partner and the
Partnership. In addition, Escrow Agent shall withhold any taxes it deems
appropriate and shall remit such taxes to the appropriate authorities.

     

    5.2 The
Escrow Agent shall have the right to liquidate any investments held in the
Escrow Account in order to provide funds necessary to make required payments
under this Agreement. The Escrow Agent, in its capacity as escrow agent
hereunder, shall not have any liability for any loss sustained as a result of
any investment made pursuant to the Instructions of the parties hereto or as a
result of any liquidation of any investment 

     

    

    
      
        
          
          

        

        
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    prior to
its maturity or for the failure of the parties to give the Escrow Agent
instructions to invest or reinvest the Escrow Account or any earnings thereon.
Any such investment of the Escrow Account shall be made in compliance with Rule
15c2-4 of the Securities Exchange Act of 1934, as amended. 

     

    5.3 Any
corporation into which the Escrow Agent in its individual capacity may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Escrow Agent in its
individual capacity shall be a party, or any corporation to which substantially
all the corporate trust business of the Escrow Agent in its individual capacity
may be transferred, shall be the Escrow Agent under this Agreement without
further act of the parties hereto. 

     

    5.4
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Escrow Agent be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including, but not limited to, lost
profits),except for any losses or damages caused by the gross negligence or
willful misconduct of the Escrow Agent. 

     

    5.5 The
duties and obligations of the Escrow Agent shall be determined solely by the
express provisions of this Agreement and shall be limited to the performance of
such duties and obligations as are specifically set forth herein. 

     

    5.6 In
performing any of its duties under this Agreement, or upon the claimed failure
to perform its duties hereunder, Escrow Agent shall not be liable to anyone for
any damages, losses or expenses which it may incur as a result of the Escrow
Agent so acting, or failing to act; provided, however, that the Escrow Agent
shall be liable for damages arising out of its willful misconduct or gross
negligence under this Agreement, as determined by a court of competent
jurisdiction. Accordingly, Escrow Agent shall not incur any such liability with
respect to (i) any action taken or omitted to be taken in good faith upon
advice of its counsel or counsel for the Partnership given with respect to any
questions relating to the duties and responsibilities of the Escrow Agent
hereunder or (ii) any action taken or omitted to be taken in reliance upon
any document, including any written notice or instructions provided for in this
Agreement, not only as to its due execution and to the validity and
effectiveness of its provisions but also as to the truth and accuracy of any
information contained therein, which the Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by proper person or
persons and to conform with the provision of this Agreement. The Escrow Agent
may execute any of its powers and perform any of its duties hereunder directly
or through agents or attorneys (and shall be liable only for the careful
selection of any such agent or attorney) and may consult with such counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. 

     

    5.7 Each
of the Partnership, the General Partner and Dealer-Manager hereby respectively
agree to indemnify and hold harmless the Escrow Agent, and its directors,
officers, agents and employees (the “indemnitees”), against any and all losses,
claims, damages, liabilities and expenses, including, without limitation,
reasonable costs of investigation and counsel fees and disbursement which may be
incurred by it resulting from any act or omission of the Partnership, the
General Partner or the Dealer-Manager; except, that if Escrow Agent shall be
found guilty of willful misconduct or gross negligence under this Agreement by
any court of competent jurisdiction, then, in that 

     

    

    
      
        
          
          

        

        
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    event,
Escrow Agent shall bear all such losses, claims, damages and expenses. The
indemnity provided by this Section 5.7 shall survive the termination of
this Agreement. 

     

    5.8 In
the event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from any party hereto
which, in its opinion, conflict with any of the provisions of this Agreement, it
shall be entitled to refrain from taking any action and its sole obligation
shall be to keep safely all property held in escrow until it shall be directed
otherwise in writing by all of the other parties hereto or by a final order or
judgment of a court of competent jurisdiction. 

     

    5.9 All
fund transfer instructions must be given in writing, whether by facsimile, PDF
or otherwise, and the Escrow Agent is authorized to seek confirmation of such
instruction by the person or persons whose specimen signature is designated on
Schedule D hereto. 

     

    5.10 It
is understood that the Escrow Agent and the beneficiary’s bank in any funds
transfer may rely solely upon any account numbers or similar identifying number
provided by either of the parties hereto to identify (a) the beneficiary,
(b) the beneficiary’s bank, or (c) an intermediary bank. The Escrow
Agent may apply any Escrow Deposit for any payment order it executes using any
such identifying number, even where its use may result in a person other than
the beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary’s bank, or an intermediary bank designated. 

     

    6. Uncollectible
Checks. If any
checks or other instruments deposited in the Escrow Account prove uncollectible,
the Partnership shall promptly reimburse the Escrow Agent therefor upon request
and the Escrow Agent shall deliver the returned checks or other instruments to
the Partnership. 

     

    7. Notices. All
notices, requests, demands and other communication or deliveries required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, deposited with a guaranteed overnight
delivery service such as Fedex or deposited for mailing, first class, postage
prepaid, registered or certified mail, as follows: 

     

    
      	
               

            	
               

            	
               

            
	
              If
      to the subscribers for Interests: 

            	
               

            	
              To
      their respective addresses

            
	
               
      

            	
               

            	
              as
      specified in their Subscription Agreements.

            
	
               

            	
               

            	
               

            
	
              If
      to the Partnership or the General Partner: 

            	
               

            	
              ICON
      Equipment and Corporate Infrastructure Fund Fourteen,
  L.P.,

            
	
               
      

            	
               

            	
              a
      Delaware limited partnership

            
	
               
      

            	
               

            	
              c/o
      ICON GP 14, LLC, its General Partner

            
	
               
      

            	
               

            	
              100
      5th Avenue
      - 4th Floor

            
	
               
      

            	
               

            	
              New
      York, NY 10011

            
	
               
      

            	
               

            	
              Attention:
      Chief Executive Officer

            
	
               

            	
               

            	
               

            

    

    

    
      
        
          
          

        

        
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              If
      to the Dealer-Manager: 

            	
               

            	
              ICON
      Securities Corp.

            
	
               
      

            	
               

            	
              100
      5th Avenue
      - 4th
      Floor

            
	
               
      

            	
               

            	
              New
      York, NY 10011

            
	
               
      

            	
               

            	
              Attention:
      President

            
	
               

            	
               

            	
               

            
	
              If
      to the Escrow Agent: 

            	
               

            	
              Deutsche
      Bank Trust Company Americas

            
	
               
      

            	
               

            	
              60
      Wall Street - 27th Floor

            
	
               
      

            	
               

            	
              New
      York, NY 10005

            
	 	 	
              Attention:
      Manager, Escrow Team

            

    

    

     

    8. Resignation or Removal of
Escrow Agent. The
Escrow Agent, or any successor to it hereafter appointed, may at any time resign
and be discharged from the duties and obligations created by this Agreement by
giving at least thirty (30) days prior written notice to the Partnership
and the General Partner and accounting in full for all sums delivered to, and
held by, it and all earnings thereon while Escrow Agent hereunder to the
Partnership, the General Partner and any successor Escrow Agent. The Escrow
Agent may be removed at any time upon sixty (60) days prior written notice
by any instrument purportedly signed by an authorized representative of the
Partnership and the General Partner. Any successor Escrow Agent shall deliver to
the Escrow Agent, the Partnership and the General Partner a written instrument
accepting such appointment hereunder and shall accept delivery of the Escrow
Account to hold and distribute same in accordance with the terms of this
Agreement. If no successor Escrow Agent shall have been appointed within thirty
(30) days after the Partnership and the General Partner receive notice of
the Escrow Agent’s intention to resign or within sixty (60) days of the
Escrow Agent’s receipt of notice of its removal, the Escrow Agent shall deliver
all amounts deposited with it in the Escrow Account and all earnings thereon to
a national bank with a net worth of not less than $100,000,000 designated by the
Escrow Agent which has agreed in writing to accept such monies and to act as
substitute Escrow Agent in compliance with the terms of this Agreement. Upon
such delivery and acceptance, the Escrow Agent shall be discharged from any
future obligations under this Agreement. 

     

    9. General.

     

    9.1 This
Escrow Agreement shall be governed by and be construed and enforced in
accordance with the laws of the State of New York, exclusive of conflicts of
laws provisions thereunder. The parties hereto consent to the jurisdiction of
all courts of the State of New York and the venue of the courts located in the
county in which the Escrow Agent is located to resolve all disputes pertaining
to this Agreement and any ancillary agreements entered into in furtherance of
the purposes hereof and agree that such jurisdiction shall be exclusive. Each
party hereto irrevocably waives any objection on the grounds of venue, forum
non-conveniens or any similar grounds and irrevocably consents to service of
process by mail or in any other manner permitted by applicable law and consents
to the jurisdiction of the courts located in the State of New York. The parties
further hereby waive any right to a trial by jury with respect to any lawsuit or
judicial proceeding arising or relating to this Escrow Agreement. No party to
this Escrow Agreement is liable to any other party for losses due to, or if it
is unable to perform its obligations under the terms of this Escrow Agreement
because of, acts of God, fire, 

     

    

    
      
        
          
          

        

        
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    floods,
strikes, equipment or transmission failure, or other causes reasonably beyond
its control. 

     

    9.2 The
section headings contained herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement. 

     

    9.3 This
Agreement sets forth the entire agreement and understanding of the parties in
respect to this Agreement and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof. 

     

    9.4 This
Agreement may be amended, modified, superseded or canceled, and any of the terms
or conditions hereof may be waived, only by a written instrument executed by
each party hereto or, in the case of a waiver, by the party waiving compliance.
The failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver of any party of any condition, or of the breach of any term
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition or of the breach
of any other terms of this Agreement. 

     

    9.5 This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. All signatures of the parties to this Agreement may
be transmitted by facsimile, and such facsimile will, for all purposes, be
deemed to be the original signature of such party whose signature it reproduces,
and will be binding upon such party. 

     

    9.6 This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and assigns. 

     

    9.7 The
Escrow Agent shall have the right to withhold an amount equal to the amount due
and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent
shall reasonably believe may be incurred by the Escrow Agent in connection with
the termination of this Agreement. 

     

    9.8 For
purposes of sending and receiving instructions or directions hereunder, all such
instructions or directions shall be, and the Escrow Agent may conclusively rely
upon such instructions or directions, delivered and executed by representatives
of the Partnership and the General Partner designated on Schedule D attached
hereto and made a part hereof (each such representative, an “Authorized
Person”), which such designation shall include specimen signatures of such
representatives, as such Schedule D may be updated from time to
time.

     

    9.9 The
Partnership, the General Partner, and the Dealer-Manager each hereby agree and
acknowledge that in accordance with Section 326 of the USA Patriot Act the
Escrow Agent, like all financial institutions and in order to fight the funding
of terrorism and money laundering, is required to obtain, verify, and record
information that identifies each person or legal entity that establishes a
relationship or opens an account with the Escrow Agent. The Partnership, the
General Partner, and the Dealer-Manager each agrees that it will provide the
Escrow Agent with such information as it may request in order for the Escrow
Agent to satisfy the requirements of the USA Patriot Act.

     

    10. Representation of the
Partnership. The
Partnership hereby acknowledges that the status of the Escrow Agent with respect
to the offering of the Interests is that of agent only for the limited purposes
herein set forth, and hereby agrees it will not represent or 

     

    

    
      
        
          
          

        

        
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    imply
that Escrow Agent, by serving as Escrow Agent hereunder or otherwise, has
investigated the desirability or advisability of an investment in the Interests,
or has approved, endorsed or passed upon the merits of the Interests or the
Offering, nor shall the Partnership use the name of Escrow Agent in any manner
whatsoever in connection with the offer or sale of the Interests, other than by
acknowledgment that it has agreed to serve as Escrow Agent for the limited
purposes herein set forth. 

     

    11. Fees. Upon
execution of this Agreement, the Partnership will pay the Escrow Agent Fee’s
outlined in Schedule E attached hereto. This section shall survive any
termination of this Agreement.

     

    

     

    [Signatures
on following page] 

     

    

     

    

    
      
        
          
          

        

        
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    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written. 

     

    

     

    ICON
EQUIPMENT AND CORPORATE INFRASTRUCTURE FUND FOURTEEN, L.P.
a
Delaware limited partnership 
By: ICON
GP 14, LLC, its General Partner 

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                 

                              	
                                 

                              	
                                 

                              	
                                 

                              	
                                 

                              
	
                                By:

                              	
                                 

                              	
                                /s/
      Michael Reisner

                              	
                                 

                              	
                                 

                              
	
                                Name:

                              	
                                 

                              	
                                Michael Reisner

                              	
                                 

                              	
                                 

                              
	Title:	 	Director	 	 
	 	 	 	 	 
	
                                ICON
      GP 14, LLC, as General Partner

                              
	 	
                                 

                              	
                                 

                              
	
                                 

                              	 	 	 	 
	
                                By:

                              	
                                 

                              	
                                
                                  /s/
      Michael Reisner

                                

                              	
                                 

                              	
                                 

                              
	Name:	 	Michael
      Reisner	 	 
	Title:	 	Director	 	 
	 	 	 

                      

                    

                  

                

              

            

          

        

      

    

    ICON
SECURITIES CORP., as Dealer-Manager

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                     

                                  	
                                     

                                  	
                                     

                                  	
                                     

                                  	
                                     

                                  
	
                                    By:

                                  	
                                     

                                  	
                                    
                                      /s/
      Michael Reisner

                                    

                                  	
                                     

                                  	
                                     

                                  
	Name:	 	Michael
      Reisner	 	 
	Title:	 	Director	 	 
	
                                     

                                  	
                                     

                                  	
                                     

                                  	
                                     

                                  	
                                     

                                  
	
                                    DEUTSCHE
      BANK TRUST COMPANY AMERICAS, as Escrow Agent 

                                  
	
                                     

                                  	 	 	 	 
	
                                    By:

                                  	
                                     

                                  	
                                    
                                      /s/
      Luigi Sacramone

                                    

                                  	
                                     

                                  	
                                     

                                  
	Name:	 	Luigi
      Sacramone	 	 
	Title:	 	Assistant Vice
      President	 	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  	
                           

                        	
                           

                        	
                           

                        	
                           

                        	
                           

                        
	
                          By:

                        	
                           

                        	
                          
                            /s/
      Kisha A. Holder

                          

                        	
                           

                        	
                           

                        
	Name:	 	Kisha A.
      Holder 	 	 
	Title:	 	Vice
    President	 	 

                

              

            

          

        

      

    

     

    
      
        
          
          

        

        
          10SECURITIES PURCHASE
AGREEMENT

     

    THIS AGREEMENT dated as of the
23rd Day of March, 2009 (the “Agreement”) between
TANGIERS INVESTORS, LP,
a limited partnership (the “Investor”), and SKINS, INC., a corporation
organized and existing under the laws of the State of Nevada (the “Company”).

     

    WHEREAS, the parties desire
that, 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 Two Million
Dollars ($2,000,000) of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”); and

    

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, as provided herein, and the Investor shall
purchase (i) a convertible debenture in the principal amount of Eighty-Five
Thousand Dollars ($85,000) (the “Convertible
Debenture”), which shall be convertible into shares of the Company’s
common stock, par value $.001 (the “Common Stock”) (as
converted, the “Conversion Shares”);
and

    

    WHEREAS, such investments 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.

      

    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 Advance
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.     “Advance
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.     “Advance
Notice Date” shall mean
each date the Company delivers (in accordance with Section 2.2(b) of this
Agreement) to the Investor an Advance Notice requiring the Investor to advance
funds to the Company, subject to the terms of this Agreement. No Advance Notice
Date shall be less than ten (10) Trading Days after the prior Advance 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.

    
      
         

      

      
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    Section 1.7.     “Commitment
Amount” shall mean the
aggregate amount of up to Two Million Dollars ($2,000,000) 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 Effective Date, 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 which in no event
shall be more than  eighteen months after the Effective
Date.

     

    Section 1.9.     “Common
Stock” shall mean the
Company’s common stock, par value $.001 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.         “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
1.15.           “Market
Price” shall mean the
lowest daily volume weighted average price of the Common Stock during the
Pricing Period.

     

    Section
1.16.           “Maximum Advance
Amount”  The maximum dollar amount of each Advance will be
equal to the average daily trading volume in dollar amount during the ten (10)
trading days preceding the Advance Date. No Advance will be made in an amount
lower than the Minimum Advance Amount (defined below) or higher than Two Hundred
Fifty Thousand Dollars ($250,000).

    

    Section
1.17.           “Minimum Advance
Amount” shall be Two Thousand Five Hundred Dollars Hundred ($2,500) per
Advance Notice.

     

    Section
1.18.           “NASD” shall mean the National Association
of Securities Dealers, Inc.

     

    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 Advance Notice Date subject to the
terms and conditions provided herein.

    
      
         

      

      
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    Section
1.21.         “Principal
Market” shall mean the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the American Stock Exchange, the OTC Bulletin Board 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 percent (90%) of the Market Price 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 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-KSB, 10-K, Quarterly Reports on Form 10-QSB, 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.

     

    Section
1.31.          “VWAP” shall mean the volume weighted
average price of the Company’s Common Stock as quoted by Bloomberg,
LP.

    
      
         

      

      
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    ARTICLE
II.

    Advances
and Purchase of Convertible Debenture

     

    Section
2.1.           
Advances.

     

    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 Advance 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.

     

    Section
2.2.            Mechanics.

     

    (a)     Advance
Notice. At any time during
the Commitment Period, the Company may require the Investor to purchase shares
of Common Stock by delivering an Advance 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 Advance Notice shall not
be less than the Minimum Advance Amount, nor 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
Advance Notice after the Advance Notice is received by the Investor. There shall
be a minimum of ten (10) Trading Days between each Advance Notice Date, unless
prior written approval is provided by the Investor to the
Company.

     

    (b)     Date of
Delivery of Advance Notice. An Advance Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received prior to 5:00 pm Eastern Time, or (ii) the
immediately succeeding Trading Day if it 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 Advance Notice may be deemed delivered on a day that is not a
Trading Day.

     

    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 Advance 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 Advance
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 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.

      

    

     

    On each Advance
Date:

    (i)            
The Company shall deliver to the Investor via DWAC transfer the shares of
Common Stock applicable to the Advance in accordance with Section 2.3. The
certificates evidencing such shares shall be free of restrictive legends,
provided such shares are registered pursuant to an effective registration
statement.

    
      
         

      

      
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    (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

     

    (vi)           the Company’s transfer agent shall be
DWAC eligible.

     

    (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 Advance 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 Advance Notice and 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, provided that the Investor has performed its
obligations pursuant to Section 2.3, and therefore the Company shall be liable
for any and all losses, commissions, fees, or financial hardship caused to the
Investor. Provided, however, that the Company shall not be liable for any
losses, commissions, fees or financial hardship caused to the Investor if some
act of god has occurred, or some other event outside of the Company’s control,
that would prevent the Company from delivering the shares of Common Stock to the
Investor as required pursuant to Section 2.3 above.

    

    Section
2.6.            Purchase and Sale of
Convertible Debenture

    

    (a)           Subject
to the satisfaction (or waiver) of the terms and conditions of this Agreement,
Investor agrees to purchase on the date hereof and the Company agrees to sell
and issue to Investor, a Convertible Debenture in the amount of Eighty Five
Thousand Dollars ($85,000).

    

    (b)           On the date hereof, the Company shall
reserve for issuance to the Investor 1,000,000 shares for issuance upon
conversions of the Convertible Debentures, (the “Share
Reserve”). The Company
represents that it has sufficient authorized and unissued shares of Common Stock
available to create the Share Reserve after considering all other commitments
that may require the issuance of Common Stock. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the full conversion of the Convertible Debenture. If at any time the
Share Reserve is insufficient to effect the full conversion of the Convertible
Debenture, the Company shall increase the Share Reserve accordingly. If the
Company does not have sufficient authorized and unissued shares of Common Stock
available to increase the Share Reserve, the Company shall call and hold a
special meeting of the shareholders within thirty (30) days of such occurrence,
for the sole purpose of increasing the number of shares authorized. The
Company’s management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. Management shall
also vote all of its shares in favor of increasing the number of authorized
shares of Common Stock.

    
      
         

      

      
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    (c)       The
Company acknowledges and agrees to provide its transfer agent any and all
documents required by its transfer agent to assist the Investor with its
conversion of the Convertible Debenture into the Conversion Shares of the
Company, including a legal opinion for the entire amount of the Conversion
Shares underlying the Convertible Debenture and resolutions of the Company
giving Michael Sobeck the authority to convert the Convertible Debenture into
the Conversion Shares of the Company and allowing the transfer agent to issue
the full shares reserved and/or transfer such shares at the direction of Michael
Sobeck.

     

    (d)       Investor
acknowledges and agrees to provide the Company’s transfer agent, any and all
documents required by the transfer agent in order to convert the Convertible
Debenture into the Conversion Shares, including a medallion stamp stock power, a
seller representation letter/broker representation letter (if applicable) and a
resolution from the Investor authorizing Michael Sobeck to transfer the
Conversion Shares in the name of the Investor.

     

    (e)       The
Company shall not change its transfer agent without the express written consent
of the Investor, which may be withheld by the Investor in their sole discretion.
If the Investor effects a sale, assignment or transfer of the Conversion Shares
the Company shall within 2 business days instruct its transfer agent to issue
one or more certificates or credit shares to the applicable balance accounts at
DTC in such name and in such denominations as specified by Michael Sobeck to
effect such sale, transfer or assignment and, with respect to any transfer,
shall permit the transfer in accordance with this Section. Nothing in this
Section shall affect in any way the Investor’s obligations and agreement to
comply with all applicable securities laws upon resale of Conversion Shares. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Investor by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Investor shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.

    

    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.

    
      
         

      

      
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    Section 3.2.    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 3.3.    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 3.4.    Investment
Purpose. The securities
are being purchased by the Investor for its own account, and for investment
purposes. The Investor agrees not to assign or in any way transfer the
Investor’s rights to the securities or any interest therein and acknowledges
that the Company will not recognize any purported assignment or transfer except
in accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s
securities unless the securities are registered under Federal and applicable
state securities laws or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.

     

    Section 3.5.    Accredited
Investor. The Investor is
and shall be on each Advance Date, an “Accredited
Investor” as that term is
defined in Rule 501(a)(3) of Regulation D of the Securities
Act.

     

    Section 3.6.    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 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 3.7.    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; (iii) the Company’s most recent periodic filings filed
with the SEC; and (iv) 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 3.8.    Registration
Rights Agreement. The
parties have entered into the Registration Rights Agreement dated the date
hereof.

     

    Section 3.9.    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.

     

    Section
3.10.    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).

    
      
         

      

      
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    Section
3.11.          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. 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 Advance Notice
the Investor has the right to sell the shares to be issued to the Investor
pursuant to the Advance Notice during the applicable Pricing
Period. 

    

    Section
3.12   Reliance on
Exemptions.  The Investor  understands that the
Common Stock is being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Investor’ compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Investor set forth here in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Common Stock.

    

    Section
3.13   No Governmental
Review.  The Investor understands that no United States,
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Common Stock issuable
pursuant to this Agreement or the fairness or suitability of the investment in
the Common Stock nor have such authorities passed upon or endorsed the merits of
the offering of the Common Stock.

     

    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.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    Section 4.3.    Capitalization. The authorized capital stock of the
Company consists of 436,363,650 shares of Common Stock and zero shares of
Preferred Stock, $0.001 par value per share (“Preferred
Stock”), of which
70,238,660 shares of Common Stock and no shares of Preferred Stock are issued
and outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. Except as disclosed in the SEC Documents and the
options issued by the Company on February 5, 2009 listed on Schedule 4.3
attached hereto, 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, 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-8 and (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). Except as disclosed in the SEC
Documents, 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 4.4.    No
Conflict. Subject to the
Company’s Certificate of Incorporation, 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.

    
      
         

      

      
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    Section 4.5.    SEC
Documents; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC under the Exchange Act since the 10-K for the year ended December 31,
2007. The Company has delivered to the Investor or its representatives, or made
available through the SEC’s website at http://www.sec.gov, true and complete
copies of the SEC Documents. As of their respective dates, 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 4.6.    10b-5. The SEC Documents do not include any
untrue statements of material fact, nor do they omit to state any material fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not
misleading.

     

    Section 4.7.    No
Default. Except as
disclosed in the SEC Documents, 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
(which has not been waived) 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 (which has not been waived)  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 4.8.    Absence of
Events of Default. Except
for matters described in the SEC Documents 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
4.9.    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.

    
      
         

      

      
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    Section
4.10.          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
4.11.         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 and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.

     

    Section
4.12.         Title. Except as set forth in the SEC
Documents, 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
4.13.         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
4.14.          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, 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
4.15.         Internal
Accounting Controls.
Except as disclosed in the SEC Documents, 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.
Schedule 4.15 discloses the deficiencies that have been noted in the SEC
Documents.

    
      
         

      

      
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    Section
4.16.          No Material
Adverse Breaches, etc.
Except as set forth in the SEC Documents, 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.

     

    Section
4.17.         Absence of
Litigation. Except as set
forth in the SEC Documents, 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
4.18.         Subsidiaries. Except as disclosed in the SEC
Documents, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or
other business entity.

     

    Section
4.19.          Tax
Status. Except as
disclosed in the SEC Documents, 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
4.20.          Certain
Transactions. Except as
set forth in the SEC Documents 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
4.21.          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
4.22.          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.
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, expense reimbursement 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.

    
      
         

      

      
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    Section
4.23.         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 use its best efforts
to maintain the listing of its Common Stock on the Principal
Market.

      

    Section
4.25.         Opinion of
Counsel. The Company will
obtain, subject to applicable securities laws, 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.
If the Company can not or will not meet this obligation then the investor may
provide an independent opinion and the transfer agent may solely rely upon
it.

     

    Section
4.26.         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.

    

    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 (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is
sought), 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.

    
      
         

      

      
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    (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.    RESERVED.

     

    Section 6.2.    Listing of
Common Stock. During the
term of the Commitment Period, the Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market.

     

    Section 6.3.    Exchange
Act Registration. During
the term of the Commitment Period, 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 before each Advance
Date.

     

    Section 6.5.    Corporate
Existence. During the
Commitment period, 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 material 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 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 Advance Notice during the
continuation of any of the foregoing events.

    
      
         

      

      
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    Section
6.7.    Restriction on Sale of
Capital Stock. The Company shall not, for a period of at least 10 trading
days after the Company has issued an Advance Notice to the Investor, without the
Investor’s prior written consent , (i) 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,
or (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 its issuance. Notwithstanding the foregoing this Section
shall not apply in respect of an Exempt Issuance or an underwritten public
offering of Common Stock.  For purposes of this Agreement “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

     

    Section 6.8.    Consolidation;
Merger. During the
Commitment Period, 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.

    
      
         

      

      
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    Section
6.12           Other Equity
Line Financings. The Company will not, without the prior written consent of the
Investor, enter into any other equity line of credit financing similar to the
type of financing that is contemplated by this Agreement. The Investors consent
shall not be unreasonably withheld.

    

    ARTICLE
VII.

    Conditions
Precedent

     

    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 an Advance Notice. The right of the Company to deliver
an Advance Notice is subject to the fulfillment by the Company, on such Advance
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 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. The Registration Statement must
have been declared effective by the SEC prior to the first Advance 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.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

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

    

    Section
7.3 Conditions
Precedent to the Company’s Obligation to Sell.

     

    The
obligation of the Company hereunder to issue and sell the Convertible Debenture
to the Investor is subject to the satisfaction of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole
discretion:

     

    (a)  The
Investor shall have executed each of the documents required to complete the
transactions contemplated by this Agreement (the “Transaction Documents”) and
delivered them to the Company. The Investor shall have delivered to the
Company the $85,000 cash for the Convertible Debenture, minus $20,000 to be paid
to Christopher K. Davies for preparation of the Company’s S-1 Registration
Statement related to this Securities Purchase Agreement and for preparing any
and all responses to the SEC on behalf of the Company. Mr. Davies shall provide
legal service until such time as the Company’s Registration Statement has been
declared effective by the SEC.  services The proceeds as set forth
herein shall be delivered by wire transfer of immediately available U.S. funds
pursuant to the wire instructions provided by the Company.(b)  The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made.

    

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

     

    Section
7.4 Conditions to
Investor’s Obligations to the Investor’s Obligation to
Purchase.

     

    The
obligation of the Investor(s) hereunder to purchase the Convertible Debentures
at the First Closing is subject to the satisfaction, at or before the First
Closing Date, of each of the following conditions:

    

    
      	
               
      

            	
              (a)

            	
              The
      Company shall have executed the Transaction Documents
      and  delivered the same to the
Buyers.

            

    

    

    
      	
               
      

            	
              (b)

            	
              The
      Common Stock shall be authorized for quotation or trading on the Primary
      Market, trading in the Common Stock shall not have been suspended for any
      reason.

            

    

    

    
      	
               
      

            	
              (c)

            	
              The
      representations and warranties of the Company shall be true and correct in
      all material respects (except to the extent that any of such
      representations and warranties is already qualified as to materiality in
      Section 3 above, in which case, such representations and warranties shall
      be true and correct without further qualification) as of the date when
      made and as of the First Closing Date as though made at that time (except
      for representations and warranties that speak as of a specific date) and
      the Company shall have performed, satisfied and complied in all material
      respects with the covenants, agreements and conditions required by this
      Agreement to be performed, satisfied or complied with by the Company at or
      prior to the First Closing Date.

            

    

    

    
      	
               
      

            	
              (d)

            	
              The
      Company shall have executed and delivered to the Investor the Convertible
      Debentures in the respective amounts set forth opposite each Buyer’s name
      on Schedule I attached hereto.

            

    

    

    
      	
               
      

            	
              (e)

            	
              The
      Company shall have provided to the Buyers a true copy of a certificate of
      good standing evidencing the formation and good standing of the Company
      from the secretary of state (or comparable office) from the jurisdiction
      in which the Company is incorporated, as of a date within 10 days of the
      First Closing Date.

            

    

    

    
      	
               
      

            	
              (f)

            	
              The
      Company shall have delivered to the Investor a certificate, executed by
      the Secretary of the Company and dated as of the First Closing Date, as to
      (i) the resolutions consistent with Section 3(c) as adopted by the
      Company's Board of Directors in a form reasonably acceptable to such
      Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as
      in effect at the First Closing.

            

    

    

    
      	
               
      

            	
              (g)

            	
              The
      Company shall have created the Share
Reserve.

            

    

    

    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.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    (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 State of
California without regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in the State of
California, and expressly consent to the jurisdiction and venue of the courts,
sitting in California and the United States District Court of California 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 eighteen (18) months after the
Effective Date. The Company’s obligations under this Agreement shall terminate
on the date that the Investor is no longer obligated to make
Advances.

     

    (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.

    

    (c)           The
Company shall have the right, but not the obligation, to terminate this
Agreement if at anytime during the Commitment Period the Investor is unable to
provide the Company Advances for a period of at least seven (7) consecutive
business days.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    ARTICLE
XI.

    Notices

     

    Section
11.1.         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:

                          	
                            Skins,
      Inc.

                          
	 
      	
                            1
      Newark Street

                            Suite
      25A

                            Hoboken
      New Jersey  07030

                          
	 	 
	 
      	
                            Attention:
      Mark Klein

                          
	 
      	
                            Telephone:
      (201) 377-5502

                            Facsimile: (212)
      656-1788

                          
	 
      	 
      
	
                            If
      to the Investor(s):

                          	
                            Tangiers
      Capital, LLC

                            1446
      Front St. Suite 400

                            San
      Diego, CA 92101

                            Telephone:
      (424) 832-3213

                            Facsimile:
      (619)
566-2011

                          

                  

                

              

            

          

        

      

    

    

    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.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    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.          Commitment
Fee. The Company hereby
agrees to pay the following fees:

    

    Upon the
execution of this Agreement the Company shall issue to the Investor shares
of  stock in an amount equal to One Hundred Thousand
Dollars ($100,000) divided by the lowest VWAP of the Company’s Common Stock
during the ten (10) business days immediately following the date hereof, as
quoted by Bloomberg, LP (the “Investor’s Shares”). Such Investor Shares shall
not be registered on the Company’s Registration Statement.

    

    The
Company shall pay to Christopher K. Davies an amount equal to $20,000 for legal
services (the “Legal Fees”).  The Legal Fees shall be deducted from
the Convertible Debenture and issued simultaneously with the Investor
distributing the funds under the Convertible Debenture to the
Company.

    

    The
Investor’s Shares shall be deemed fully earned as of the date
hereof.

    

    Section
12.5.          Brokerage. Each of the parties hereto represents
that it has had no dealings in connection with this transaction with any finder
or broker who will demand payment of any fee or commission from the other
party.  The Company on the one hand, and the Investor, on the other
hand, agree to indemnify the other against and hold the other harmless from any
and all liabilities to any person claiming brokerage commissions or finder’s
fees on account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.

     

    Section
12.6.          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) 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.

     

    [SIGNATURE
PAGE TO FOLLOW]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
          
            
              
                
                  
                    	
                            COMPANY:

                          
	
                            Skins,
      Inc.

                          
	 
      	
                             

                          
	
                            Name:

                          	
                             Mark
      Klein

                          
	
                            Title:

                          	
                            Chief
      Executive Officer

                          
	 
      	 
      
	
                            INVESTOR:

                          
	
                            Tangiers
      Investors, LP

                          
	 
      	 
      
	 
      	
                             

                          
	
                            By:

                          	
                            Tangiers
      Capital, LLC

                          
	
                            Its:

                          	
                            General
      Partner

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    ADVANCE
NOTICE

     

    SKINS,
INC.

     

    The
undersigned, _______________________ hereby certifies, with respect to the sale
of shares of Common Stock of SKINS, INC. (the “Company”) issuable in
connection with this Advance Notice, delivered pursuant to the Securities
Purchase 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 Advance 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 Advance 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
_________________.

     

    
      
        
          
            	
                    SKINS,
      INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name:

                  	 
      
	
                    Title:

                  	 
      

          

        

      

    

    

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

    

    SCHEDULE
4.3

     

    Options
Issued

    
      
         

      

      
        23

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