ex10-3.htm


     

    Exhibit
      10.3

     

     

    


    THE
      SECURITY REPRESENTED HEREBY, AND THE
      SECURITIES ISSUABLE UPON CONVERSION OR REDEMPTION HEREOF, HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND
      NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
      TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
      REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL
      FOR
      THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL
      FOR
      THIS COMPANY, IS AVAILABLE.

    


    


    VEMICS,
      INC.

    


    SECURED
      CONVERTIBLE PROMISSORY
      NOTE

    BRIDGE
      FUNDING

    


    US$445,000       December
      2, 2005

    


     

    


    FOR
      VALUE RECEIVED, Vemics, Inc., a
      corporation duly organized and validly existing under the laws of the state
      of
Nevada(the
“Company”),
      promises to pay to  Valiant
      Holding Co. the registered
      holder of this secured convertible promissory note (“Note”)
      and its successors and assigns (the
“Holder”),
      the principal sum of  Four
      Hundred Forty Five Thousand Dollars  ($445,000) (“Loan
      Proceeds”) (see Exhibit
“B”) in accordance with
      the terms hereof, and interest on the principal sum
      outstanding in accordance with the terms hereof. Accrual of interest on the
      outstanding principal amount shall commence on the date hereof and shall
      continue until payment in full of the outstanding principal amount has been
      made
      or duly provided for, or until the entire outstanding principal amount of the
      Note has been converted.

    


    This
      Note has been issued pursuant to a
      subscription agreement executed by the Holder, dated of even date herewith,
      in
      the aggregate principal amount of $445,000 (collectively, the “Subscription
      Agreement”). The Loan
      Proceeds shall be paid to the Company as follows: (i) $282,000 payable on the
      date hereof, and (ii) $163,000 payable within 5 days from the date
      hereof.

    


    The
      following is a statement of the
      rights of the Holder of this Note and the terms and conditions to which this
      Note is subject, and to which the Holder, by acceptance of this Note,
      agrees:

    


    1.  Principal
      Repayment; Prepayment. The
      outstanding principal amount of this Note and any and all accrued but unpaid
      interest thereon shall be payable on or before November 31, 2006 (the
“Maturity
      Date”), unless this Note
      has been converted or redeemed as described below. The Company will have the
      option to extend this note for one twelve month period.

    


    2. Interest.
      The Holder is entitled to receive
      interest on the outstanding principal amount of this Note at the rate of twelve
      percent (10.0%) per annum. Interest shall be due and payable on the Maturity
      Date. In the event of this note being extended by the company, interest on
      any
      and all extensions will include a 12% interest on the original principle amount
      for the extended period.

    


    3. Ranking
      and
      Security Agreement. The
      obligations of the Company under this Note shall rank senior to any and all
      indebtedness of the Company currently existing and incurred hereafter. The
      Company, Holder and the Company’s wholly-owned subsidiary, First Asia Fuel
      Corporation, shall enter into a Security Agreement in form and substance
      substantially in the form attached hereto as  Exhibit
      A.

    


    4. Conversion.

    


    (a) Optional
      Conversion. From and after
      the date hereof, Holder may elect, at its option, to convert all or any portion
      of the outstanding principal amount of this Note, and all accrued interest
      thereon, into shares of common stock of the Company (“Common Stock”), at the
      Conversion Price.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      (b) Conversion
        Price. For purposes of this
        Note, the “Conversion
        Price” shall mean, with
        respect to a conversion of the outstanding principal amount of this Note,
        plus
        accrued but unpaid interest thereon, into shares of Common Stock, the price
        per
        share of Common Stock equal to 75% of the market price of the Company’s Common
        Stock on the day immediately prior to conversion. For purposes hereof “Market
        Price” shall be the average closing sale price of the Company’s Common Stock
        during each of the ten trading days prior to a conversion date. The Conversion
        Price and the number of shares of Common Stock into which the outstanding
        principal amount of this Note may convert shall be subject to adjustment
        from
        time to time in accordance with Section 4 hereof.

    

     

    (c) Mechanics
      of
      Conversion. Upon any
      conversion of the outstanding principal amount of this Note, (i) such principal
      amount converted shall be converted and such converted portion of this Note
      shall become fully paid and satisfied, (ii) the Holder shall surrender and
      deliver this Note, duly endorsed, to the Company’s office or such other address
      which the Company shall designate against delivery of the certificates
      representing the new securities of the Company; (iii) the Company shall promptly
      deliver a duly executed Note to the Holder in the principal amount, if any,
      that
      remains outstanding after any such conversion; and (iv) in exchange for all
      or
      any portion of the surrendered Note described in clause (ii) of this Section
      4(c), the Company shall provide the Holder with irrevocable instructions
      addressed to the Company’s transfer and exchange agent, as applicable, to issue
      such number of shares of Common Stock.

    


    (d)  Issue
      Taxes. The Holder shall pay
      any and all issue and other taxes that may be payable with respect to any issue
      or delivery of shares of Common Stock on conversion of this Note pursuant
      hereto;  provided,  however,
      that the Holder shall not be obligated
      to pay any transfer taxes resulting from any transfer requested by any holder
      in
      connection with any such conversion.

     

    (e)  Elimination
      of Fractional Interests. No
      fractional shares of Common Stock shall be issued upon conversion of this Note,
      nor shall the Company be required to pay cash in lieu of fractional interests,
      it being the intent of the parties that all fractional interests shall be
      eliminated and that all issuances of the Common Stock shall be rounded up to
      the
      nearest whole share.

     

    5. Redemption. The
      Company may redeem this Note
      at anytime upon thirty (30) days prior written notice at a redemption price
      of
      100% of the principal amount of the Note plus accrued and unpaid interest.
      During such thirty day notice period Holder may convert all or any portion
      of
      this Note in accordance with Section 4 hereof.

    


    6. Rights
      upon
      Liquidation, Dissolution or Winding Up. In the event of any liquidation,
      dissolution or winding up of the Company, either voluntary or involuntary,
      the
      holders of the Notes shall be entitled to receive, prior and in preference
      to
      any distribution of any of the assets of the Company or to the holders of any
      equity security of the Company, an amount equal to the unpaid and unconverted
      principal face amount of their Notes and any accrued and unpaid interest
      thereon.

    


    7. Affirmative
      Covenants of the Company.
      The Company hereby agrees that, so long as the Note remains outstanding and
      unpaid, or any other amount is owing to the Holder hereunder, the Company
      will:

    


    (a) Corporate
      Existence
      and Qualification. Take the
      necessary steps to preserve its corporate existence and its right to conduct
      business in all states in which the nature of its business requires
      qualification to do business.

    


    (b) Books
      of
      Account. Keep its books of
      account in accordance with good accounting practices.

    


    (c) Insurance.
      Maintain insurance with responsible
      and reputable insurance companies or associations, as determined by the Company
      in its sole but reasonable discretion, in such amounts and covering such risks
      as is usually carried by companies engaged in similar businesses and owning
      similar properties in the same general areas in which the Company
      operates.

    


    (d) Preservation
      of
      Properties; Compliance with Law. Maintain and preserve
      all of its
      properties that are used or that are useful in the conduct of its business
      in
      good working order and condition, ordinary wear and tear excepted and comply
      with the charter and bylaws or other organizational or governing documents
      of
      the Company, and any law, treaty, rule or regulation, or determination of an
      arbitrator or a court or other governmental authority, in each case applicable
      to or binding upon the Company or any of its property or to which each the
      Company or any of its property is subject.

     

    (e) Taxes.
      Duly pay and discharge all taxes or
      other claims, which might become a lien upon any of its property except to
      the
      extent that any thereof are being in good faith appropriately contested with
      adequate reserves provided therefor.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) Reservation
      of
      Shares. The Company shall
      at all times have authorized, and reserved for the purpose of issuance, a
      sufficient number of shares of Common Stock and issuable upon conversion of
      this
      Note and exercise of the Warrants to provide for the issuance of all of such
      shares. Prior to complete conversion of this Notes and exercise of the Warrants,
      the Company shall not reduce the number of shares of Common Stock reserved
      for
      issuance hereunder without the written consent of the Holder except for a
      reduction proportionate to a reverse stock split effected for a business purpose
      other than affecting the requirements of this Section, which reverse stock
      split
      affects all shares of Common Stock equally.

    


    (g) Use
      of
      Proceeds. The proceeds of
      the Notes will be used for working capital purposes.

    


    (h) Financial
      Information. For so long as
      the Company is not filing periodic reports with the Securities and Exchange
      Commission pursuant to Section 13 or Section 15 of the Exchange Act, the Company
      shall deliver to the Holder, as soon as available after the end of each fiscal
      year of the Company, the audited financial statements of the Company for such
      fiscal year then ended, together with the written opinion of the auditor
      rendered in connection therewith. With respect to such financial statements,
      if
      for any fiscal year, the Company shall have any subsidiary whose accounts are
      consolidated with those of the Company, then in respect of such period, the
      financial statements delivered pursuant to the foregoing section shall be the
      consolidated and consolidating financial statements of the Company and all
      such
      consolidated subsidiaries.

     

                   
      8. Negative
      Covenants of the Company.
      The Company hereby agrees that, so long as all or any portion of this Note
      remains outstanding and unpaid it will not, nor will it permit any of its
      subsidiaries, if any, without the consent of the Holder (as defined in Section
      16 hereof), to:

    


    (a) Indebtedness
      for
      Borrowed Money. Incur, or
      permit to exist, any Indebtedness (as defined below) for borrowed money in
      excess of $50,000 during each fiscal year of the Company, with rights superior
      to Holder, except in the ordinary course of the Company’s business. For purposes
      of this Note, “Indebtedness”
shall
      mean (a) all obligations of the
      Company for borrowed money or with respect to deposits or advances of any kind,
      (b) all obligations of the Company evidenced by bonds, debentures, notes or
      other similar instruments, (c) all obligations of the Company for the deferred
      purchase price of property or services, except current accounts payable arising
      in the ordinary course of business and not overdue beyond such period as is
      commercially reasonable for the Company’s business, (d) all obligations of the
      Company under conditional sale or other title retention agreements relating
      to
      property purchased by the Company, (e) all payment obligations of the Company
      with respect to interest rate or currency protection agreements, (f) all
      obligations of the Company as an account party under any letter of credit or
      in
      respect of bankers’ acceptances, (g) all obligations of any third party secured
      by property or assets of such Person (regardless of whether or not the Company
      is liable for repayment of such obligations), except for obligations to secure
      Indebtedness incurred within the limitations of this Section 8(a); (h) all
      guarantees of the Company and (i) the redemption price of all redeemable
      preferred stock of the Company, but only to the extent that such stock is
      redeemable at the option of the holder or requires sinking fund or similar
      payments at any time prior to the Maturity Date.

    


    (b) Mergers,
      Acquisitions and Sales of Assets. Enter into any merger
      or consolidation
      or liquidate, windup or dissolve itself or sell, transfer or lease or otherwise
      dispose of all or any substantial part of its assets or technologies (other
      than
      sales of inventory and obsolescent equipment in the ordinary course of
      business); except: (i) if the Company is the surviving corporation and a change
      in control has not occurred, (ii) that any subsidiary of the Company may merge
      into or consolidate with any other subsidiary which is wholly-owned by the
      Company, and (iii) any subsidiary which is wholly-owned by the Company may
      merge
      with or consolidate into the Company provided that the Company is the surviving
      corporation.

    


    (c) Loans;Lend
      or advance money, credit or
      property to (by capital contribution, loan, purchase or otherwise) any firm,
      corporation, or other Person except (i) investments in United States Government
      obligations, certificates of deposit of any banking institution with combined
      capital and surplus of at least $200,000,000; (iii) accounts receivable arising
      out of sales in the ordinary course of business; and (iv) loans to subsidiaries,
      if any. The Company may enter into an acquisition or merger deemed beneficial
      by
      the board of directors with mutual consent of the Holder of this
      note.

    


    (d) Dividends
      and
      Distributions. Pay
      dividends or make any other distribution on shares of the capital stock of
      the
      Company.

    


    (e) Liens.
      Create, assume or permit to exist, any
      lien on any of its property or assets now owned or hereafter acquired except
      (i)
      liens in favor of the Holder; (ii) liens granted to secure Indebtedness incurred
      within the limitations of Section 8(a) hereof; (iii) liens incidental to the
      conduct of its business or the ownership of its property and assets which were
      not incurred in connection with the borrowing of money or the obtaining of
      advances or credit and which do not materially impair the use thereof in the
      operation of its business; (iv) liens for taxes or other governmental charges
      which are not delinquent or which are being contested in good faith and for
      which a reserve shall have been established in accordance with generally
      accepted accounting principles; and (v) purchase money liens granted to secure
      the unpaid purchase price of any fixed assets purchased within the limitations
      of Section 8(h) hereof.

    


    (f) Contingent
      Liabilities. Assume,
      endorse, be or become liable for or guarantee the obligations of any Person,
      contingently or otherwise, excluding however, the endorsement of negotiable
      instruments for deposit or collection in the ordinary course of business or
      guarantees of the Company made within the limitations of Section 8(a)
      hereof.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) Sales
      of
      Receivables; Sale-
      Leasebacks. Sell, discount
      or otherwise dispose of notes, accounts receivable or other obligations owing
      to
      the Company, with or without recourse, except for the purpose of collection
      in
      the ordinary course of business; or sell any asset pursuant to an arrangement
      to
      thereafter lease such asset from the purchaser thereof.

    


    
      (h) Capital
        Expenditures; Capitalized Leases. Expend in the aggregate
        for the
        Company and all its subsidiaries in excess of $50,000 in any fiscal year
        for
        Capital Expenditures (as defined below), including payments made on account
        of
        Capitalized Leases (as defined below). Except as defined in the business
        plan
        (Attached as Exhibit “C”) as part of the operational build out of the company
        and expansion of its office and technical infrastrucre,
        which will require Capital
        Expenditures and / or Capitalized
        Leases, for purposes of the
        foregoing, Capital Expenditures shall include payments made on account of
        any
        deferred purchase price or on account of any indebtedness incurred to finance
        any such purchase price not defined in the business plan as of the date of
        this
        note. “Capital
        Expenditures” shall mean
        for any period, the aggregate amount of all payments made by any Person directly
        or indirectly for the purpose of acquiring, constructing or maintaining fixed
        assets, real property or equipment which, in accordance with generally accepted
        accounting principles, would be added as a debit to the fixed asset account
        of
        such Person, including, without limitation, all amounts paid or payable with
        respect to Capitalized Lease Obligations and interest which are required
        to be
        capitalized in accordance with generally accepted accounting principles.
        “Capitalized
        Lease” shall mean any
        lease the obligations to pay rent or other amounts under which constitute
        Capitalized Lease Obligations. “Capitalized
        Lease
        Obligations” shall mean as
        to any Person, the obligations of such Person to pay rent or other amounts
        under
        a lease of (or other agreement conveying the right to use) real and/or personal
        property which obligations are required to be classified and accounted for
        as a
        capital lease on a balance sheet of such Person under generally accepted
        accounting principles and, for purposes of this Note, the amount of such
        obligations shall be the capitalized amount thereof, determined in accordance
        with generally accepted accounting principles.



    (i) Nature
      of
      Business. Materially alter
      the nature of the Company’s business or otherwise engage in any business other
      than the business engaged in or proposed to be engaged in on the date of this
      Note.

    


    (j) Stock
      of
      Subsidiaries. Sell or
      otherwise dispose of any subsidiary, if any, or permit a subsidiary, if any,
      to
      issue any additional shares of its capital stock except pro rata to its
      stockholders.

    


    (k) ERISA.
      (i) Terminate any plan (“Plan”)
      of a type described in Section 402l(a)
      of the Employee Retirement Income Security Act of l974, as amended from time
      to
      time (“ERISA”)
      in respect of which the Company is an
“employer” as defined in Section 3(5) of ERISA so as to result in any material
      liability to the Pension Benefit Guaranty Corporation (the “PBGC”)
      established pursuant to Subtitle A of
      Title IV of ERISA, (ii) engage in or permit any person to engage in any
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
      the Internal Revenue Code of 1954, as amended) involving any Plan which would
      subject the Company to any material tax, penalty or other liability, (iii)
      incur
      or suffer to exist any material “accumulated funding deficiency” (as defined in
      Section 302 of ERISA), whether or not waived, involving any Plan, or (iv) allow
      or suffer to exist any event or condition, which presents a material risk of
      incurring a material liability to the PBGC by reason of termination of any
      Plan.

    


    (l) Accounting
      Changes. Make, or permit
      any subsidiary to make any change in their accounting treatment or financial
      reporting practices except as required or permitted by generally accepted
      accounting principles in effect from time to time.

    


    (m) Transactions
      with
      Affiliates. Directly or
      indirectly, purchase, acquire or lease any property from, or sell, transfer
      or
      lease any property to, or enter into any other transaction, with any Affiliate
      (as defined below) except in the ordinary course of business and at prices
      and
      on terms not less favorable to it than those which would have been obtained
      in
      an arm’s-length transaction with a non-affiliated third party.  “Affiliate”  as
      applied to any Person,
      shall mean any other Person directly or indirectly through one or more
      intermediaries controlling, controlled by, or under common control with, that
      Person. For the purposes of this definition, “control” (including with
      correlative meanings, the terms “controlling,” “controlled by” and “under common
      control with”), as applied to any Person, means the possession, directly or
      indirectly, of the power to direct or cause the direction of the management
      and
      policies of that Person, whether through the ownership of voting securities
      or
      by contract or otherwise.

    


                     
      9. Events
      of
      Default. The Note shall
      become immediately due and payable at the option of the Holder, without notice
      or demand, upon any one or more of the following events or occurrences
      (“Events
      of Default”):

     

    (a) if
      any portion of the Note is
      not paid when due;

     

    (b) if
      any representation or
      warranty of the Company made in this Note, the Transaction Documents (as defined
      in the Holder Subscription Agreement), or in any certificate, report or other
      financial statement or other instrument or document delivered pursuant hereto,
      or any notice, certificate, demand or request delivered to the Holder pursuant
      to this Note, the Transaction Documents (as defined in the Holder Subscription
      Agreement), or any other document proves to be false or misleading in any
      material respect as of the time when the same is made;

     

    (c) if
      the Company consummates a
      transaction which would cause this Note or any exercise of any Holder’s rights
      under this Notes and the Warrants (i) to constitute a non-exempt prohibited
      transaction under ERISA, (ii) to violate a state statute regulating governmental
      plans or (iii) otherwise to subject the Company to liability for violation
      of
      ERISA or such state statute;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) if
      any final judgment for the
      payment of money is rendered against the Company and the Company does not
      discharge the same or cause it to be discharged or vacated within one hundred
      twenty (120) days from the entry thereof, or does not appeal therefrom or from
      the order, decree or process upon which or pursuant to which said judgment
      was
      granted, based or entered, and does not secure a stay of execution pending
      such
      appeal within one hundred twenty (120) days after the entry
      thereof;

     

    (e) subject
      to the provisions of
      Section 7(f) hereof, if any taxes are not paid before
      delinquency;

     

    (f) if
      the Company makes an
      assignment for the benefit of creditors or if the Company generally does not
      pay
      its debts as they become due;

     

    (g) if
      a receiver, liquidator or
      trustee of the Company is appointed or if the Company is adjudicated a bankrupt
      or insolvent, or if any petition for bankruptcy, reorganization or arrangement
      pursuant to federal bankruptcy law, or any similar federal or state law, is
      filed by or against, consented to, or acquiesced in, by the Company or if any
      proceeding for the dissolution or liquidation of the Company is instituted;
      however, if such appointment, adjudication, petition or proceeding is
      involuntary and is not consented to by the Company, upon the same not being
      discharged, stayed or dismissed within 60 days;

     

    (h) if
      the Company defaults under
      any other mortgage or security agreement covering any part of its
      property;

     

    (i) except
      for specific defaults
      set forth in this Section 9, if the Company defaults in the observance or
      performance of any other term, agreement or condition of this Note, the
      Transaction Documents (as defined in the Subscription Agreement), and the
      Company fails to remedy such default within thirty (30) days after notice by
      the
      Holder to the Company of such default, or, if such default is of such a nature
      that it cannot with due diligence be cured within said thirty (30) day period,
      if the Company fails, within said thirty (30) days, to commence all steps
      necessary to cure such default, and fails to complete such cure within ninety
      (90) days after the end of such thirty (30) day period; and

     

    (j) if
      any of the following exist
      uncured for forty-five (45) days following written notice to the Company in
      any
      the Transaction Documents (as defined in the Subscription Agreement): (i) the
      failure of any representation or warranty made by the Company to be true and
      correct in all material respects or (ii) the Company fails to provide the Holder
      with the written certifications and evidence referred to in this
      Note.

     

                   
      10. Holder
      Not
      Deemed a Stockholder. No
      Holder, as such, of this Note shall be entitled (prior to conversion or
      redemption of this Note into Common Stock, and only then to the extent of such
      conversion) to vote or receive dividends or be deemed the holder of shares
      of
      the Company for any purpose, nor shall anything contained in this Note be
      construed to confer upon the Holder hereof, as such, any of the rights at law
      of
      a stockholder of the Company prior to the issuance to the holder of this Note
      of
      the shares of Common Stock which the Holder is then entitled to receive upon
      the
      due conversion of all or a portion of this Note. Notwithstanding the foregoing,
      the Company will provide the Holder with copies of the same notices and other
      information given to the stockholders of the Company generally,
      contemporaneously with the giving thereof to the
      stockholders.

    


    11. Confidential
      Information. The Holder
      agrees that it will keep confidential and will not disclose, divulge or use
      for
      any purpose, other than to monitor its investment in the Company, any
      confidential information obtained from the Company pursuant to the terms of
      this
      Agreement, including without limitation information provided pursuant to Section
      7(h), unless such confidential information (i) is known or becomes known to
      the
      public in general (other than as a result of a breach of this Section 11 by
      the
      Holder), (ii) is or has been independently developed or conceived by the Holder
      without use of the Company's confidential information or (iii) is or has been
      made known or disclosed to the Holder by a third party without a breach of
      any
      obligation of confidentiality such third party may have to the
      Company;  provided,  however,
      that the Holder may disclose
      confidential information to its attorneys, accountants, consultants, and other
      professionals to the extent necessary to obtain their services in connection
      with monitoring its investment in the Company or as may be required by law,
      provided that the Holder takes reasonable steps to minimize the extent of any
      such required disclosure.

    


    12. Mutilated,
      Destroyed, Lost or Stolen Notes. In case this Note shall
      become
      mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute
      and deliver a new note of like principal amount in exchange and substitution
      for
      the mutilated or defaced Note, or in lieu of and in substitution for the
      destroyed, lost or stolen Note. In the case of a mutilated or defaced Note,
      the
      Holder shall surrender such Note to the Company. In the case of any destroyed,
      lost or stolen Note, the Holder shall furnish to the Company (a) evidence to
      its
      satisfaction of the destruction, loss or theft of such Note and (b) such
      security or indemnity as may be reasonably required by the Company to hold
      the
      Company harmless.

    


    13. Waiver
      of
      Demand, Presentment, Etc. The Company hereby expressly
      waives demand and presentment for payment, notice of nonpayment, protest, notice
      of protest, notice of dishonor, default and nonpayment, notice of acceleration
      or intent to accelerate, bringing of suit and diligence in taking any action
      to
      collect amounts called for hereunder, and all rights of set-off, defenses,
      deduction or counterclaim with respect to any amount owing hereunder, and shall
      be directly and primarily liable for the payment of all sums owing and to be
      owing hereunder, regardless of and without any notice, diligence, act or
      omission as or with respect to the collection of any amount called for
      hereunder.

    


    14. Payment.
      Except as otherwise provided for
      herein, all payments with respect to this Note shall be made in lawful currency
      of the United States of America, at the option of the Holder, (i) at the
      principal office of the Holder, located at The Chrysler Building, 405 Lexington
      Avenue, 26th Floor, New York, NY 10174, or such other place or places as may
      be
      reasonably specified by the Holder of this Note in a written notice to the
      Company at least ten (10) business days before a given payment date, or (ii)
      by
      mailing a good check in the proper amount to the Holder at least two days prior
      to the due date of each payment or otherwise transferring funds so as to be
      received by the Holder on the due date of each such payment;  provided,  however,
      that the Company shall make payment by
      wire transfer to an account such Holder may specify in writing to the Company
      at
      least two days prior to the due date of each payment. Payment shall be credited
      first to the accrued interest then due and payable and the remainder applied
      to
      principal. The Holder shall keep a record of each payment of principal and
      interest with respect thereto.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    15. Assignment.
      The rights and obligations of the
      Company and the Holder of this Note shall be binding upon, and inure to the
      benefit of, the permitted successors, assigns, heirs, administrators and
      transferees of the parties hereto. Notwithstanding the foregoing, the Holder
      may
      not assign, pledge or otherwise transfer this Note without the prior written
      consent of the Company. Interest and principal are payable only to the
      registered Holder of this Note in the Note Register.

     

                    16. Waiver
      and
      Amendment. Any provision of
      this Note, including, without limitation, the due date hereof, and the
      observance of any term hereof, may be amended, waived or modified (either
      generally or in a particular instance and either retroactively or prospectively)
      only with the written consent of the Company and the Holder.

    


    17. Notices.
      Any notice, request or other
      communication required or permitted hereunder shall be in writing and shall
      be
      deemed to have been duly given if personally delivered or mailed by registered
      or certified mail, postage prepaid, or delivered by facsimile transmission,
      to
      the Company at the address or facsimile number set forth herein or to the Holder
      at its address or facsimile number set forth in the records of the Company.
      Any
      party hereto may by notice so given change its address for future notice
      hereunder. Notice shall conclusively be deemed to have been given when
      personally delivered or when deposited in the mail in the manner set forth
      above
      and shall be deemed to have been received when delivered or, if notice is given
      by facsimile transmission, when delivered with confirmation of
      receipt.

    


    18. Governing
      Law; Jurisdiction. This
      Note, and all matters arising directly or indirectly here from, shall be
      governed by and construed in accordance with the laws of the Nevada,
      notwithstanding the choice of law or
      conflicts of law principles thereof. Each of the parties hereto hereby (i)
      irrevocably consents and submits to the sole exclusive jurisdiction of the
      United States District Court for the District of New Jersey (and of the
      appropriate appellate courts therefrom) in connection with any suit, action
      or
      other proceeding arising out of or relating to this Note, (ii) irrevocably
      waives, to the fullest extent permitted by law, any objection that it may now
      or
      hereafter have to the laying of the venue of any such suit, action or proceeding
      in any such court or that any such suit, action or proceeding which is brought
      in any such court has been brought in an inconvenient forum, and (iii) agrees
      that service of any summons, complaint, notice or other process relating to
      such
      suit, action or other proceeding may be effected in the manner provided by
      Section 17.

    


    19. Severability.
      If one or more provisions of this Note
      are held to be unenforceable under applicable law, such provisions shall be
      excluded from this Note, and the balance of this Note shall be interpreted
      as if
      such provisions were so excluded and shall be enforceable in accordance with
      its
      terms.

    


    20. Headings.
      Section headings in this Note are for
      convenience only, and shall not be used in the construction of this
      Note.

    


    [SIGNATURE
      PAGE
      FOLLOWS]

    


    


    
      


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    IN
      WITNESS
      WHEREOF, the Company has
      caused this Note to be issued as of the date first above
      written.

    


    


    VEMICS,
      INC.

    


    By:
/s/ 
Fred
      Zolla                  


    Name:
      Fred Zolla

    Title:
      CEO

    


    


    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    EXHIBIT
      A

     

    


    JOINT
      SECURITY AGREEMENT

    


    


    THIS
      JOINT SECURITY
      AGREEMENT(this
“Agreement”),
      dated as of December 2, 2005 (the
“Effective
      Date”), is made by and
      among  Vemics,
      Inc., a Nevadacorporation
      (the “Company”
or
“Debtor”),
      and  Valiant
      Holding Company, Inc.  (the “Secured
      Party”).

    


    WHEREAS,
      the Secured Party is purchasing
      from the Company for Four Hundred Forty-Five Thousand Dollars ($445,000), a
      Twelve secured promissory note dated of even date herewith (the “Note”);
      and

     

    WHEREAS,
      the obligation of the Secured
      Party to purchase the Note is conditioned upon, among other things, the
      execution and delivery of this Agreement by the Debtor to the Secured
      Party.

    


    NOW,
      THEREFORE, the Debtors and the
      Secured Party agree as follows:

    


    1. Definitions
      and Incorporation by Reference. Capitalized terms used
      but not defined
      in this Agreement shall have the meanings assigned to such terms in the Note.
      In
      addition, terms not defined in this Agreement or the Note that are defined
      in
      the Nevada Uniform Commercial Code (the “Code”)
      shall have the same meaning in this
      Agreement as in the Code.

    


    2. Grant
      of
      Security Interest. The
      Debtors hereby grant to the Secured Party a lien and security interest in the
      Collateral (as defined in Section 3 below) to secure the payment and performance
      of all of the Obligations (as defined in Section 4 below). The lien and security
      interest granted to the Secured Party under this Agreement shall constitute
      a
      priority lien and security interest senior to all other liens and security
      interests, subject to the current lien and security interest held by Valiant
      Holding Company, Inc. The Debtor shall not grant any liens or security interests
      in and to the Collateral which shall be senior to or have a priority over the
      lien and security interest granted to Secured Party
      hereunder.

    


    3. Collateral.
      Each of the Debtors hereby grant to
      the Secured Party a security interest in all of Debtors’ right, title and
      interest in all property and interests of Debtors, tangible or intangible,
      whether now or hereafter existing, wherever located,
      including:

    


    
      	
               

            	
              (a)

            	
              Accounts,
                including but not
                limited to, all accounts, all rights of the Debtors to payment for
                goods
                sold or leased or for services rendered, all accounts receivable
                of the
                Debtors; all obligations owing to the Debtors evidenced by an instrument
                or chattel paper; all obligations owing to the Debtors of any kind
                or
                nature, including all writings, if any, evidencing the same, including
                all
                instruments, drafts, acceptances and chattel paper; any and all proceeds
                of any of the foregoing. Further included within the term “Accounts” are
                all right, title and interest of Debtors in and any security and
                liens
                with respect to any Account, and all Accounts, Documents and Contract
                Rights of Debtors as defined in the Uniform Commercial Code as enacted
                in
                the State of Nevada (the “Uniform Commercial Code”);
                and

            


    

     

    
      	
               

            	
              (b)

            	
              Investment
                Property, including all
                of the Debtors’ investment property (as defined in the Uniform Commercial
                Code) and all of the Debtors’ other securities (whether certificated or
                uncertificated), security entitlements, financial assets, securities
                accounts, commodity contracts, and commodity accounts (as each such
                term
                is defined in the Uniform Commercial Code), including all substitutions
                and additions thereto, all dividends, distributions and sums distributable
                or payable from, upon or in respect of such property, and all rights
                and
                privileges incident to such
                property.

            


    

     

    
      	
               

            	
              (c)

            	
              Instruments
                and Chattel Paper,
                including all instruments and chattel paper as defined in the Uniform
                Commercial Code and all proceeds thereof;
                and

            


    

     

    
      	
               

            	
               
(d)

            	
               Intellectual
                Property,
                including any and all rights to licensing agreements;
                and

            


    

     

    
      	
               

            	
              (e)

            	
              General
                Intangibles, including but
                not limited to, all general intangibles as defined in the Uniform
                Commercial Code and all proceeds thereof, including without limitation,
                any and all rights of Debtors to any refund of any tax assessed against
                Debtors or paid by Debtors, loss carry-back tax refunds, insurance
                premium
                rebates, unearned premiums, insurance proceeds, chooses in action,
                names,
                trade names, goodwill, trade secrets, computer programs, computer
                records,
                data, computer software, customer lists, patents, patent rights,
                patent
                applications, patents pending, patent licenses or assignments, development
                ideas and concepts, licenses, permits, franchises, literary rights,
                rights
                to performance, trademarks, trademark applications, trademark rights,
                logos, intellectual property, copyrights, proprietary or other processes,
                drawings, designs, diagrams, plans, reports, charts, catalogs, manuals,
                research, literature, proposals and other reproductions on paper
                or
                otherwise, of any and all concepts or ideas, whether or not related
                to the
                business or operations of Debtors;
                and

            


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (f)

            	
              Equipment
                as defined in the
                Uniform Commercial Code, including but not limited to, all equipment,
                vehicles, machinery, tools, furniture, fixtures, trade fixtures and
                parts.
                Further included within the term “Equipment” is all tangible personal
                property utilized in the conduct of the Debtors’ business and all
                additions, accessions, substitutions, components, and replacements
                thereto, therefor and thereof and all proceeds thereof;
                and

            


    

     

    
      	
               

            	
              (g)

            	
              Inventory
                as defined in the
                Uniform Commercial Code, including without limitation, all raw materials
                and other materials and supplies, work-in-progress and finished goods
                and
                any products made or processed there from and all substances, if
                any,
                commingled therewith or added thereto;
                and

            


    

     

    
      	
               

            	
              (h)

            	
              all
                products and proceeds of the
                above, including insurance proceeds (collectively, the “Collateral”).

            


    

    


    4. Obligations.
      The security interest granted pursuant
      to this Agreement secures the payment and performance of the following
      indebtedness, liabilities and obligations (collectively, the “Obligations”):

    


    (a)  
All
      indebtedness,
      liabilities and obligations of the Company to the Secured Party arising under
      the Note; and

    


    (b)  
All
      indebtedness,
      liabilities and obligations of the Debtor now or hereafter existing under this
      Agreement; and

    


    (c)  
the
      payment and
      performance of all debts, liabilities and obligations of Debtor to Secured
      Party, fixed or contingent, joint or several, now existing or hereafter arising,
      including but not limited to all obligations of Debtor now or hereafter existing
      under this Agreement, the Note and any other agreement or document executed
      in
      connection with any of the foregoing.

    


    5. Representations,
      Warranties and Covenants.
      Each of the Debtors hereby represent, warrant and covenant as
      follows:

    


    5.1 Power
      and
      Authority. The Debtors have
      full power and authority to enter into this Agreement, grant to the Secured
      Party a valid security interest in the Collateral and perform all of its
      obligations under this Agreement, no further action by the Debtors being
      necessary. The execution, delivery and performance by the Debtors of this
      Agreement does not conflict with, or constitute a breach or default under,
      any
      judgment, indenture, loan agreement contract or other agreement or instrument
      to
      which the Debtors are a party or by which the Debtors or any of its property
      is
      bound.

    


    5.2 Governmental
      Authorization. No
      authorization, consent or approval or other action by, and no notice to or
      other
      filing with, any governmental authority or regulatory body is required for
      the
      grant by the Debtors of the security interest granted pursuant to this
      Agreement, the due execution and delivery by the Debtors of this Agreement
      or
      the performance by the Debtors of any of its obligations under this
      Agreement.

    


    5.3 Title
      to
      Collateral. Subject to the
      security interest granted by this Agreement (the “Existing
      Liens”),the
      Debtors are the owners and holders
      of all the Collateral, free and clear of any security interest, lien, charge,
      encumbrance or other adverse claim, and the Debtors will defend all of the
      Collateral (whether now owned or hereafter acquired) against all claims and
      demands of all persons at any time claiming the same or any interest therein,
      and will take all steps to maintain the security interest of the Secured Party
      as a valid and fully perfected lien first in priority to all other Liens, in
      each case subject only to any additional Liens granted which shall be expressly
      subject and subordinated to the Lien granted to the Secured Party
      hereunder.

    


    5.4 Place
      of
      Business and Name. The
      Debtors’ chief place of business is at the address set forth next to such
      Debtors’ signature below. No Debtor shall have changed its name, except as
      indicated below the Debtors’ signature below. No Debtor will change its name or
      the location of its chief place of business, without the prior written consent
      of the Secured Party, which shall not be unreasonably
      withheld.

    


    5.5 Financing
      Statements; Related Instruments. No financing statement
      covering any of
      the Collateral or any proceeds thereof is on file in any public office in any
      jurisdiction, other than financing statements covering the Existing Liens.
      At
      the request of the Secured Party, the Debtors will execute and deliver to the
      Secured Party one or more financing statements in form and substance
      satisfactory to the Secured Party and will pay the cost of filing the same
      in
      all public offices where filing is deemed by the Secured Party to be necessary
      or desirable. The Debtors promise to pay to the Secured Party all fees and
      expenses incurred in filing financing statements and any continuation statements
      or amendments thereto, which fees and expenses shall become a part of the
      Obligations secured by this Agreement. A carbon, photographic or other
      reproduction of this Agreement or any financing statement covering the
      Collateral or any part thereof shall be sufficient as a financing
      statement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.6 Transfers;
      Other Liens. Neither the
      Debtors nor their agents, servants or employees will sell, assign or offer
      to
      sell or assign or otherwise transfer the Collateral, either in whole or in
      part,
      or any interest therein without the prior written consent of the Secured Party,
      other than as contemplated by the Note or any other Transaction Document. The
      Debtors will not, without the prior written consent of the Secured Party, create
      or permit to exist any security interest, lien, charge, encumbrance or other
      adverse claim on any of the Collateral, other than the security interest in
      favor of the Secured Party created by this Agreement and the Existing
      Liens.

    


    5.7 Compliance
      with Laws. The Debtors
      agree to comply in all material respects with all statutes, laws, ordinances,
      rules and regulations applicable to them and to the conduct of their
      businesses.

    


    5.8 Taxes.
      The Debtors will pay promptly when due
      all taxes and assessments upon or with respect to the Collateral, the
      Obligations, this Agreement or any other instrument executed pursuant to this
      Agreement. The Debtors hereby authorize the Secured Party to discharge upon
      five
      (5) days prior written notice any taxes, assessments, liens, security interests
      or other encumbrances at any time levied or placed on the Collateral, to pay
      for
      any insurance on the Collateral required to be maintained by the Debtor
      hereunder, and pay for, make or provide for any maintenance, repair or
      preservation of the Collateral as herein required;  provided,  however,
      that the Secured Party shall be under
      no obligation to do so.

    


    5.9 Schedules,
      Inspection of Books and Records. The Debtors will furnish
      to the
      Secured Party from time to time (i) statements and schedules further identifying
      and describing the Collateral and detailing sales or other transfers of the
      Collateral and payments received or accounts owing with respect to the
      Collateral for the periods specified by the Secured Party, and (ii) such other
      reports in connection with the Collateral as the Secured Party may reasonably
      request, all in reasonable detail. The Debtors will permit the Secured Party
      or
      its duly authorized representative upon reasonable prior notice to examine
      its
      books and records during business hours and shall furnish to the Secured Party
      such financial statements and other financial data as the Secured Party may
      reasonably request from time to time.

    


    5.10 Accounts.
      With respect to the
      Accounts:

    


    (a) The
      Debtors’ records concerning
      all Accounts are and will be kept solely in the State of New Jersey and
      at the Debtors’ chief place of
      business specified on the signature page below. The Debtors will not remove
      any
      of such records from such address without the prior written consent of the
      Secured Party, which shall not be unreasonably withheld. Without in any way
      excusing a breach by the Debtors of the foregoing sentence, if for any reason
      any of such records concerning the Accounts shall at any time be moved to
      another location or locations, the Debtors will promptly notify the Secured
      Party of any such change in the location of such records and will execute and
      deliver such financing statements and do such other acts and things as the
      Secured Party may request pursuant to Section 10 hereof.

    


    (b) Each
      item of Accounts is, or at
      such time as it becomes part of the Collateral will be, a bona fide, valid
      and
      legally enforceable obligation of the account debtor or other obligor in respect
      thereof, subject to no defense known to the Debtor, set-off or counterclaim
      against the Debtor and in connection with which there is no default with respect
      to any payment or performance on the part of the Debtors or any other
      party.

    


    (c) The
      Debtors will at all times
      keep accurate and complete records of payment and performance by the Debtors,
      the respective account Debtors and all other parties obligated on the
      Accounts.

    


    (d) The
      Debtors will immediately
      inform the Secured Party of any default in payment or performance by the Debtors
      or any account debtor or other parties obligated on, and of claims made by
      others in regard to, the Accounts and shall not change the terms thereof (or
      terminate or permit the impairment of any of its rights thereunder) without
      the
      prior written consent of the Secured Party, which shall not be unreasonably
      withheld. The Debtors will make all payments and perform all undertakings on
      the
      Debtors’ part to be paid or performed with respect to Accounts when due. The
      Debtors hereby authorize the Secured Party to cure any default in payment or
      performance by the Debtors with respect to the Accounts;provided,  however,
      that the Secured Party shall be under
      no obligation to do so, and provided further, that the Secured Party’s curing of
      any default shall not constitute a waiver by the Secured Party of any default
      under this Agreement. The Debtors agree to reimburse the Secured Party on demand
      with interest at the Maximum Rate for any payment made or any expense incurred
      by the Secured Party pursuant to the foregoing authorization, and any payment
      made or expense incurred by the Secured Party pursuant to the foregoing
      authorization shall be part of the Obligations secured
      hereunder.

    


    (e) The
      Debtors shall, upon request
      of the Secured Party, and the Secured Party themselves may, in the name of
      the
      Secured Party or the Debtors, at any time (whether or not the Debtors are in
      default hereunder) notify the account debtor or other obligor on any item of
      the
      Accounts, of the Secured Party’s security interest. The Secured Party may, in
      its own name or the name of the Debtors, at any time after the occurrence and
      during the continuation of an Event of Default (as defined below), demand,
      sue
      for, collect or receive any money or property payable or receivable on any
      Accounts and settle, release, compromise, adjust, sue upon, foreclose, realize
      upon or otherwise enforce any item of Accounts as the Secured Party may
      determine, and for the purpose of realizing the Secured Party’s rights herein,
      the Secured Party may receive, open and dispose of mail addressed to the Debtors
      and endorse notes, checks, drafts, money orders, documents of title or other
      forms of payment on behalf of and in the name of the Debtors. The Secured Party
      may at any time in their discretion (whether or not there has occurred an Event
      of Default) transfer any notes, securities or other Accounts into their own
      names or that of their nominees and receive the income thereon and hold the
      same
      as Collateral for the Obligations or apply the same to the payment of principal
      or interest due on the Obligations. The Debtors agree to reimburse the Secured
      Party on demand with interest at the Default Rate for any payment made or any
      expense incurred by the Secured Party pursuant to the foregoing authorization,
      and any payment made or expense incurred by the Secured Party pursuant to the
      foregoing authorization shall be part of the obligations secured
      hereunder.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6. Events
      of
      Default. The Debtors shall
      be in default under this Agreement upon the occurrence of any Event of Default
      as defined in the Note.

    


    7. Rights
      and
      Remedies Upon Default. Upon
      the occurrence and during the continuation of any Event of Default, the Secured
      Party may accelerate all the obligations and shall have, in addition to all
      other rights and remedies provided herein or by applicable law, all of the
      rights and remedies of a secured party under the Code, including, but not
      limited to, the right to take possession of the Collateral, and the right,
      without further notice to the Debtors, to take the Collateral in satisfaction
      in
      full of obligations owing under the Note, and for those purposes the Secured
      Party may, and the Debtors hereby authorize the Secured Party to, enter upon
      any
      premises on which Collateral may be located or situated and remove the same
      therefrom or without removal render the same unusable and may use or dispose
      of
      the Collateral on such premises without any liability for rent, storage,
      utilities or other sums, and upon request the Debtors shall, to the extent
      practicable, assemble and make the Collateral available to the Secured Party
      at
      a place to be designated by the Secured Party, which is reasonably convenient
      to
      the Debtors and the Secured Party. The Debtors agrees that, to the extent notice
      of sale shall be required, at least five days, notice to the Debtors of the
      time
      and place of any public sale or the time after which any private sale or any
      other intended disposition is to be made shall constitute reasonable
      notification of such sale or disposition. The Secured Party shall also have
      the
      right to apply for and have a receiver appointed by a court of competent
      jurisdiction in any action taken by the Secured Party to enforce their rights
      and remedies hereunder, to manage, protect and preserve the Collateral or
      continue the operation of the business of the Debtors, and the Secured Party
      shall be entitled to collect all revenues and profits thereof and apply the
      same
      to the payment of all expenses and other charges of such receivership, including
      the compensation of the receiver, and to the payment of the obligations until
      a
      sale or other disposition of such Collateral shall be finally made and
      consummated. In the event of any disposition or collection of or any other
      realization upon all or any part of the Collateral, the Secured Party shall
      apply the proceeds of such disposition, collection or other realization as
      follows:

    


    (a) First,
      to the payment of the
      reasonable costs and expenses of the Secured Party in exercising or enforcing
      their rights hereunder, including, but not limited to, costs and expenses
      incurred in retaking, holding or preparing the Collateral for sale, lease or
      other disposition, and in collecting or attempting to collect any of the
      Collateral, and to the payment of all amounts payable to the Secured Party
      pursuant to Section 7 hereof;

    


    (b) Second,
      to the payment of the
      Obligations; and

    


    (c) Third,
      after payment in full of
      all of the obligations, the surplus, if any, shall be paid to the Debtors or
      to
      whomsoever may be lawfully entitled to receive such surplus.

    


    8. Indemnity
      and Expenses. The Debtors
      agree to indemnify the Secured Party from and against any and all claims, losses
      and liabilities arising out of or resulting from this Agreement (including,
      without limitation, enforcement of this Agreement or any actions taken by the
      Secured Party pursuant to Section 10 of this Agreement) except claims, losses
      or
      liabilities resulting from the Secured Party’ own negligence or willful
      misconduct. The Debtors will, on demand, pay to the Secured Party the amount
      of
      any and all reasonable costs and expenses, including, but not limited, to the
      reasonable fees and disbursements of their counsel and of any experts or agents,
      which the Secured Party may incur in connection with (i) the exercise or
      enforcement by the Secured Party of any of their rights or remedies hereunder,
      or (ii) any failure by the Debtors to perform any of the
      Obligations.

    


    9. Further
      Assurances and Power of Attorney. The Debtors will execute
      and deliver
      to the Secured Party, at the request of the Secured Party, at any time and
      from
      time to time, such financing statements and other instruments (and pay the
      cost
      of filing or recording the same in all public offices deemed necessary or
      desirable by the Secured Party) and do such other acts and things as the Secured
      Party may reasonably deem necessary or desirable in order to establish and
      maintain a valid security interest in the Collateral in favor of the Secured
      Party (free and clear of all other security interests, liens, charges,
      encumbrances and other claims, whether voluntarily or involuntarily created,
      except as permitted by Section 6.3 hereof) or in order to facilitate the
      collection of the Collateral. To effectuate the rights and remedies of the
      Secured Party hereunder, effective upon the occurrence of an Event of Default,
      the Debtors hereby irrevocably appoint the Secured Party attorney-in-fact for
      the Debtors in the name of the Debtors or the Secured Party, with full power
      of
      substitution, to sign, execute and deliver any and all instruments and documents
      and do any and all acts and things to the same extent as the Debtors could
      do,
      to sell, assign and transfer any Collateral, including, but not limited to,
      taking all action necessary or the preservation of any rights pertaining to
      the
      Collateral beyond reasonable care in the custody or preservation thereof. The
      Secured Party may exercise their rights and remedies with respect to the
      Collateral without resorting or regard to other security or sources for payment.
      All rights and remedies of the Secured Party hereunder or with respect to the
      obligations or the Collateral shall be cumulative and may be exercised
      singularly or concurrently.

    


    10. Assignment.
      If at any time or times by sale,
      assignment, negotiation, pledge or otherwise, the Secured Party transfers any
      of
      the obligations, such transfer shall carry with it the Secured Party’s rights
      and remedies under this Agreement with respect to the obligations transferred,
      and the transferee shall become vested with such rights and remedies whether
      or
      not they are specifically referred to in the transfer. If and to such extent
      such Secured Party retains any other Obligations, the Secured Party shall
      continue to have the rights and remedies herein set forth with respect
      thereto.

    


    11. Notices.
      Unless otherwise provided, any notice
      required or permitted under this Agreement shall be given in writing and shall
      be deemed effectively given upon personal delivery to the party to be notified
      or five days after deposit with the United States Post Office, by registered
      or
      certified mail, or two days after deposit with a nationally recognized express
      courier, postage prepaid and sent (i) if to a Secured Party, at the address
      of
      the Secured Party set forth in the Debtor’s records, or (ii) if to the Debtors,
      at the Debtors’ principal place of business or at such other address as the
      Debtors shall have furnished to the Secured Party in
      writing.

    


    12. Governing
      Law. This Agreement shall
      be governed by and construed under the laws of the State of Nevada.
      Whenever possible, each provision of
      this Agreement shall be interpreted in such manner as to be effective and valid
      under applicable law, but if any provision of this Agreement shall be prohibited
      or invalid under applicable law, such provision shall be ineffective only to
      the
      extent of such prohibition or invalidity, without invalidating the remainder
      of
      such provision or the remaining provisions of this Agreement. This Agreement
      shall be given a fair and reasonable construction in accordance with the
      intention of the parties.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

                     
        13. Action
        by
        Secured Party. All rights
        and remedies of Secured Party hereunder may be exercised by the Holder of
        the
        Note. Similarly, consent to any request by the Debtors (whether to modification
        of this Agreement, or any agreement executed in connection herewith) shall
        require consent of the Secured Party.

    

    


    14. Miscellaneous.
      Neither this Agreement nor any
      provision hereof may be changed, waived discharged or terminated orally, but
      only by an instrument in writing signed by the party against which enforcement
      of the change, waiver, discharge or termination is sought. This Agreement shall
      be binding upon the Debtors and their successors and assigns, and all persons
      claiming under or through the Debtors or any such successors or assigns, and
      shall inure to the benefit of and be enforceable by the Secured Party and their
      successors and assigns.

    


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    IN
      WITNESS WHEREOF, the parties have
      executed this Security Agreement as of the day and year first above
      written.

    


    “DEBTOR”

    


    VEMICS,
      INC.

    


    


    By: /s/
      Fred
      Zolla                   


    Name: 
Fred
      Zolla

    Title: 
CEO

    


    


    


    “SECURED
      PARTY”

    


    VALIANT
      HOLDING
      CO.

    


    


    By:      

    Name: 

    Title: