Contract
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND IS BEING
OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUCH LAWS. THIS SECURITY MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS.
AMENDED
AND RESTATED 7 % DEBENTURE
Company: Skins,
Inc.
Company Address: 0 Xxxxxx
Xxxxxx, Xxxxx 00X Xxxxxxx, Xxx Xxxxxx, 00000
Closing Date: June 22,
2009
Maturity Date: March 23,
2010
Principal Amount:
$85,000
SKINS,
INC., a corporation duly organized under the laws of Nevada and any
successor or resulting corporation by way of merger, consolidation, sale or
exchange of all or substantially all of the assets or otherwise (the “Company”), for value
received, hereby promises to pay to the Holder (as such term is hereinafter
defined), or such other Person (as such term is hereinafter defined) upon order
of the Holder, on the Maturity Date (as such term is hereinafter defined), the
Principal Amount (as such term is hereinafter defined), as such sum may be
adjusted as provided herein, and to pay interest thereon with such interest
commencing to accrue as of the date of March 23, 2009 and payable upon the
Maturity Date (except that, if any such date is not a Business Day, then such
payment shall be due on the next succeeding Business Day), at the rate of Seven
Percent (7 %) per annum (the “Interest Rate”). All interest payable on the
Principal Amount of this Debenture shall be calculated on the basis of a year of
365 or 366 days, as the case may be, for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest is payable. Payment of interest on this Debenture shall be
in cash only. This Debenture may not be prepaid without the written
consent of the Holder.
ARTICLE
1
DEFINITIONS
SECTION
1.1 Definitions. The
terms defined in this Article whenever used in this Debenture have the following
respective meanings:
(i) “Affiliate” has the meaning
ascribed to such term in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended.
(ii) “Bankruptcy Code” means the
United States Bankruptcy Code of 1986, as amended (11 U.S.C. §§ 101 et. seq.).
(iii) “Business Day” means a day
other than Saturday, Sunday or any day on which banks located in the State of
California are authorized or obligated to close.
(v) “Closing Date” means the
closing date set forth in the first paragraph of this Debenture.
(vi) “Debenture” or “Debentures” means this
Amended and Restated Debenture of the Company or such other debenture(s)
exchanged therefore as provided in Section 2.1.
(vii) “Event of Default” has the
meaning set forth in Section 5.1.
(viii) “Holder” means Tangiers
Investors, LP, any successor thereto, or any Person to whom this Debenture is
subsequently transferred in accordance with the provisions hereof.
(ix) “Market Disruption
Event” means any event that results in a material suspension or
limitation of trading of the Common Shares.
(x) “Maturity Date” means the
maturity date set forth in the first paragraph of this Debenture.
(xi) “Maximum Rate” has the meaning
set forth in Section 5.3.
(xii) “Person” means an individual,
a corporation, a partnership, an association, a limited liability company, an
unincorporated business organization, a trust or other entity or organization,
and any government or political subdivision or any agency or instrumentality
thereof.
(xiii) “Principal Amount” means, for
any date of calculation, the principal sum set forth in the first paragraph of
this Debenture (including all amounts represented by any cash
advances made by Holder to the Company.
(xiv) “SEC” means the United States
Securities and Exchange Commission.
(xv) “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
thereunder, all as in effect at the time.
(xvi) “Securities Purchase
Agreement” means that certain Securities Purchase Agreement of even date
herewith by and among the Company and Holder, as the same may be amended from
time to time.
(xvii) “Subsidiary” means any entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are owned directly or indirectly by the Company.
All
references to “cash” or “$” herein means currency of the United States of
America.
ARTICLE
2
EXCHANGES,
TRANSFER AND REPAYMENT
SECTION
2.1 Registration
of Transfer of Debentures. This Debenture, when presented for
registration of transfer, shall (if so required by the Company) be duly endorsed
or be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company duly executed, by the Holder duly authorized in
writing.
SECTION
2.2 Loss, Theft,
Destruction of Debenture. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Debenture and, in the case of any such loss, theft or destruction, upon
receipt of indemnity or security reasonably satisfactory to the Company, or, in
the case of any such mutilation, upon surrender and cancellation of this
Debenture, the Company shall make, issue and deliver, in lieu of such lost,
stolen, destroyed or mutilated Debenture, a new Debenture of like tenor and
unpaid Principal Xxxxxx dated as of the date hereof This Debenture shall be held
and owned upon the express condition that the provisions of this Section 2.2 are
exclusive with respect to the replacement of a mutilated, destroyed, lost or
stolen Debenture and shall preclude any and all other rights and remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement of negotiable instruments or other securities
without the surrender thereof.
SECTION
2.3 Who Deemed
Absolute Owner. The Company may deem the Person in whose name
this Debenture shall be registered upon the registry books of the Company to be,
and may treat it as, the absolute owner of this Debenture (whether or not this
Debenture shall be overdue) for the purpose of receiving payment of or on
account of the Principal Amount of this Debenture and for all other purposes,
and the Company shall not be affected by any notice to the
contrary. All such payments shall be valid and effectual to satisfy
and discharge the liability upon this Debenture to the extent of the sum or sums
so paid.
SECTION
2.4 Repayment at
Maturity. At the Maturity Date, the Company shall repay the
outstanding Principal Amount of this Debenture in whole in cash, together with
all accrued and unpaid interest thereon, in cash, to the Maturity
Date.
ARTICLE
3
STATUS;
RESTRICTIONS ON TRANSFER
SECTION
3.1 Status of
Debenture. This Debenture constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
subject, as to enforceability, to general principles of equity and to principles
of bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors’ rights and remedies
generally.
SECTION
3.2 Restrictions
on Transfer. This Debenture has not been registered under the
Securities Act. The Holder by accepting this Xxxxxxxxx agrees that
this Debenture a may not be assigned or otherwise transferred unless and until
(i) the Company has received the opinion of counsel for the Holder that this
Debenture or (ii) a registration statement relating to this Debenture or such
shares has been filed by the Company and declared effective by the SEC.
ARTICLE
4
COVENANTS
SECTION
4.1 Notice of
Default. If any one or more events occur which constitute or
which, with notice, lapse of time, or both, would constitute an Event of
Default, the Company shall forthwith give notice to the Holder, specifying the
nature and status of the Event of Default or such other event(s), as the case
may be.
SECTION
4.2 Payment of
Obligations. So long as this Debenture shall be outstanding,
the Company shall pay, extend, or discharge at or before maturity, all its
respective material obligations and liabilities, including, without limitation,
tax liabilities, except where the same may be contested in good faith by
appropriate proceedings.
SECTION
4.3 Compliance
with Laws. So long as this Debenture shall be outstanding, the
Company shall comply with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities, except for such noncompliance
which would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries.
SECTION
4.6 No
Impairment. Except and to the extent waived or consented to by
the Holder or as otherwise permitted under the terms hereof, the Company will
not, by amendment of its Certificate of Incorporation or similar corporate
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Debenture and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
ARTICLE
5
EVENTS
OF DEFAULT; REMEDIES
SECTION
5.1 Events of
Default. “Event of Default” wherever
used herein means any one of the following events:
(i) the
Company shall default in the payment of principal of or interest on this
Debenture as and when the same shall be due and payable and, in the case of an
interest payment default, such default shall continue for three (3) Business
Days after the date such interest payment was due, or the Company shall fail to
perform or observe any other covenant, agreement, term, provision, undertaking
or commitment under this Debenture and such default shall continue for a period
of five (5) Business Days after the delivery to the Company of written notice
that the Company is in default hereunder or thereunder;
(ii) any
of the representations, warranties, or covenants made by the Company herein
Agreement or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection
with the execution and delivery of this Debenture shall be false or misleading
in a material respect on the Closing Date;
(iii) under
the laws of any jurisdiction not otherwise covered by clauses (iv) and (v)
below, the Company or any Subsidiary (A) becomes insolvent or generally not able
to pay its debts as they become due, (B) admits in writing its inability to pay
its debts generally or makes a general assignment for the benefit of creditors,
(C) institutes or has instituted against it any proceeding seeking (x) to
adjudicate it a bankrupt or insolvent, (y) liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors including any plan of compromise or arrangement or other
corporate proceeding involving or affecting its creditors or (z) the entry of an
order for relief or the appointment of a receiver, trustee or other similar
person for it or for any substantial part of its properties and assets, and in
the case of any such official proceeding instituted against it (but not
instituted by it), either the proceeding remains undismissed or unstayed for a
period of sixty (60) calendar days, or any of the actions sought in such
proceeding (including the entry of an order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its properties and assets) occurs or (D) takes
any corporate action to authorize any of the above actions;
(iv) the
entry of a decree or order by a court having jurisdiction in the premises
adjudging the Company or any Subsidiary a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under the Bankruptcy Code or any
other applicable Federal or state law, or appointing a receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of the Company or
of any substantial part of its property, or ordering the winding-up or
liquidation of its affairs, and any such decree or order continues and is
unstayed and in effect for a period of sixty (60) calendar days;
(v) the
institution by the Company or any Subsidiary of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under the Bankruptcy Code or any
other applicable federal or state law, or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator, assignee, trustee
or sequestrator (or other similar official) of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as and when they become due, or the taking of corporate action by the
Company in furtherance of any such action;
(vi) a
final judgment or final judgments for the payment of money shall have been
entered by any court or courts of competent jurisdiction against the Company and
remains undischarged for a period (during which execution shall be effectively
stayed) of thirty (30) days, provided that the
aggregate amount of all such judgments at any time outstanding (to the extent
not paid or to be paid, as evidenced by a written communication to that effect
from the applicable insurer, by insurance) exceeds One Hundred Thousand Dollars
($100,000);
(vii) it
becomes unlawful for the Company to perform or comply with its obligations under
this Debenture in any respect;
(viii) the
Common Shares shall no longer be traded in the over the counter market via the
NASDAQ OTCBB (the “Trading
Market” or, to the extent the Company becomes eligible to list its Common
Stock on any other national security exchange or quotation system, upon official
notice of listing on any such exchange or system, as the case may be, it shall
be the “Trading Market”) or suspended from trading on the Trading Market, and
shall not be reinstated, relisted or such suspension lifted, as the case may be,
within five (5) days;
(ix) the
Company shall fail to timely file all reports required to be filed by it with
the SEC pursuant to Section 13 or 15(d) of the Securities and Exchange Act of
1934, as amended (the “Exchange Act”), or otherwise required by the Exchange
Act; or
(x) the
Company shall default (giving effect to any applicable grace period) in the
payment of principal or interest as and when the same shall become due and
payable, under any indebtedness, individually or in the aggregate, of more than
Fifty Thousand Dollars ($50,000).
SECTION
5.2 Acceleration
of Maturity; Rescission and Annulment. If an Event of Default
occurs and is continuing, then and in every such case the Holder may, in
Holder’s sole and absolute discretion, by a notice in writing to the Company,
declare that any or all amounts owing or otherwise outstanding under this
Debenture are immediately due and payable and upon any such declaration this
Debenture or such portion thereof, as applicable, shall become immediately due
and payable in cash at a price of one hundred fifty percent (150%) of the
Principal Amount thereof, together with all accrued and unpaid interest thereon
to the date of payment; provided, however, in the case
of any Event of Default described in clauses (iii), (iv), (v) or (vii) of
Section 5.1, all amounts owing or otherwise outstanding under this Debenture
automatically shall become immediately due and payable without the necessity of
any notice or declaration as aforesaid. In the event that the Company
is obligated to pay any amount to the Holder in connection with an acceleration
of the maturity of this Debenture as set forth herein, the Company shall first
apply against such amount an amount equal to the outstanding amount owed by the
Holder to the Company under the Promissory Note, if any, and the amount
otherwise owed by the Company to the Holder in connection with an acceleration
of the maturity of this Debenture shall be reduced by the outstanding amount
owed by the Holder to the Company under the Promissory Note, with the Promissory
Note deemed paid by Holder to the extent of and with respect to such amount, and
if the amount due from the Company to the Holder in connection with an
acceleration of the maturity of this Debenture is equal to or greater than the
outstanding amount owed under the Promissory Note, the Company shall cancel and
deem the Promissory Note as paid in full in connection with the application of
the amount owed by the Holder to the Company under Promissory Note against the
amount otherwise owed by the Company to the Holder hereunder. The
Company shall immediately pay in cash to the Holder any remaining amount owed by
the Company to the Holder in connection with the acceleration of the maturity of
this Debenture as described herein, after the application of the outstanding
amount owed under the Promissory Note, if any, to such obligation.
SECTION
5.3 Maximum
Interest Rate. Notwithstanding anything herein to the contrary, if
at any time the applicable interest rate as provided for herein shall exceed the
maximum lawful rate which may be contracted for, charged, taken or received by
the Holder in accordance with any applicable law (the “Maximum Rate”), the rate of
interest applicable to this Debenture shall be limited to the Maximum
Rate. To the greatest extent permitted under applicable law, the
Company hereby waives and agrees not to allege or claim that any provisions of
this Debenture could give rise to or result in any actual or potential violation
of any applicable usury laws.
SECTION
5.4 Remedies Not
Waived. No course of dealing between the Company and the
Holder or any delay in exercising any rights hereunder shall operate as a waiver
by the Holder.
SECTION
5.5 Remedies. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder, 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 Debenture will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Debenture, that the Holder shall be entitled
to all other available remedies at law or in equity, and in addition to the
penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Debenture and to enforce specifically
the terms and provisions thereof, without the necessity of showing economic loss
and without any bond or other security being required.
ARTICLE
6
MISCELLANEOUS
SECTION
6.1 Notice of
Certain Events. In the case of the occurrence of any event of
a reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up of the Company, the Company shall cause to be mailed
to the Holder of this Debenture at its last address as it appears in the
Company’s security registry, at least twenty (20) days prior to the applicable
record, effective or expiration date hereinafter specified (or, if such twenty
(20) days’ notice is not possible, at the earliest possible date prior to any
such record, effective or expiration date), a notice thereof, including, if
applicable, the date on which such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up is expected to become
effective.
SECTION
6.2 Register. The
Company shall keep at its principal office a register in which the Company shall
provide for the registration of this Debenture. Upon any transfer of
this Debenture in accordance with Articles 2 and 3 hereof, the Company shall
register such transfer on the Debenture register.
SECTION
6.3 Withholding. To
the extent required by applicable law, the Company may withhold amounts for or
on account of any taxes imposed or levied by or on behalf of any taxing
authority in the United States having jurisdiction over the Company from any
payments made pursuant to this Debenture.
SECTION
6.4 Transmittal
of Notices. Except as may be otherwise provided herein, any
notice or other communication or delivery required or permitted hereunder shall
be in writing and shall be delivered personally, or sent by telecopier machine
or by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
(1) If
to the Company, to:
Skins,
Inc.
0 Xxxxxx
Xxxxxx, Xxxxx 00X
Hoboken,
New Jersey, 07030
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
(2) If
to the Holder, to:
Tangiers
Capital, LLC
0000
Xxxxx Xx. Xxxxx 000
San
Diego, CA 92101
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Each of
the Holder or the Company may change the foregoing address by notice given
pursuant to this Section 6.4.
SECTION
6.5 Attorneys’
Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Debenture, or any judgment based on this
Debenture, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all reasonable attorneys' fees and all reasonable costs, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds, whether
taxable or not, and that such reimbursement shall be included in any judgment or
final order issued in that proceeding. The "prevailing party" means
the party determined by the court to most nearly prevail and not necessarily the
one in whose favor a judgment is rendered.
SECTION
6.6 Governing
Law. This Debenture shall be governed by, and construed in
accordance with, the laws of the State of California (without giving effect to
conflicts of laws principles). With respect to any suit, action or
proceedings relating to this Debenture, the Company irrevocably submits to the
exclusive jurisdiction of the courts of the State of California sitting in Los
Angeles and the United States District Court located in the City of Los Angeles
and hereby waives, to the fullest extent permitted by applicable law, any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. Subject to applicable law, the Company agrees that final
judgment against it in any legal action or proceeding arising out of or relating
to this Debenture shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which judgment shall be conclusive evidence thereof and the
amount of its indebtedness, or by such other means provided by law.
SECTION
6.7 Waiver of
Jury Trial. To the fullest extent permitted by law, each of the parties
hereto hereby knowingly, voluntarily and intentionally waives its respective
rights to a jury trial of any claim or cause of action based upon or arising out
of this Debenture or any other document or any dealings between them relating to
the subject matter of this Debenture and other documents. Each party
hereto (i) certifies that neither of their respective representatives, agents or
attorneys has represented, expressly or otherwise, that such party would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Debenture by, among
other things, the mutual waivers and certifications herein.
SECTION
6.8 Headings. The
headings of the Articles and Sections of this Debenture are inserted for
convenience only and do not constitute a part of this Debenture.
SECTION
6.9 Payment
Dates. Whenever any payment hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day.
SECTION
6.10 Binding
Effect. Each Holder by accepting this Xxxxxxxxx agrees to be
bound by and comply with the terms and provisions of this
Debenture.
SECTION
6.11 No
Stockholder Rights. Except as otherwise provided herein, this
Debenture shall not entitle the Holder to any of the rights of a stockholder of
the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company.
SECTION
6.12 Facsimile
Execution. Facsimile execution of this Debenture shall be
deemed original.
IN
WITNESS WHEREOF, the Company has caused this Debenture to be signed by its duly
authorized officer on the date of this Debenture.
SKINS,
INC.
By:
______________________________________
Name:
____________________________________
Title:
_____________________________________
