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Exhibit 10.16

REGISTRATION RIGHTS AGREEMENT

(CONVERTIBLE DEBENTURES)

THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 7, 2005 (this "Agreement"), is made by and between EL GRANDE INTERNATIONAL, INC., a Nevada corporation, with headquarters located at 1450 Kootenay Street, Vancouver, British Columbia, Canada V5K 4R1 (the “Company”), and each entity named on the signature page hereto as “Investors” (each, an “Investor”).

W I T N E S S E T H:

WHEREAS, upon the terms and subject to the conditions of the Securities Purchase Agreement, dated as of December 7, 2005, between the Buyers listed therein and the Company (the "Securities Purchase Agreement"; terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement), the Company has agreed to issue and sell to the Investors one or more debentures of the Company, in a minimum aggregate principal amount of $250,000 and a maximum aggregate amount of $600,000 (the "Debentures"); and

WHEREAS, the Debentures are convertible into shares of Common Stock (the "Conversion Shares"; which term, for purposes of this Agreement, shall be 300% of that number of shares of Common Stock into which the Debentures, including without limitation all shares of Common Stock issuable by the Company in lieu of accrued interest on conversion as contemplated by the Debentures) upon the terms and subject to the conditions contained in the Debentures. 

WHEREAS, to induce the Investors to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), with respect to the Conversion Shares; 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows:

1.

Definitions.

As used in this Agreement, the following terms shall have the following meanings:

a.

“Holders’ Representative” means the person appointed as the Holders’ Representative by the Investors pursuant to Section 11 hereof.

b.

"Investor" means an Investor and any permitted transferee or assignee who agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof and who holds Debentures or Registrable Securities.

c.

"Potential Material Event" means any of the following: (i) the possession by the Company of material information not ripe for disclosure in a registration statement, which shall be evidenced by determinations in good faith by the Board of Directors of the Company that disclosure of such information in the registration statement would be detrimental to the business and affairs of the Company; or (ii) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in a registration statement at such time, which determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the registration statement would be materially misleading absent the inclusion of such information.

d.

"Register," "Registered," and "Registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the SEC. 

e.

"Registrable Securities" means the Conversion Shares and, to the extent applicable, any other shares of capital stock or other securities of the Company or any successor to the Company that are issued upon exchange of the Conversion Shares.

f.

"Registration Statement" means a registration statement of the Company under the Securities Act.

g.

“SEC” means the United States Securities and Exchange Commission.

2.

Piggy-back Registration.  From and after the date that is ninety (90) days after the date of this Agreement and until the fifth anniversary of the Closing Date, for so long as any of the Registrable Securities are outstanding and are not the subject of an effective registration statement, if the Company contemplates making an offering of Common Stock (or other equity securities convertible into or exchangeable for Common Stock) registered for sale under the Securities Act or proposes to file a Registration Statement covering any of its securities other than (i) a registration on Form S-8 or S-4, or any successor or similar forms; and (ii) a shelf registration under Rule 415 for the sole purpose of registering shares to be issued in connection with the acquisition of assets, the Company will at each such time give prompt written notice to the Holders’ Representative and the Investors of its intention to do so and of the Investor’s rights under this Agreement.  Upon the written request of any Investor made within thirty (30) days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method of disposition thereof), the Company will use its best efforts to effect the registration of all Registrable Securities which the Company has been so requested to register by the Investors, to the extent requisite to permit the disposition (in accordance with the intended methods of disposition) of the Registrable Securities by the Investors requesting registration, by inclusion of such Registrable Securities in the Registration Statement which covers the securities which the Company proposes to register; provided, that if the Company is unable to register the full amount of Registrable Securities in an “at the market offering” under Commission rules and regulations due to the high percentage of the Company’s Common Stock the Registrable Securities represents (giving effect to all other 

securities being registered in the Registration Statement), then the Company may reduce, on a pro rata basis, the amount of Registrable Securities subject to the Registration Statement to a lesser amount which equals the maximum number of Registrable Securities that the Company is permitted to register in an “at the market offering”; and provided, further, that if, at any time after giving written notice of its intention to register any Registrable Securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company shall determine for any reason either not to register or to delay registration of such Registrable Securities, the Company may, at its election, give written notice of such determination to the Holders’ Representative and the Investors requesting registration and, thereupon, (i) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the expenses of registration in connection therewith), and (ii) in the case of a determination to delay registering such Registrable Securities, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities.

3.

Obligations of the Company.  In connection with the registration of the Registrable Securities, the Company shall do each of the following:

(a)

Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement as set forth in Section 2 and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the period through the earliest of (i) the date that is five (5) years after the last day of the calendar month following the month in which the Registration Statement so filed is declared effective by the SEC, (ii) the date when the Investors may sell all Registrable Securities under Rule 144, or (iii) the date the Investors no longer own any of the Registrable Securities (The “Registration Period”), Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement;

(b)

The Company shall permit a single firm of legal counsel designated by the Holders’ Representative (the “Investors’ Counsel”) to review drafts of the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than three (3) business days) prior to their filing with the SEC, and not file any document in a form to which such Investors’ Counsel reasonably objects.  If the Investors’ Counsel objects, the Company shall take under advisement such objections and shall endeavor to promptly make such revisions to the Registration Statement (or ancillary documents and/or SEC filings in connection therewith) as are necessary to satisfy the objections of the Investors’ Counsel;

(c)

Notify the Holders’ Representative and the Investors’ Counsel, and any managing underwriters immediately (and, in the case of (i)(A) below, not less than five (5) days prior to the contemplated date of such filing) and (if requested by any the Holders' Representative) confirm such notice in writing no later than one (1) business day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) whenever the SEC notifies the Company 

whether there will be a “review” of  Registration Statement; (C) whenever the Company receives (or a representative of the Company receives on its behalf) any oral or written comments from the SEC relating to a Registration Statement (copies or, in the case of oral comments, summaries of such comments shall be promptly furnished by the Company to the Holders’ Representative and the Investor’s Counsel); and (D) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) if at any time the Company has actual knowledge that any of the representations or warranties of the Company contained in any agreement (including any underwriting agreement) contemplated hereby ceases to be true and correct in all material respects; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (vi) of the occurrence of any event that to the best knowledge of the Company makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  In addition, the Company shall respond to the SEC in writing to comments on the Registration Statement by the SEC within fifteen (15) business days of the Company’s receipt thereof, plus any additional time reasonably required by the Company’s independent auditors to respond to accounting comments and, if requested by the Holders' Representative and the Investors’ counsel, the Company shall furnish the Holders' Representative with copies of all intended written responses to the comments contemplated in clause (C) of this Section 3(c) not later than one (1) business day in advance of the filing of such responses with the SEC so that the Holders’ Representative and the Investors’ Counsel shall have the opportunity to comment thereon;  

(d)

Furnish to the Holders’ Representative and the Investors’ Counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary Prospectus and Prospectus, and each amendment or supplement thereto, and (ii) if so requested by any Investor, such number of copies of a Prospectus, and all amendments and supplements thereto and such other documents, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor;  

(e)

As promptly as practicable after becoming aware thereof, notify the Holders’ Representative of the happening of any event of which the Company has actual knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct 

such untrue statement or omission, and deliver a number of copies of such supplement or amendment to the Holders' Representative and each Investor as such Investor may reasonably request;

(f)

As promptly as practicable (and in any event not later than one (1) business day) after becoming aware thereof, notify the Holders’ Representative of the issuance by the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time;  

(g)

Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of a Registration Statement, the Company notifies the Holders’ Representative in writing of the existence of a Potential Material Event, the Investors shall not offer or sell any Registrable Securities, or engage in any other transaction involving or relating to the Registrable Securities, from the time of the giving of notice with respect to a Potential Material Event until such Investor receives written notice from the Company that such Potential Material Event either has been disclosed to the public or no longer constitutes a Potential Material Event; provided, however, that the Company may not so suspend the right to such Holders of Registrable Securities for more than two twenty (20) business day periods in the aggregate during any 12-month period ("Suspension Period") with at least a ten (10) business day interval between such periods, during the periods the Registration Statement is required to be in effect;

(h)

Use its  reasonable efforts to secure and maintain the designation of all the Registrable Securities covered by the Registration Statement on the NASDAQ/National Market System or the "OTC Bulletin Board Market" or any successor thereto of the National Association of Securities Dealers Automated Quotations System ("NASDAQ") within the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the Registrable Securities on The NASDAQ National Market System; and further use its efforts to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities;  

(i)

Provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than one (1) business day after the effective date of the Registration Statement;

(j)

Cooperate with the Investors to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts as the case may be, as the Investors may reasonably request, and, within five (5) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) an appropriate instruction and opinion of such counsel; 

(k)

Take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of the Registrable Securities pursuant to the Registration Statement; 

(l)

Not take, or omit to take, any actions that would preclude the filing or effectiveness of the Registration Statement or require the withdrawal of the Registration Statement;  

(m)

If the Registration Statement has been filed but has not been declared effective by the SEC, not complete any acquisitions or business combinations until the SEC has declared effective the Registration Statement that registers the Registrable Securities.

4.

Payments by the Company.  Unless the Company's performance is waived in writing by the Holders' Representative:

(i)

If the Company fails to satisfy its obligations under Sections 2 or 3, then the Company shall immediately pay to the Investors without demand therefor a cash amount equal to 2% per month of the outstanding principal amount of the Debentures and, until such time as all such obligations shall have been satisfied, the same amount shall accrue and become payable to the Investors within three days on each subsequent month until such obligations shall have been satisfied.  In light of the difficulty of ascertaining the amount of damage that the Investors will suffer as a result of the Company’s failure to comply with its obligations under Sections 2 or 3, all amounts payable under this Section 4 shall be payable as liquidated damages, and not as a penalty.  The Company shall keep the Registration Statement effective throughout the Registration Period.

(ii)

The parties acknowledge that the damages which may be incurred by the Investors if the Company fails to satisfy any of its obligations under Sections 2 or 3 may be difficult to ascertain.  The parties agree that the payments to be paid to the Investors under this Section 4 represent a reasonable estimate on the part of the parties, as of the date of this Agreement, of the amount of such damages.

5.

Obligations of the Investors.  In connection with the registration of the Registrable Securities, the Investors shall have the following obligations:

(a)

It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.  At least ten (10) business days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor of the information the Company requires from each such Investor (the "Requested Information") if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement.  If at least two (2) business days prior to the filing date the Company has 

not received the Requested Information from an Investor (a "Non-Responsive Investor"), then the Company may file the Registration Statement without including Registrable Securities of such Non-Responsive Investor;

(b)

Each Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement; and

(c)

Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d) or 3(e), above, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(d) or 3(e) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

(d)

Each holder of Registrable Securities that sells Registrable Securities pursuant to a registration under this Agreement agrees that in connection with registration as follows:

(i)

Such seller shall cooperate as reasonably requested by the Company with the Company in connection with the preparation of the registration statement, and for as long as the Company is obligated to file and keep effective the registration statement, shall provide to the Company, in writing, for use in the registration statement, all such information regarding such seller and its plan of distribution of the Registrable Securities as may reasonably be necessary to enable the Company to prepare the registration statement and prospectus covering the Registrable Securities, to maintain the currency and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith; and  

(ii)

During such time as such seller may be engaged in a distribution of the Registrable Securities, such seller shall comply with Rules 10b-6 and 10b-7 promulgated under the Securities Exchange Act and pursuant thereto it shall, among other things; (x) not engage in any stabilization activity in connection with the securities of the Company in contravention of such rules; (y) distribute the Registrable Securities under the registration statement solely in the manner described in the registration statement; and (z) cease distribution of such Registrable Securities pursuant to such registration statement upon written notice from the Company that the prospectus covering the Registrable Securities contains any untrue statement of a material fact required to be stated therein or necessary to make the statements therein not misleading.

6.

Expenses of Registration.  

(a)

All reasonable expenses (other than underwriting discounts and commissions of the Investors) incurred for the Registration Statement covering the Registrable Securities applicable to the Debentures shall be borne by the Company, up to an aggregate amount of $50,000 in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, a fee for the Investors’ Counsel of not more than $5,000 and including, without limitation, all registration, listing, and qualifications fees, printers, legal and accounting fees and the fees and disbursements of counsel for the Company.  

(b)

Neither the Company nor any of its subsidiaries has, as of the date hereof, nor shall the Company nor any of its subsidiaries, on or after the date of this Agreement, entered into any agreement with respect to its securities that is inconsistent with the rights granted to the Investors in this Agreement or otherwise conflicts with the provisions hereof.  Except as disclosed in the Securities Purchase Agreement or the other documents entered into simultaneously therewith, neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person except for the secured convertible promissory note issued to Thomas A. Simons dated December 23, 2004 with piggyback registration rights expiring one year from the date of the note and as provided in the subscription agreement dated October 11, 2004 between the Company and Walther-Glass Gmbh & Co KG.  Without limiting the generality of the foregoing, without the written consent of the Investors holding a majority of the Registrable Securities, the Company shall not grant to any person the right to request the Company to register any securities of the Company under the Securities Act unless the rights so granted are subject in all respects to the prior rights in full of the Investors set forth herein, and are not otherwise in conflict or inconsistent with the provisions of this Agreement and the other Transaction Documents.

7.

Indemnification.  In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a)

To the extent permitted by law, the Company will indemnify and hold harmless the Holders’ Representative, the Investor’s Counsel and each Investor who holds such Registrable Securities, the directors, managers, partners, stockholders and members, if any, of the Holders’ Representative, the Investor’s Counsel or such Investor, the officers and employees, if any, of the Holders’ Representative, the Investor’s Counsel or such Investor, and each person, if any, who controls the Holders’ Representative, the Investors Counsel or any Investor within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person" or "Indemnified Party"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as 

amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations").  Subject to clause (b) of this Section 7, the Company shall reimburse the Investors, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 7(a) shall not (I) apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof;  (II) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company;  (III) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; or (IV) apply to any violation or alleged violation by an Indemnified Person of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation under the Securities Act, the Exchange Act, or any state securities laws.   Each Investor will indemnify the Company and its officers, directors and agents (each, an "Indemnified Person" or "Indemnified Party") against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of such Investor, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions as are applicable to the Indemnification provided by the Company to this Section 7.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors.

(b)

Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 7 of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be.  In case any such action is brought against any Indemnified Person or Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Person or Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Person or Indemnified Party under this Section 7 for any legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Person or 

Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion.  The Indemnified Person or Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Person or Indemnified Party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 7, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.  The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.

8.

Contribution.  To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 7 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 7; (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

9.

Reports under Exchange Act.  With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:

a.

make and keep public information available, as those terms are understood and defined in Rule 144; 

b.

file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act;  

c.

furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration; and  

d.   cause its counsel to deliver to its transfer agent such opinions of law as shall be required to remove restrictive legends on the shares to be sold in the standard form then employed for such purpose by such counsel or in such other form as is reasonably acceptable to 

such transfer agent.

10.

Amendment of Registration Rights.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold a fifty (50%) percent interest of the Registrable Securities.  Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company.

11.

Appointment and Indemnification of Holders’ Representative.  Each of the Investors hereby appoints as the Holders’ Representative Divine Capital Markets, LLC to so act until such time as all Registrable Securities have become Registered and there shall be no Debentures issued and outstanding, or such time as a successor to the then-acting Holders’ Representative is appointed in writing signed by the Investors representing greater than 50% of the then-outstanding Debentures and Registrable Securities.  The Holders’ Representative shall have full discretion and authority, without consultation with the Holders, to accept and give notices on behalf of the Holders, to communicate with the Holders at such times and in such manner as the Holders’ Representative in its discretion determines is appropriate and to grant extensions of deadlines or waive any payment obligations set forth in Sections 2 and 3 hereof.  The Holders' Representative shall not have discretion or authority to exercise any investment discretion over the Debentures, including causing the conversion of any Debentures, absent a Holder's express written authority.  Notwithstanding any provision to the contrary contained elsewhere herein or in the Securities Purchase Agreement or the Debentures, the Holders’ Representative shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Holders’ Representative have or be deemed to have any fiduciary relationship with any Holder, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the Securities Purchase Agreement or Debentures or otherwise exist against the Holders’ Representative.  The Holders shall indemnify upon demand the Holders’ Representative (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so under Section 7 hereof or under any other agreement or applicable law), pro rata, and hold harmless the Holders’ Representative from and against any and all against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Holders’ Representative’s Claims") incurred by it; provided, however, that no Holder shall be liable for the payment to the Holders’ Representative of any portion of such Holders’ Representative’s Claims to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from the Holders’ Representative’s own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Holders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 11.  Without limitation of the foregoing, each Holder shall reimburse the Holders’ Representative upon demand for its ratable share of any costs or out-of-pocket expenses incurred by the Holders’ Representative in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, the Securities Purchase Agreement, the Debentures, or any document contemplated by or referred to herein, to the extent that the Holders’ Representative is not reimbursed for such expenses by or on behalf of the Company.

12.

Miscellaneous.

a.

A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

b.

Notices required or permitted to be given hereunder shall be given in the manner contemplated by the Securities Purchase Agreement, (i) if to the Company or to the Investors, to their respective address contemplated by the Securities Purchase Agreement, and (iii) if to any other Investor, at such address as such Investor shall have provided in writing to the Company, or at such other address as each such party furnishes by notice given in accordance with this Section 12(b).

c.

Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d.

This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non coveniens, to the bringing of any such proceeding in such jurisdictions.  To the extent determined by such court, the Company shall reimburse the Buyer for any reasonable legal fees and disbursements incurred by the Buyer in enforcement of or protection of any of its rights under this Agreement.

e.

If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.

f.

Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

g.

All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

h.

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning thereof.

i.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by telephone 

line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

j.

The Company acknowledges that any failure by the Company to perform its obligations under Sections 2 or 3 or any delay in such performance could result in loss to the Investors, and the Company agrees that, in addition to any other liability the Company may have by reason of such failure or delay, the Company shall be liable for all direct damages caused by any such failure or delay, unless the same is the result of force majeure.  Neither party shall be liable for consequential damages.

k.

This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof. 

[Signature page follows.]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

	COMPANY:

	ELGRANDE INTERNATIONAL, INC.

	         /s/ Michael F. Holloran

By:   _____________________________

	       Name:  Michael F. Holloran

	 	Title:

Chief Executive Officer

	INVESTOR: 

 

	 
	Print Name of Investor Above

	By:

	Investor Signature Above

Print Name of Signatory:  

Title of Signatory:EXHIBIT 10.1
                                                                    ------------

                         PRIVATE EQUITY CREDIT AGREEMENT

                                 BY AND BETWEEN

                              GLOBAL MATRECHS, INC.

                                       AND

                        BRITTANY CAPITAL MANAGEMENT LTD.

                                      Dated

                                January 10, 2006

<PAGE>

     THIS PRIVATE EQUITY CREDIT AGREEMENT is entered into as of the 10th day of
January 2006 (this "AGREEMENT"), by and between BRITTANY CAPITAL MANAGEMENT
LTD., a limited liability company organized and existing under the laws of The
Bahamas ("INVESTOR"), and GLOBAL MATRECHS, INC f/ka HOMECOM COMUNICATIONS, INC.,
a corporation organized and existing under the laws of the State of Delaware
(the "COMPANY").

     WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Investor, from
time to time as provided herein, and Investor shall purchase, up to Fifteen
Million Dollars ($15,000,000) of the Common Stock (as defined below);

     WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("SECTION 4(2)") of the Securities Act of 1933 and Regulation D,
and the rules and regulations promulgated thereunder (the "SECURITIES ACT"),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
in Common Stock to be made hereunder; and

     NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

     Section 1.1 DEFINED TERMS as used in this Agreement, the following terms
shall have the following meanings specified or indicated (such meanings to be
equally applicable to both the singular and plural forms of the terms defined)

     "ADDITIONAL CLOSING DATE" shall mean the date of the closing of the
purchase and sale of the Additional Common Stock.

     "AGREEMENT" shall have the meaning specified in the preamble hereof.

     "BID PRICE" shall mean, for any Trading Day, the closing bid price of the
Common Stock on the Principal Market for such Trading Day.

     "BLACKOUT NOTICE" shall have the meaning specified in the Registration
Rights Agreement.

                                                                               2
<PAGE>

     "BLACKOUT SHARES" shall have the meaning specified in Section 2.6

     "BY-LAWS" shall have the meaning specified in Section 4.8.

     "CERTIFICATE" shall have the meaning specified in Section 4.8

     "CLAIM NOTICE" shall have the meaning specified in Section 9.3(a).

     "CLOSING" shall mean one of the closings of a purchase and sale of shares
of Common Stock pursuant to Section 2.3.

     "CLOSING DATE" shall mean, as applicable, an Interim Closing Date or a
Remainder Closing Date.

     "COMMITMENT PERIOD" shall mean the period commencing on the Effective Date,
and ending on the earlier of (i) the date on which Investor shall have purchased
Put Shares pursuant to this Agreement for an aggregate Purchase Price of the
Maximum Commitment Amount, (ii) the date this Agreement is terminated pursuant
to Section 2.5, or (iii) the date occurring thirty-six (36) months from the date
of commencement of the Commitment Period.

     "COMMON STOCK" shall mean the Company's common stock, $.0001 par value per
share, and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the distribution of
dividends (as and when declared) and assets (upon liquidation of the Company).

     "COMMON STOCK EQUIVALENTS" shall mean any securities that are convertible
into or exchangeable for Common Stock or any options or other rights to
subscribe for or purchase Common Stock or any such convertible or exchangeable
securities.

     "COMPANY" shall have the meaning specified in the preamble to this
Agreement.

     "CONDITION SATISFACTION DATE" shall have the meaning specified in Section
7.2.

     "DAMAGES" shall mean any loss, claim, damage, liability, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
costs and expenses of expert witnesses and investigation).

     "DISCOUNT" shall mean eight (8%) percent.

     "DISPUTE PERIOD" shall have the meaning specified in Section 9.3(a).

                                                                               3
<PAGE>

     "DTC" shall the meaning specified in Section 2.3.

     "DWAC" shall the meaning specified in Section 2.3.

     "EFFECTIVE DATE" shall mean the date on which the SEC first declares
effective a Registration Statement registering resale of the Registrable
Securities as set forth in Section 7.2(a).

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

     "FAST" shall the meaning specified in Section 2.3.

     "INDEMNIFIED PARTY" shall have the meaning specified in Section 9.3(a).

     "INDEMNIFYING PARTY" shall have the meaning specified in Section 9.3(a).

     "INDEMNITY NOTICE" shall have the meaning specified in Section 9.3(b).

     "INITIAL REGISTRABLE SECURITIES" shall have the meaning specified in the
Registration Rights Agreement.

     "INITIAL REGISTRATION STATEMENT" shall have the meaning specified in the
Registration Rights Agreement.

     "INTERIM CLOSING DATE" shall mean, with respect to a Closing, the fifth
(5th) Trading Day following the Put Date related to a Closing provided all
conditions to a Closing have been satisfied on or before such Trading Day.

     "INTERIM INVESTMENT AMOUNT" shall mean fifty percent (50%) of the
INVESTMENT AMOUNT with respect to each Put Notice.

     "INTERIM MARKET PRICE" on any given Put shall mean the average of the
closing Bid Prices for the first three (3) Trading Days during the Valuation
Period.

     "INTERIM PURCHASE PRICE" shall mean, with respect to Interim Put Shares,
the Interim Market Price less the product of the Discount and the Interim Market
Price.

     "INTERIM PUT SHARES" shall be the number of Put Shares deliverable on an
Interim Closing Date equal to the Interim Investment Amount divided by the
Interim Purchase Price.

                                                                               4
<PAGE>

     "INVESTMENT AMOUNT" shall mean the dollar amount (within the range
specified in Section 2.2) to be invested by Investor to purchase Put Shares with
respect to any Put Date as notified by the Company to Investor in accordance
with Section 2.2.

     "INVESTOR" shall have the meaning specified in the preamble to this
Agreement.

     "LEGEND" shall have the meaning specified in Section 8.1.

     "MARKET PRICE" on any given date shall mean the average of the three lowest
of the Bid Prices for the ten (10) Trading Days immediately following the Put
Date.

     "MAXIMUM COMMITMENT AMOUNT" shall mean Fifteen Million Dollars ($
15,000,000).

     "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
operations, properties, prospects or financial condition of the Company that is
material and adverse to the Company or to the Company and such other entities
controlling or controlled by the Company, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
its obligations under any of (a) this Agreement and (b) the Registration Rights
Agreement. "MAXIMUM PUT AMOUNT" shall mean, with respect to any Put, the lesser
of (a) Five Hundred Thousand Dollars ($500,000), or (b)Five Hundred (500%)
percent of the Weighted Average Volume for the twenty (20) Trading Days
immediately preceding the Put Date.

     "MINIMUM COMMITMENT AMOUNT" shall mean One Million Dollars ($1,000,000).

     "MINIMUM PUT AMOUNT" shall mean, with respect to any Put, Twenty-Five
Thousand Dollars ($25,000).

     "NASD" shall mean the National Association of Securities Dealers, Inc.

     "NASDAQ" shall mean The Nasdaq Stock Market, Inc.

     "NEW BID PRICE" shall have the meaning specified in Section 2.6.

     "OLD BID PRICE" shall have the meaning specified in Section 2.6.

     "OUTSTANDING" shall mean, with respect to the Common Stock, at any

                                                                               5
<PAGE>

date as of which the number of shares of Common Stock is to be determined, all
issued and outstanding shares of Common Stock, including all shares of Common
Stock issuable in respect of outstanding convertible securities, scrip or any
certificates representing fractional interests in shares of Common Stock;
provided, however, that Outstanding shall not include any shares of Common Stock
then directly or indirectly owned or held by or for the account of the Company.

     "PERSON" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.

     "PRINCIPAL MARKET" shall mean the Nasdaq National Market, the Nasdaq Small
Cap Market, the Over the Counter Bulletin Board, the American Stock Exchange or
the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.

     "PURCHASE PRICE" shall mean, with respect to Interim Put Shares, the
Interim Market Price less the product of the Discount and the Interim Market
Price, and with respect to Remainder Put Shares, the Remainder Market Price less
the product of the Discount and the Remainder Market Price.

     "PUT" shall mean each occasion that the Company elects to exercise its
right to tender a Put Notice requiring Investor to purchase shares of Common
Stock, subject to the terms and conditions of this Agreement.

     "PUT DATE" shall mean the Trading Day during the Commitment Period that a
Put Notice is deemed delivered pursuant to Section 2.2(b).

     "PUT NOTICE" shall mean a written notice, substantially in the form of
Exhibit B hereto, to Investor setting forth the Investment Amount with respect
to which the Company intends to require Investor to purchase shares of Common
Stock pursuant to the terms of this Agreement.

     "PUT SHARES" shall mean the Interim Put Shares and the Remainder Put
Shares.

     "REGISTRABLE SECURITIES" shall mean the (a) Put Shares, (b) the Blackout
Shares and (c) any securities issued or issuable with respect to any of the
foregoing by way of exchange, stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (i) a
Registration Statement has been declared effective by the SEC and such
Registrable Securities have been disposed of pursuant to a Registration
Statement, (ii) such

                                                                               6
<PAGE>

Registrable Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 are met, (iii) such time as such Registrable
Securities have been otherwise transferred to holders who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend or (iv) in the opinion of counsel to the Company, which
counsel shall be reasonably acceptable to Investor, such Registrable Securities
may be sold without registration under the Securities Actor the need for an
exemption from any such registration requirements and without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.

     "REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights
agreement in the form of Exhibit A hereto.

     "REGISTRATION STATEMENT" shall mean a registration statement on Form
SSB-__2 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement and the Registration Rights Agreement and in accordance with the
intended method of distribution of such securities), for the registration of the
resale by Investor of the Registrable Securities under the Securities Act.

     "REGULATION D" shall have the meaning specified in the recitals of this
Agreement.

     "REMAINDER CLOSING DATE" shall mean, with respect to a Closing, the
eleventh (11h) Trading Day following the Put Date related to a Closing, provided
all conditions to a Closing have been satisfied on or before such Trading Day.

     "REMAINDER INVESTMENT AMOUNT" shall mean the Investment Amount less the
Interim Investment Amount.

     "REMAINDER MARKET PRICE" on any given Put shall mean the average of the
lowest closing Bid Prices (not necessarily consecutive) for any three (3)
Trading Days during the Valuation Period.

     "REMAINDER PURCHASE PRICE" shall mean with respect to Remainder Put Shares,
the Remainder Market Price less the product of the Discount and the Remainder
Market Price.

     "REMAINDER PUT SHARES" shall be the number of Put Shares deliverable on a
Remainder Closing Date equal to the Investment Amount divided by the Remainder
Purchase

                                                                               7
<PAGE>

Price minus the Interim Put Shares.

     "REMAINING PUT SHARES" shall have the meaning specified in Section 2.6.

     "RULE 144" shall mean Rule 144 under the Securities Act or any similar
provision then in force under the Securities Act.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECTION 4(2)" shall have the meaning specified in the recitals of this
Agreement.

     "SECURITIES ACT" shall have the meaning specified in the recitals of this
Agreement.

     "SEC DOCUMENTS" shall mean, as of a particular date, all reports and other
documents filed by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act since the beginning of the Company's then most recently completed
fiscal year as of the time in question (provided that if the date in question is
within ninety days of the beginning of the Company's fiscal year, the term shall
include all documents filed since the beginning of the second preceding fiscal
year).

     "SUBSCRIPTION DATE" shall mean the date on which this Agreement is executed
and delivered by the Company and Investor.

     "THIRD PARTY CLAIM" shall have the meaning specified in Section 9.3(a).

     "TRADING DAY" shall mean any day during which the Principal Market shall be
open for business.

     "TRANSACTION DOCUMENTS" means the Private Equity Credit Agreement, the
Registration Rights Agreement, Closing Certificate, and the Transfer Agent
Instructions.

     "TRANSFER AGENT" shall mean the transfer agent for the Common Stock (and to
any substitute or replacement transfer agent for the Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent).

     "TRANSFER AGENT INSTRUCTIONS" shall mean the instructions for the Transfer
Agent attached hereto as Exhibit E.

     "UNDERWRITER" shall mean any underwriter participating in any

                                                                               8
<PAGE>

disposition of the Registrable Securities on behalf of Investor pursuant to a
Registration Statement. "VALUATION EVENT" shall mean an event in which the
Company at any time during a Valuation Period takes any of the following
actions:

                               (a)      subdivides or combines the Common Stock;
                               (b)      pays a dividend in shares of Common
                                        Stock or makes any other distribution of
                                        shares of Common Stock, except for
                                        dividends paid with respect to the
                                        Preferred Stock;
                               (c)      issues any options or other rights to
                                        subscribe for or purchase shares of
                                        Common Stock and the price per share for
                                        which shares of Common Stock may at any
                                        time thereafter be issuable pursuant to
                                        such options or other rights shall be
                                        less than the Bid Price in effect
                                        immediately prior to such issuance;
                               (d)      issues any securities convertible into
                                        or exchangeable for shares of Common
                                        Stock and the consideration per share
                                        for which shares of Common Stock may at
                                        any time thereafter be issuable pursuant
                                        to the terms of such convertible or
                                        exchangeable securities shall be less
                                        than the Bid Price in effect immediately
                                        prior to such issuance;
                               (e)      issues shares of Common Stock otherwise
                                        than as provided in the foregoing
                                        subsections (a) through (d), at a price
                                        per share less, or for other
                                        consideration lower, than the Bid Price
                                        in effect immediately prior to such
                                        issuance, or without consideration;
                               (f)      makes a distribution of its assets or
                                        evidences of indebtedness to the holders
                                        of Common Stock as a dividend in
                                        liquidation or by way of return of
                                        capital or other than as a dividend
                                        payable out of earnings or surplus
                                        legally available for dividends under
                                        applicable law or any distribution to
                                        such holders made in respect of the sale
                                        of all or substantially all of the
                                        Company's assets (other than under the
                                        circumstances provided for in the
                                        foregoing subsections (a) through (e);
                                        or
                               (g)      takes any action affecting the number of
                                        Outstanding Common Stock, other than an
                                        action described in any of the foregoing
                                        subsections (a) through (f) hereof,
                                        inclusive, which in the opinion of the
                                        Company's Board of Directors, determined
                                        in good faith, would have a materially
                                        adverse effect upon the rights of
                                        Investor at the time of a Put.

     "VALUATION PERIOD" shall mean the period of ten (10) Trading Days

                                                                               9
<PAGE>

immediately following the date on which the applicable Put Notice is deemed to
be delivered and during which the Purchase Price of the Common Stock is valued;
provided, however, that if a Valuation Event occurs during any Valuation Period,
a new Valuation Period shall begin on the Trading Day immediately after the
occurrence of such Valuation Event and end on the tenth (10th) Trading Day
thereafter.

     "WEIGHTED AVERAGE VOLUME" shall mean the average of the Weighted Volume for
the relevant days.

     "WEIGHTED VOLUME" shall mean the product of (a) the Closing Bid Price times
(b) the volume on the Principal Market.

                                   ARTICLE II

                        PURCHASE AND SALE OF COMMON STOCK

     Section 2.1 INVESTMENTS.

                      (a) PUTS. Upon the terms and conditions set forth herein
     (including, without limitation, the provisions of Article VII), on any Put
     Date the Company may exercise a Put by the delivery of a Put Notice.

                      (b) MINIMUM AMOUNT OF PUTS. The Company shall, in
     accordance with Section 2.2(a), deliver to Investor during the Commitment
     Period, Put Notices with an aggregate Investment Amount at least equal to
     the Minimum Commitment Amount. If the Company for any reason fails to issue
     and deliver such Put Shares during the Commitment Period, on the first
     Trading Day after the expiration of the Commitment Period, the Company
     shall wire to Investor a sum in immediately available funds equal to the
     product of (i) the Minimum Commitment Amount minus the aggregate Investment
     Amounts of the Put Notices delivered to Investor hereunder, and (ii) the
     Discount.

     Section 2.2 MECHANICS.

                      (a) PUT NOTICE. At any time during the Commitment Period,
     the Company may deliver a Put Notice to Investor, subject to the conditions
     set forth in Section 7.2; provided, however, the Investment Amount for each
     Put as designated by the Company in the applicable Put Notice shall be
     neither less than the Minimum Put Amount nor more than the Maximum Put
     Amount.

                      (b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be
     deemed delivered on (i) the Trading Day it is received by facsimile or
     otherwise by Investor if such notice is received on or prior to 12:00 noon
     New York time, or (ii) the immediately succeeding Trading Day if it is
     received by facsimile or otherwise after 12:00 noon New

                                                                              10
<PAGE>

     York time on a Trading Day or at anytime on a day which is not a Trading
Day.

     Section 2.3 CLOSINGS. On or prior to each Interim Closing Date, or
Remainder Closing Date, for a Put, (a) the Company shall deliver to the Investor
one or more certificates representing the Interim Put Shares or Remainder Put
Shares, as applicable, to be purchased by Investor pursuant to Section 2.1
herein, registered in the name of Investor and (b) provided all conditions to
Closing have been satisfied by the Company, Investor shall deliver to the
Company the Interim Investment Amount, or Remainder Investment Amount, as
applicable, by wire transfer of immediately available funds within 24 hours
after each Interim Closing Date, or Remainder Closing Date, as applicable. In
lieu of delivering physical certificates representing the Common Stock issuable
in accordance with clause (a) of this Section 2.3, and provided that the
Transfer Agent then is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of Investor,
the Company shall use its commercially reasonable efforts to cause the Transfer
Agent to electronically transmit, prior to the Closing Date, the Put Shares by
crediting the account of the Investor's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system, and provide proof
satisfactory to the Investor of such delivery. In addition, on or prior to such
Closing Date, each of the Company and Investor shall deliver all documents,
instruments and writings required to be delivered or reasonably requested by
either of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein.

     Section 2.4 [INTENTIONALLY OMITTED]

     Section 2.5 TERMINATION OF INVESTMENT OBLIGATION. The obligation of
Investor pursuant to this Agreement to purchase shares of Common Stock shall
terminate permanently (including with respect to a Closing Date that has not yet
occurred) in the event that (a) there shall occur any stop order or suspension
of the effectiveness of any Registration Statement for an aggregate of thirty
(30) Trading Days during the Commitment Period, for any reason other than
deferrals or suspension during a Blackout Period in accordance with the
Registration Rights Agreement, as a result of corporate developments subsequent
to the Subscription Date that would require such Registration Statement to be
amended to reflect such event in order to maintain its compliance with the
disclosure requirements of the Securities Act, or (b) the Company shall at any
time fail to comply with the requirements of Section 6.3, 6.4, or 6.6 and such
failure shall continue for more than thirty (30) days.

     Section 2.6 BLACKOUT SHARES. In the event that, (a) within fifteen (15)
Trading Days following any Closing Date, the Company gives a Blackout Notice to
Investor of a Blackout Period in accordance with the Registration Rights
Agreement, and (b) the Bid Price on the Trading Day immediately preceding such
Blackout Period ("OLD BID PRICE") is greater than the Bid Price on the first
Trading Day following such Blackout Period that Investor may sell its
Registrable Securities pursuant to an effective Registration Statement ("NEW BID
PRICE"), then the Company shall issue to Investor the number of additional

                                                                              11
<PAGE>

shares of Registrable Securities (the "BLACKOUT SHARES") equal to the difference
between (i) the product of the number of Put Shares held by Investor immediately
prior to the Blackout Period that were issued on the most recent Closing
Date(the "REMAINING PUT SHARES") multiplied by the Old Bid Price, divided by the
New Bid Price, and (ii) the Remaining Put Shares that were issued on the most
recent Closing Date.

     Section 2.7 [INTENTIONALLY LEFT BLANK]

     Section 2.8 LIQUIDATED DAMAGES. Each of the Company and Investor
acknowledge and agree that the requirement to issue Blackout Shares under
Section 2.6 shall give rise to liquidated damages and not penalties. Each of the
Company and Investor further acknowledge that (a) the amount of loss or damages
likely to be incurred is incapable or is difficult to precisely estimate, (b)
the amount specified in such Section bears a reasonable proportion and is not
plainly or grossly disproportionate to the probable loss likely to be incurred
by Investor in connection with the failure by the Company to make Puts with
aggregate Purchase Prices totaling at least the Minimum Commitment Amount or in
connection with a Blackout Period under the Registration Rights Agreement, and
(c) each of the Company and Investor are sophisticated business parties and have
been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm's length.

                                   ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

              Investor represents and warrants to the Company that:

     Section 3.1 INTENT. Investor is entering into this Agreement for its own
account and Investor has no present arrangement (whether or not legally binding)
at any time to sell the Common Stock to or through any person or entity;
provided, however, Investor reserves the right to dispose of the Common Stock at
any time in accordance with federal and state securities laws applicable to such
disposition.

     Section 3.2 SOPHISTICATED INVESTOR. Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Common Stock. Investor acknowledges that an
investment in the Common Stock is speculative and involves a high degree of
risk.

     Section 3.3 AUTHORITY. (a) Investor has the requisite power and authority
to enter into and perform its obligations under this Agreement and the
transactions contemplated hereby in accordance with its terms; (b) the execution
and delivery of this Agreement and the Registration Rights Agreement, and the
consummation by it of the transactions contemplated

                                                                              12
<PAGE>

hereby and thereby have been duly authorized by all necessary action and no
further consent or authorization of Investor or its partners is required; and
(c) this Agreement has been duly authorized and validly executed and delivered
by Investor and is a valid and binding agreement of Investor enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.

     Section 3.4 NOT AN AFFILIATE. Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

     Section 3.5 ORGANIZATION AND STANDING. Investor is a limited liability
company duly organized, validly existing and in good standing under the laws of
the Cayman Islands, and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Investor is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a material adverse
effect on Investor.

     Section 3.6 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, and compliance
with the requirements hereof and thereof, will not (a) violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on
Investor, (b) violate any provision of any indenture, instrument or agreement to
which Investor is a party or is subject, or by which Investor or any of its
assets is bound, or conflict with or constitute a material default thereunder,
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Investor to any third party, or (d) require the approval
of any third-party (that has not been obtained) pursuant to any material
contract, instrument, agreement, relationship or legal obligation to which
Investor is subject or to which any of its assets, operations or management may
be subject.

     Section 3.7 DISCLOSURE; ACCESS TO INFORMATION. Investor has received all
documents, records, books and other information pertaining to Investor's
investment in the Company that has been requested by Investor. Investor has
reviewed or received copies of the SEC Documents.

     Section 3.8 MANNER OF SALE. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.

                                                                              13
<PAGE>

     Section 3.9 FINANCIAL CAPABILITY. Investor presently has the financial
capacity and the necessary capital to perform its obligations hereunder and
shall and has provided to the Company such financial and other information that
the Company has requested to demonstrate such capacity.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Investor that, except as disclosed
in the SEC Documents:

     Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware, and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. The Company
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, other than those in
which the failure so to qualify would not have a Material Adverse Effect.

     Section 4.2 AUTHORITY. (a) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement and
the Registration Rights Agreement and to issue the Put Shares and the Blackout
Shares, if any; (b) the execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required; and (c) each of
this Agreement and the Registration Rights Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.

     Section 4.3 CAPITALIZATION. As of December 31, 2005, the authorized capital
stock of the Company consisted of the following:

     Common stock, $.0001 par value, 300,000,000 shares authorized, 148,274,286
shares issued and outstanding at December 31, 2005

     Redeemable Preferred stock, Series B, $.01 par value, 125 shares
authorized; 0 shares at December 31, 2005 (Retired).

                                                                              14
<PAGE>

     Preferred stock, Series C, $.01 par value, 175 shares authorized; 0.99
shares outstanding at December31, 2005.

     Preferred stock, Series D, $.01 par value, 75 shares authorized; 0 shares
issued as of December 31, 2005 (Retired).

     Preferred stock, Series E, $.01 par value, 106.4 shares authorized 106.4
shares outstanding at December 31, 2005.

     Preferred Stock Series G, $.01 par value, 1069 shares authorized; 1069
shares outstanding at December 31, 2005.

     Preferred stock Series H, $.01 par value, 13,500 shares authorized, 12,582
shares are outstanding at December 31, 2005.

     Preferred stock Series I, $.01 par value 1000 shares authorized; 490.5
shares issued and outstanding as of December 31, 2005.

     All of the outstanding shares of Common Stock of the Company have been duly
and validly authorized and issued and are fully paid and nonassessable.

     Section 4.4 COMMON STOCK. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing or quotation of the Common
Stock, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date of this Agreement, the Principal Market is the OTC
Bulletin Board.

     Section 4.5 SEC DOCUMENTS. The Company has delivered or made available to
Investor true and complete copies of the SEC Documents on file as of December
31, 2005. To the best of Company's knowledge, the Company has not provided to
Investor any information that, according to applicable law, rule or regulation
should have been disclosed publicly prior to the date hereof by the Company, but
which has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and other federal, state and local laws,
rules and regulations applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect

                                                                              15
<PAGE>

thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (a) as may be otherwise indicated in such financial
statements or the notes thereto or (b) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).

     Section 4.6 EXEMPTION FROM REGISTRATION; VALID ISSUANCES. To the best of
Company's knowledge, the sale and issuance of the Put Shares and the Blackout
Shares, if any, in accordance with the terms and on the bases of the
representations and warranties set forth in this Agreement, may and shall be
properly issued by the Company to Investor pursuant to an exemption from
registration pursuant to the Securities Act and/or any applicable state law.
When issued and paid for as herein provided, the Put Shares, and the Blackout
Shares, if any, shall be duly and validly issued, fully paid, and nonassessable.
Neither the sales of the Put Shares or the Blackout Shares, if any, pursuant to,
nor the Company's performance of its obligations under, this Agreement or the
Registration Rights Agreement shall (a) result in the creation or imposition of
any liens, charges, claims or other encumbrances upon the Put Shares or the
Blackout Shares, if any, or any of the assets of the Company, or (b) entitle the
holders of Outstanding Common Stock to preemptive or other rights to subscribe
to or acquire the Common Stock or other securities of the Company. The Put
Shares and the Blackout Shares, if any, shall not subject Investor to personal
liability by reason of the ownership thereof.

     Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor any person acting
on its or their behalf (a) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Put Shares or the Blackout Shares, if
any, or (b) made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Common Stock under the Securities Act.

     Section 4.8 CORPORATE DOCUMENTS. The Company has furnished or made
available to Investor true and correct copies of the Company's Certificate of
Incorporation, as amended and in effect on the date hereof (the "CERTIFICATE"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"BY-LAWS").

     Section 4.9 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Put Shares
and the Blackout Shares, if any, do not and will not (a) result in a violation
of the Certificate or By-Laws or (b) conflict with, or constitute a material
default (or an event that with notice or

                                                                              16
<PAGE>

lapse of time or both would become a material default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture, instrument or any "lock-up" or similar provision
of any underwriting or similar agreement to which the Company is a party, or (c)
result in a violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations)applicable to the Company or by which any property or asset
of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect) nor is
the Company otherwise in violation of, conflict with or in default under any of
the foregoing; provided, however, that for purposes of the Company's
representations and warranties as to violations of foreign law, rule or
regulation referenced in clause (c), such representations and warranties are
made only to the best of the Company's knowledge insofar as the execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby are or may be affected by
the status of Investor under or pursuant to any such foreign law, rule or
regulation. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Common Stock in accordance with the terms
hereof(other than any SEC, NASD or state securities filings that may be required
to be made by the Company subsequent to any Closing, any registration statement
that may be filed pursuant hereto, and any shareholder approval required by the
rules applicable to companies whose common stock trades on the Over The Counter
Bulletin Board); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of Investor herein.

     Section 4.10 NO MATERIAL ADVERSE CHANGE. Since December 31, 2005, no event
has occurred that would have a Material Adverse Effect on the Company, except as
disclosed in the SEC Documents on file on the date hereof.

     Section 4.11 NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents on file on the date hereof or otherwise
publicly announced, other than those incurred in the ordinary course of the
Company's businesses since September 30, 2005 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company.

     Section 4.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since September 30,
2005, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that,

                                                                              17
<PAGE>

under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents on file on the date hereof.

     Section 4.13 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.

     Section 4.14 LITIGATION AND OTHER PROCEEDINGS. Except as may be set forth
in the SEC Documents on file on the date hereof, there are no lawsuits or
proceedings pending or to the best knowledge of the Company threatened, against
the Company, nor has the Company received any written or oral notice of any such
action, suit, proceeding or investigation, which would have a Material Adverse
Effect. Except as set forth in the SEC Documents on file on the date hereof, no
judgment, order, writ, injunction or decree or award has been issued by or, so
far as is known by the Company, requested of any court, arbitrator or
governmental agency which would have a Material Adverse Effect.

     Section 4.15 NO MISLEADING OR UNTRUE COMMUNICATION. The Company, any Person
representing the Company, and, to the knowledge of the Company, any other Person
selling or offering to sell the Put Shares or the Blackout Shares, if any, in
connection with the transactions contemplated by this Agreement, have not made,
at any time, any oral communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

                                    ARTICLE V

                              COVENANTS OF INVESTOR

     Section 5.1 COMPLIANCE WITH LAW. Investor's trading activities with respect
to shares of the Common Stock will be in compliance with all applicable state
and federal securities laws, rules and regulations and the rules and regulations
of the NASD and the Principal Market on which the Common stock is listed.

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

     Section 6.1 REGISTRATION RIGHTS. The Company shall cause the Registration

                                                                              18
<PAGE>

Rights Agreement to remain in full force and effect and the Company shall comply
in all respects with the terms thereof.

     Section 6.2 RESERVATION OF COMMON STOCK. Not later than February 15, 2006,
the Company shall have available and the Company shall reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligation to issue the Put
Shares and the Blackout Shares, if any; such amount of shares of Common Stock to
be reserved shall be calculated based upon a minimum Purchase Price of $.05 for
the Put Shares under the terms and conditions of this Agreement and a good faith
estimate by the Company in consultation with Investor of the number of Blackout
Shares, if any, that will need to be issued. The number of shares so reserved
from time to time, as theretofore increased or reduced as hereinafter provided,
may be reduced by the number of shares actually delivered hereunder.

     Section 6.3 LISTING OF COMMON STOCK. The Company shall maintain the listing
of the Common Stock on a Principal Market and, if applicable, will cause the Put
Shares and the Blackout Shares, if any, to be listed on the Principal Market.
The Company further shall, if the Company applies to have the Common Stock
traded on any other Principal Market, include in such application the Put Shares
and the Blackout Shares, if any, and shall take such other action as is
necessary or desirable in the reasonable opinion of Investor to cause the Common
Stock to be listed on such other Principal Market as promptly as possible. The
Company shall use its commercially reasonable efforts to continue the listing
and trading of the Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the NASD and the Principal Market.

     Section 6.4 EXCHANGE ACT REGISTRATION. The Company shall take all
commercially reasonable steps to cause the Common Stock to continue to be
registered under Section 12(g) or 12(b) of the Exchange Act, will use its
commercially reasonable efforts to comply in all material respects with its
reporting and filing obligations under said Act, and will not take any action or
file any document (whether or not permitted by said Act or the rules
thereunder)to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act.

     Section 6.5 LEGENDS. The certificates evidencing the Put Shares and the
Blackout Shares, if any, shall be free of legends, except as provided for in
Article VIII.

     Section 6.6 CORPORATE EXISTENCE. The Company shall take all commercially
reasonable steps necessary to preserve and continue the corporate existence of
the Company.

     Section 6.7 [INTENTIONALLY OMITTED]

     Section 6.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;

                                                                              19
<PAGE>

SUSPENSION OF RIGHT TO MAKE A PUT. The Company shall promptly notify Investor
upon the occurrence of any of the following events in respect of a registration
statement or related prospectus in respect of an offering of Registrable
Securities: (a) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or supplements to the
registration statement or related prospectus; (b) the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose; (c) receipt of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (d) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
registration statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (e) the Company's reasonable
determination that a post-effective amendment to the registration statement
would be appropriate, and the Company shall promptly make available to Investor
any such supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the continuation of any of the
foregoing events.

     Section 6.9 EXPECTATIONS REGARDING PUT NOTICES. Within fifteen (15)
business days after the commencement of each calendar quarter occurring
subsequent to the commencement of the Commitment Period, the Company undertakes
to notify Investor as to its reasonable expectations as to the dollar amount it
intends to raise during such calendar quarter, if any, through the issuance of
Put Notices. Such notification shall constitute only the Company's good faith
estimate with respect to such calendar quarter and shall in no way obligate the
Company to raise such amount during such calendar quarter or otherwise limit its
ability to deliver Put Notices during such calendar quarter. The failure by the
Company to comply with this provision can be cured by the Company's notifying
Investor at any time as to its reasonable expectations with respect to the
current calendar quarter.

     Section 6.10 CONSOLIDATION; MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to Investor
such shares of Common Stock and/or securities as Investor is entitled to receive
pursuant to this Agreement.

                                                                              20
<PAGE>

     Section 6.11 ISSUANCE OF PUT SHARES AND BLACKOUT SHARES. The sale of the
Put Shares and the issuance of the Blackout Shares, if any, shall be made in
accordance with the provisions and requirements of Regulation D (or shall
otherwise be exempt from the registration requirements of the Securities Act)
and any applicable state law.

     Section 6.12 DILUTION. The number of shares of Common Stock issuable as Put
Shares may increase substantially in certain circumstances, including, but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock declines during the period between the Effective Date and the end of the
Commitment Period. The Company's executive officers and directors have studied
and fully understand the nature of the transactions contemplated by this
Agreement and recognize that they have a potential dilutive effect. The board of
directors of the Company has concluded, in its good faith business judgment that
such issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Put Shares is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

                                   ARTICLE VII

                            CONDITIONS TO DELIVERY OF
                      PUT NOTICES AND CONDITIONS TO CLOSING

     Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL COMMON STOCK. The obligation hereunder of the Company to issue and sell
the Put Shares to Investor incident to each Closing is subject to the
satisfaction, at or before each such Closing, of each of the conditions set
forth below.

                  (a) ACCURACY OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The
     representations and warranties of Investor shall be true and correct in all
     material respects as of the date of this Agreement and as of the date of
     each such Closing as though made at each such time, except for changes
     which have not had a Material Adverse Effect.

                  (b) PERFORMANCE BY INVESTOR. Investor shall have performed,
     satisfied and complied in all respects with all covenants, agreements and
     conditions required by this Agreement to be performed, satisfied or
     complied with by Investor at or prior to such Closing.

     Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A
PUT NOTICE AND THE OBLIGATION OF INVESTOR TO PURCHASE

                                                                              21
<PAGE>

PUT SHARES. The right of the Company to deliver a Put Notice and the obligation
of Investor hereunder to acquire and pay for the Put Shares incident to a
Closing is subject to the satisfaction, on (a) the date of delivery of such Put
Notice and (b) the applicable Closing Date (each a "CONDITION SATISFACTION
DATE"), of each of the following conditions:

                  (a) REGISTRATION OF REGISTRABLE SECURITIES WITH THE SEC. As
     set forth in the Registration Rights Agreement, the Company shall have
     filed with the SEC the Initial Registration Statement with respect to the
     resale of the Initial Registrable Securities by Investor and such
     Registration Statement shall have been declared effective by the SEC prior
     to the first Put Date. For the purposes of any Put Notice with respect to
     the Registrable Securities other than the Initial Registrable Securities,
     the Company shall have filed with the SEC a Registration Statement with
     respect to the resale of such Registrable Securities by Investor which
     shall have been declared effective by the SEC prior to the Put Date
     therefore.

                  (b) EFFECTIVE REGISTRATION STATEMENT. As set forth in the
     Registration Rights Agreement, a Registration Statement shall have
     previously become effective for the resale by Investor of the Registrable
     Securities subject to such Put Notice and such Registration Statement shall
     remain effective on each Condition Satisfaction Date and (i) neither the
     Company nor Investor shall have received notice that the SEC has issued or
     intends to issue a stop order with respect to such Registration Statement
     or that the SEC otherwise has suspended or withdrawn the effectiveness of
     such Registration Statement, either temporarily or permanently, or intends
     or has threatened to do so (unless the SEC's concerns have been addressed
     and Investor is reasonably satisfied that the SEC no longer is considering
     or intends to take such action),and (ii) no other suspension of the use or
     withdrawal of the effectiveness of such Registration Statement or related
     prospectus shall exist.

                  (c) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
     The representations and warranties of the Company shall be true and correct
     in all material respects as of each Condition Satisfaction Date as though
     made at each such time (except for representations and warranties
     specifically made as of a particular date) with respect to all periods, and
     as to all events and circumstances occurring or existing to and including
     each Condition Satisfaction Date, except for any conditions which have
     temporarily caused any representations or warranties herein to be incorrect
     and which have been corrected with no continuing material impairment to the
     Company or Investor.

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

                                                                              22
<PAGE>

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

                  (f) [INTENTIONALLY OMITTED]

                  (g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK.
     The trading of the Common Stock shall not have been suspended by the SEC,
     the Principal Market or the NASD and the Common Stock shall have been
     approved for listing or quotation on and shall not have been delisted from
     the Principal Market.

                  (h) LEGAL OPINION. The Company shall have caused to be
     delivered to Investor, within five (5) Trading Days of the effective date
     of the Initial Registration Statement and each subsequent Registration
     Statement, an opinion of the Company's legal counsel in the form of Exhibit
     C hereto, addressed to Investor.

                  (i) [INTENTIONALLY OMITTED]

                  (j) Notwithstanding anything to the contrary contained herein,
     if, on any Closing Date, the number of Put Shares then to be purchased
     pursuant to a Put Notice by Investor would, when aggregated with all other
     shares of Common Stock then held by Investor (including, for the purposes
     of this Section 7.2(j), Common Stock issuable upon conversion, exercise or
     exchange, as applicable, of Common Stock Equivalents then held by
     Investor), cause Investor to beneficially own in excess of 9.999% of the
     total number of issued and outstanding shares of Common Stock after giving
     effect to the Put (the "Percentage Cap"), then the number of Put Shares
     shall be reduced to the extent necessary for Investor's beneficial
     ownership of Common Stock, after giving effect to the Put, not to exceed
     the Percentage Cap. For such purposes, beneficial ownership shall be
     determined in accordance with Section 13(d) of the Exchange Act and the
     rules and regulations promulgated thereunder. In the event the number of
     Put Shares with respect to any Put are required to be reduced pursuant to
     this Section 7.2(j), Investor shall provide, via facsimile, as soon as
     possible on the Closing Date, and in no event later than 12:00 p.m. EST, a
     notice to the Company setting forth the maximum number of shares issuable
     pursuant to such put which would not result in Investor's beneficial
     ownership exceeding the Percentage Cap.

                  (k) NO KNOWLEDGE. The Company shall have no knowledge of any
     event more likely than not to have the effect of causing such Registration
     Statement to be suspended or otherwise ineffective (which event is more
     likely than not to occur within the fifteen Trading Days following the
     Trading Day on which such Notice is deemed delivered.

                                                                              23
<PAGE>

                  (l) SHAREHOLDER VOTE. The issuance of shares of Common Stock
     with respect to the applicable Closing, if any, shall not violate the
     shareholder approval requirements of the Principal Market.

                  (m) OTHER. On each Condition Satisfaction Date, Investor shall
     have received and been reasonably satisfied with such other certificates
     and documents as shall have been reasonably requested by Investor in order
     for Investor to confirm the Company's satisfaction of the conditions set
     forth in this Section 7.2., including, without limitation, a certificate in
     substantially the form and substance of Exhibit D hereto, executed by an
     executive officer of the Company and to the effect that all the conditions
     to such Closing shall have been satisfied as at the date of each such
     certificate.

     Section 7.3 DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

                  (a) The Company shall make available for inspection and review
     by Investor, advisors to and representatives of Investor (who may or may
     not be affiliated with Investor and who are reasonably acceptable to the
     Company), and any Underwriter, any Registration Statement or amendment or
     supplement thereto or any blue sky, NASD or other filing, all financial and
     other records, all SEC Documents and other filings with the SEC, and all
     other corporate documents and properties of the Company as may be
     reasonably necessary for the purpose of such review, and cause the
     Company's officers, directors and employees to supply all such information
     reasonably requested by Investor or any such representative, advisor or
     Underwriter in connection with such Registration Statement (including,
     without limitation, in response to all questions and other inquiries
     reasonably made or submitted by any of them), prior to and from time to
     time after the filing and effectiveness of such Registration.

                  (b) Each of the Company, its officers, directors, employees
     and agents shall in no event disclose non-public information to Investor,
     advisors to or representatives of Investor.

                  (c) Nothing herein shall require the Company to disclose
     non-public information to Investor or its advisors or representatives, and
     the Company represents that it does not disseminate non-public information
     to any investors who purchase stock in the Company in a public offering, to
     money managers or to securities analysts; provided, however, that
     notwithstanding anything herein to the contrary, the Company shall, as
     hereinabove provided, immediately notify the advisors and representatives
     of Investor and any Underwriters of any event or the existence of any
     circumstance(without any obligation to disclose the specific event or
     circumstance) of which it becomes aware, constituting non-public
     information (whether or not requested of the Company specifically or
     generally during the course of due diligence by such persons or entities),
     which, if not disclosed in the prospectus included in a Registration
     Statement would cause such prospectus to include a material misstatement or
     to omit a material fact required to be stated therein in order to make the
     statements therein, in

                                                                              24
<PAGE>

     light of the circumstances in which they were made, not misleading. Nothing
     contained in this Section 7.3 shall be construed to mean that such persons
     or entities other than Investor (without the written consent of Investor
     prior to disclosure of such information) may not obtain non-public
     information in the course of conducting due diligence in accordance with
     the terms and conditions of this Agreement and nothing herein shall prevent
     any such persons or entities from notifying the Company of their opinion
     that based on such due diligence by such persons or entities, any
     Registration Statement contains an untrue statement of a material fact or
     omits a material fact required to be stated in such Registration Statement
     or necessary to make the statements contained therein, in light of the
     circumstances in which they were made, not misleading.

                                  ARTICLE VIII

                                     LEGENDS

     Section 8.1 LEGENDS. (a) Except as otherwise provided below, each
certificate representing Registrable Securities will bear the following legend
(the "LEGEND"):

                      The securities represented by this certificate have not
                      been registered under the Securities Act of 1933 (the
                      "Securities Act") or qualified under applicable state
                      securities laws. These securities may not be offered,
                      sold, pledged, hypothecated, transferred or otherwise
                      disposed of except pursuant to (i) an effective
                      registration statement and qualification in effect with
                      respect thereto under the Securities Act and under any
                      applicable state securities law, (ii) to the extent
                      applicable, Rule 144 under the Securities Act, or (iii) an
                      opinion of counsel reasonably acceptable to the Company
                      that such registration and qualification is not required
                      under applicable federal and state securities laws."

                      (b) As soon as practicable after the execution and
     delivery hereof, the Company shall issue to the Transfer Agent the Transfer
     Agent Instructions. Such instructions shall be irrevocable by the Company
     from and after the date thereof or from and after the issuance thereof
     except as otherwise expressly provided in the Registration Rights
     Agreement. It is the intent and purpose of such instructions, as provided
     therein, to require the Transfer Agent to issue to Investor certificates
     evidencing shares of Common Stock incident to a Closing, free of the
     Legend, without consultation by the transfer agent with the Company or its
     counsel and without the need for any further advice or instruction or
     documentation to the Transfer Agent by or from the Company or its counsel
     or Investor; provided that (a) a Registration Statement shall then be
     effective, (b) Investor confirms to the Transfer Agent and the Company that
     it has or intends to sell such Common Stock to a third

                                                                              25
<PAGE>

     party which is not an affiliate of Investor or the Company and Investor
     agrees to redeliver the certificate representing such shares of Common
     Stock to the Transfer Agent to add the Legend in the event the Common Stock
     is not sold, and (c) Investor confirms to the transfer agent and the
     Company that Investor has complied with the prospectus delivery requirement
     under the Securities Act. At any time after the Effective Date, upon
     surrender of one or more certificates evidencing Common Stock that bear the
     Legend, to the extent accompanied by a notice requesting the issuance of
     new certificates free of the Legend to replace those surrendered.

     Section 8.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other
than the one specified in Section 8.1 has been or shall be placed on the share
certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.

     Section 8.3 COVER. If the Company fails for any reason to deliver the Put
Shares on such Closing Date and the holder of the Put Shares (a "Investor")
purchases, in an open market transaction or otherwise, shares of Common Stock
(the "Covering Shares") in order to make delivery in satisfaction of a sale of
Common Stock by such Investor (the "Sold Shares"), which delivery such Investor
anticipated to make using the Put Shares (a "Buy-In"), then the Company shall
pay to such Investor, in addition to all other amounts contemplated in other
provisions of the Transaction Documents, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) such Investor's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (y) the
net proceeds (after brokerage commissions, if any) received by such Investor
from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment
Amount to such Investor in immediately available funds immediately upon demand
by such Investor. By way of illustration and not in limitation of the foregoing,
if such Investor purchases Covering Shares having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock that it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount that the Company will be required to pay to such Investor will
be $1,000.

     Section 8.4 INVESTOR'S COMPLIANCE. Nothing in this Article VIII shall
affect in any way Investor's obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.

                                   ARTICLE IX

                            NOTICES; INDEMNIFICATION

     Section 9.1 NOTICES. All notices, demands, requests, consents, approvals,
and other

                                                                              26
<PAGE>

communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (a) personally served,(b) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (c)
delivered by reputable air courier service with charges prepaid, or (d)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice given in accordance herewith. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:

              If to the Company:        Global Matrechs, Inc.
                                        90 Grove Street, Suite 201
                                        Ridgefield, CT 06877
                                        Telephone No.: (203) 431-6665
                                        Telecopier No.: (203) 431-8304

              if to Investor:           Brittany Capital Management Ltd.
                                        Cumberland House
                                        27 Cumberland Street
                                        PO Box N-10818
                                        Nassau, New Providence
                                        Bahamas

     Either party hereto may from time to time change its address or facsimile
     number for notices under this Section 9.1 by giving at least ten (10) days'
     prior written notice of such changed address or facsimile number to the
     other party hereto.

     Section 9.2 INDEMNIFICATION.

                      The Company agrees to indemnify and hold harmless Investor
     and its officers, directors, employees, and agents, and each Person or
     entity, if any, who controls Investor within the meaning of Section 15 of
     the Securities Act or Section 20 of the Exchange Act, together with the
     Controlling Persons (as defined in the Registration Rights Agreement) from
     and against any Damages, joint or several, and any action in respect
     thereof to which Investor, its partners, affiliates, officers, directors,
     employees, and duly authorized agents, and any such Controlling Person
     becomes subject to, resulting from, arising out of or relating

                                                                              27
<PAGE>

     to any misrepresentation, breach of warranty or nonfulfillment of or
     failure to perform any covenant or agreement on the part of Company
     contained in this Agreement, as such Damages are incurred, except to the
     extent such Damages result primarily from Investor's failure to perform any
     covenant or agreement contained in this Agreement or Investor's or its
     officer's, director's, employee's, agent's or Controlling Person's
     negligence, recklessness or bad faith in performing its obligations under
     this Agreement.

     Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.2
shall be asserted and resolved as follows:

                      (a) In the event any claim or demand in respect of which
     any person claiming indemnification under any provision of this Article (an
     "INDEMNIFIED PARTY") might seek indemnity under this Article is asserted
     against or sought to be collected from such Indemnified Party by a person
     other than a party hereto or an affiliate thereof (a "THIRD PARTY CLAIM"),
     the Indemnified Party shall deliver a written notification, enclosing a
     copy of all papers served, if any, and specifying the nature of and basis
     for such Third Party Claim and for the Indemnified Party's claim for
     indemnification that is being asserted under any provision of this Article
     against any person (the "INDEMNIFYING PARTY"), together with the amount or,
     if not then reasonably ascertainable, the estimated amount, determined in
     good faith, of such Third Party Claim (a "CLAIM NOTICE") with reasonable
     promptness to the Indemnifying Party. If the Indemnified Party fails to
     provide the Claim Notice with reasonable promptness after the Indemnified
     Party receives notice of such Third Party Claim, the Indemnifying Party
     shall not be obligated to indemnify the Indemnified Party with respect to
     such Third Party Claim to the extent that the Indemnifying Party's ability
     to defend has been prejudiced by such failure of the Indemnified Party. The
     Indemnifying Party shall notify the Indemnified Party as soon as
     practicable within the period ending thirty (30) calendar days following
     receipt by the Indemnifying Party of either a Claim Notice or an Indemnity
     Notice (as defined below) (the "DISPUTE PERIOD") whether the Indemnifying
     Party disputes its liability or the amount of its liability to the
     Indemnified Party under this Article and whether the Indemnifying Party
     desires, at its sole cost and expense, to defend the Indemnified Party
     against such Third Party Claim.(i)If the Indemnifying Party notifies the
     Indemnified Party within the Dispute Period that the Indemnifying Party
     desires to defend the Indemnified Party with respect to the Third Party
     Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall
     have the right to defend, with counsel reasonably satisfactory to the
     Indemnified Party, at the sole cost and expense of the Indemnifying Party,
     such Third Party Claim by all appropriate proceedings, which proceedings
     shall be vigorously and diligently prosecuted by the Indemnifying Party to
     a final conclusion or will be settled at the discretion of the Indemnifying
     Party (but only with the consent of the Indemnified Party in the case of
     any settlement that provides for any relief other than the payment of
     monetary damages or that provides for the payment of monetary damages as to
     which the Indemnified Party shall not be indemnified in full pursuant to
     this Article). The Indemnifying Party shall have full control of such
     defense and proceedings,

                                                                              28
<PAGE>

     including any compromise or settlement thereof; provided, however, that the
     Indemnified Party may, at the sole cost and expense of the Indemnified
     Party, at any time prior to the Indemnifying Party's delivery of the notice
     referred to in the first sentence of this clause (i), file any motion,
     answer or other pleadings or take any other action that the Indemnified
     Party reasonably believes to be necessary or appropriate to protect its
     interests; and provided further, that if requested by the Indemnifying
     Party, the Indemnified Party will, at the sole cost and expense of the
     Indemnifying Party, provide reasonable cooperation to the Indemnifying
     Party in contesting any Third Party Claim that the Indemnifying Party
     elects to contest. The Indemnified Party may participate in, but not
     control, any defense or settlement of any Third Party Claim controlled by
     the Indemnifying Party pursuant to this clause (i), and except as provided
     in the preceding sentence, the Indemnified Party shall bear its own costs
     and expenses with respect to such participation. Notwithstanding the
     foregoing, the Indemnified Party may takeover the control of the defense or
     settlement of a Third Party Claim at any time if it irrevocably waives its
     right to indemnity under this Article with respect to such Third Party
     Claim. (ii) If the Indemnifying Party fails to notify the Indemnified Party
     within the Dispute Period that the Indemnifying Party desires to defend the
     Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party
     gives such notice but fails to prosecute vigorously and diligently or
     settle the Third Party Claim, or if the Indemnifying Party fails to give
     any notice whatsoever within the Dispute Period, then the Indemnified Party
     shall have the right to defend, at the sole cost and expense of the
     Indemnifying Party, the Third Party Claim by all appropriate proceedings,
     which proceedings shall be prosecuted by the Indemnified Party in a
     reasonable manner and in good faith or will be settled at the discretion of
     the Indemnified Party(with the consent of the Indemnifying Party, which
     consent will not be unreasonably withheld). The Indemnified Party will have
     full control of such defense and proceedings, including any compromise or
     settlement thereof; provided, however, that if requested by the Indemnified
     Party, the Indemnifying Party will, at the sole cost and expense of the
     Indemnifying Party, provide reasonable cooperation to the Indemnified Party
     and its counsel in contesting any Third Party Claim which the Indemnified
     Party is contesting. Notwithstanding the foregoing provisions of this
     clause (ii), if the Indemnifying Party has notified the Indemnified Party
     within the Dispute Period that the Indemnifying Party disputes its
     liability or the amount of its liability hereunder to the Indemnified Party
     with respect to such Third Party Claim and if such dispute is resolved in
     favor of the Indemnifying Party in the manner provided in clause (iii)
     below, the Indemnifying Party will not be required to bear the costs and
     expenses of the Indemnified Party's defense pursuant to this clause (ii) or
     of the Indemnifying Party's participation therein at the Indemnified
     Party's request, and the Indemnified Party shall reimburse the Indemnifying
     Party in full for all reasonable costs and expenses incurred by the
     Indemnifying Party in connection with such litigation. The Indemnifying
     Party may participate in, but not control, any defense or settlement
     controlled by the Indemnified Party pursuant to this clause (ii), and the
     Indemnifying Party shall bear its own costs and expenses with respect to
     such participation. (iii) If the Indemnifying Party notifies the
     Indemnified Party that it does not dispute its liability or the amount of
     its liability to the Indemnified Party with respect to the Third Party
     Claim under this Article or fails to notify the Indemnified Party within
     the

                                                                              29
<PAGE>

     Dispute Period whether the Indemnifying Party disputes its liability or the
     amount of its liability to the Indemnified Party with respect to such Third
     Party Claim, the amount of Damages specified in the Claim Notice shall be
     conclusively deemed a liability of the Indemnifying Party under this
     Article and the Indemnifying Party shall pay the amount of such Damages to
     the Indemnified Party on demand. If the Indemnifying Party has timely
     disputed its liability or the amount of its liability with respect to such
     claim, the Indemnifying Party and the Indemnified Party shall proceed in
     good faith to negotiate a resolution of such dispute; provided, however,
     that if the dispute is not resolved within thirty (30) days after the Claim
     Notice, the Indemnifying Party shall be entitled to institute such legal
     action as it deems appropriate.

                      (b) In the event any Indemnified Party should have a claim
     under this Article against the Indemnifying Party that does not involve a
     Third Party Claim, the Indemnified Party shall deliver a written
     notification of a claim for indemnity under this Article specifying the
     nature of and basis for such claim, together with the amount or, if not
     then reasonably ascertainable, the estimated amount, determined in good
     faith, of such claim (an "INDEMNITY NOTICE") with reasonable promptness to
     the Indemnifying Party. The failure by any Indemnified Party to give the
     Indemnity Notice shall not impair such party's rights hereunder except to
     the extent that the Indemnifying Party demonstrates that it has been
     irreparably prejudiced thereby. If the Indemnifying Party notifies the
     Indemnified Party that it does not dispute the claim or the amount of the
     claim described in such Indemnity Notice or fails to notify the Indemnified
     Party within the Dispute Period whether the Indemnifying Party disputes the
     claim or the amount of the claim described in such Indemnity Notice, the
     amount of Damages specified in the Indemnity Notice will be conclusively
     deemed a liability of the Indemnifying Party under this Article and the
     Indemnifying Party shall pay the amount of such Damages to the Indemnified
     Party on demand. If the Indemnifying Party has timely disputed its
     liability or the amount of its liability with respect to such claim, the
     Indemnifying Party and the Indemnified Party shall proceed in good faith to
     negotiate a resolution of such dispute; provided, however, that if the
     dispute is not resolved within thirty (30) days after the Claim Notice, the
     Indemnifying Party shall be entitled to institute such legal action as it
     deems appropriate.

                      (c) The indemnity agreements contained herein shall be in
     addition to (i) any cause of action or similar rights of the Indemnified
     Party against the Indemnifying Party or others, and (ii) any liabilities
     the Indemnifying Party may be subject to.

     Section 9.4 REIMBURSEMENT. (i) any Investor, other than by reason of its
gross negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any stockholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if such Investor is impleaded in
any such action, proceeding or investigation by any Person, or (ii) any
Investor, other than by reason of its gross negligence or willful misconduct or
by reason of its trading of the Common Stock in a manner that is illegal under

                                                                              30
<PAGE>

the federal securities laws, becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC against or involving the Company
or in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if such Investor is impleaded in
any such action, proceeding or investigation by any Person, then in any such
case, the Company will reimburse such Investor for its reasonable legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. In addition,
other than with respect to any matter in which such Investor is a named party,
the Company will pay such Investor the charges, as reasonably determined by such
Investor, for the time of any officers or employees of such Investor devoted to
appearing and preparing to appear as witnesses, assisting in preparation for
hearings, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliates of the
Investor who are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Investor and any such Affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Investor and any such Affiliate and any such
Person. The Company also agrees that neither any Investor nor any such
Affiliate, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Agreements except to the extent that any losses, claims,
damages, liabilities or expenses incurred by the Company result from the gross
negligence or willful misconduct of such Investor.

                                    ARTICLE X

                                  MISCELLANEOUS

     Section 10.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflicts of law. Each of the Company and Investor
hereby submit to the exclusive jurisdiction of the United States Federal and
state courts located in New York with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby.

     Section 10.2 JURY TRIAL WAIVER. The Company and the Investor hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other in respect of any matter arising out of or in
connection with the Transaction Documents.

                                                                              31
<PAGE>

     Section 10.3 SPECIFIC ENFORCEMENT. The Company and the Investor acknowledge
and agree that irreparable damage would occur to the Investor in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the Investor shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.

     Section 10.4 ASSIGNMENT. Neither this Agreement nor any rights of Investor
or the Company hereunder may be assigned by either party to any other person.

     Section 10.5 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the Company and Investor, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

     Section 10.6 TERMINATION. This Agreement shall terminate at the end of the
Commitment Period or as otherwise provided herein(unless extended by the
agreement of the Company and Investor); provided, however, that the provisions
of Article VI, VIII, IX and Sections 10.2, 10.3 and 10.4 shall survive the
termination of this Agreement.

     Section 10.7 ENTIRE AGREEMENT,. This Agreement and the instruments
referenced herein contain the entire understanding of the Company and Investor
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor Investor makes
any representation, warranty, covenant or undertaking with respect to such
matters.

     Section 10.8 FEES AND EXPENSES. Except as otherwise provided in this
Agreement or any of the Exhibits thereto, each of the Company and Investor
agrees to pay its own expenses in connection with the preparation of this
Agreement and performance of its obligations hereunder. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Shares pursuant hereto.

     Section 10.9 NO BROKERS. Each of the Company and Investor represents that
it has had no dealings in connection with this transaction with any finder or
broker who will demand payment of any fee or commission from the other party,
except that the company agrees to pay the consultant, Greenfield Capital
Partners, LLC., a fee in the amount of 1% of any money funded pursuant to a Put
Notice. The Company on the one hand, and Investor, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.

                                                                              32
<PAGE>

     Section 10.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the Company and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the parties so delivering this
Agreement.

     Section 10.11 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the Company hereto shall survive each Closing
hereunder for a period of one (1) year thereafter. In the event that any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision; provided that such severability
shall be ineffective if it materially changes the economic benefit of this
Agreement to any party.

     Section 10.12 FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     Section 10.13 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

     Section 10.14 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

     Section 10.15 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the determination of the trading price of the Common Stock on
any given Trading Day for the purposes of this Agreement shall be Bloomberg L.P.
or any successor thereto.

     Section 10.16 PUBLICITY. The Company and Investor shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and no party shall issue any
such press release or otherwise make any such public statement without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other parties with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of Investor without the prior

                                                                              33
<PAGE>

written consent of such Investor, except to the extent required by law. Investor
acknowledges that this Agreement and all or part of the Transaction Documents
may be deemed to be "material contracts" as that term is defined by Item
601(b)(10) of Regulation S-K, and that the Company may therefore be required to
file such documents as exhibits to reports or registration statements filed
under the Securities Act or the Exchange Act. Investor further agrees that the
status of such documents and materials as material contracts shall be determined
solely by the Company, in consultation with its counsel.

                         [REMAINDER OF PAGE LEFT BLANK]

                                                                              34
<PAGE>

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

                              GLOBAL MATRECHS, INC.

                                        By: /s/ Michael Sheppard
                                            ----------------------------
                                            Name: Michael Sheppard
                                            Title: President

                                        BRITTANY CAPITAL MANAGEMENT LTD.

                                        By: /s/ Barry W. Herman
                                            ----------------------------
                                            Name: Barry W. Herman
                                            Title: President

                                                                              35
<PAGE>

                                    EXHIBITS

     EXHIBIT A              Registration Rights Agreement

     EXHIBIT B              Put Notice

     EXHIBIT C              Opinion

     EXHIBIT D              Closing Certificate

     EXHIBIT E              Transfer Agent Instructions

                                                                              36
<PAGE>

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