Document:

ex10-2.htm

    Exhibit
10.2

     

    ASSET
PURCHASE AGREEMENT

    Between

    VEMICS,
INC.

    and

    E
LEARNING DESKTOP VENTURES, INC.

    

    This
ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of January 25, 2007
("Effective Date"), by and between Vemics, Inc., a Nevada Corporation whose
address is 523 Avalon Gardens Drive, Nanuet, New York 10954 ("Vemics''), and E
Learning Desktop Ventures Inc., a Canadian Corporation whose address is 2301
Haines Rd # 201, Mississauga ON Canada ("EL Desktop").

    

    1.           
Sale of business
assets.

    

    (a) Sale.  On the terms
and subject to the conditions set forth herein, EL Desktop shall sell, convey,
transfer, assign, and deliver to Vemics, and Vemics shall purchase, acquire and
accept, as provided for and subject to the limitations set forth herein, all of
EL Desktop's assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill of every kind and
description, wherever located, including but not limited to those set forth on
or as provided for in Exhibit A (Asset List) and Exhibits A-I through A-5
(Contracts), all as they exist upon the consummation of closing (collectively,
the "Assets"). Vemics shall have the option (exercisable in its sole and
absolute discretion) to accept or reject the sale, conveyance, transfer
assignment and/or delivery of any EL Desktop assets, contracts, agreements,
properties, business, intellectual property, copyrights, patents, trademarks,
leases and goodwill, including but not limited to any of the leases listed in
Exhibit B herein; any such items so rejected by Vemics shall be retained by EL
Desktop and shall not be included within the Assets. With respect to all EL
Desktop assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill, including but
not limited to any of the leases listed in Exhibit B herein that EL Desktop
obtains after the Effective Date, within 10 days of entering into or otherwise
obtaining such assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill, including but
not limited to any of the leases listed in Exhibit B, EL Desktop shall provide
written notice thereof to Vemics, which notice shall be accompanied by a
complete and correct copy of the assets, contracts, agreements, properties,
business, intellectual property, copyrights, patents, trademarks, leases and
goodwill, including but not limited to any of the leases listed in Exhibit B;
Vemics shall have 30 days after receipt of all of the foregoing from EL Desktop
to accept or reject the assignment of such assets, contracts, agreements,
properties, business, intellectual property, copyrights, patents, trademarks,
leases and goodwill, including but not limited to any of the leases listed in
Exhibit B.

    

    Desktop
must reveal to and notify Vemics, in writing, of all revenue-generating
contracts, agreements, memoranda of agreements and other business arrangements
that EL Desktop has entered into and/or will enter into in the future ("New
Contracts"). Such notice shall be provided by EL Desktop to Vemics within 15
days of the first to occur of (i) the parties' execution and delivery of, or
(ii) EL Desktop's direct or indirect receipt of any income, payments or other
compensation from, any such New Contracts. Upon written demand of Vemics, EL
Desktop will assign to Vemics, at no additional cost or expense, any or all such
New Contracts. These New Contracts shall include but not be limited to the
contracts attached hereto as Exhibits A-1 through A-5 (the "Contracts"). EL
Desktop shall be under a continuing on-going obligation now and in the future to
reveal and notify Vemics of any such New Contracts, and its failure to do so
shall be a material breach of this Agreement.  EL Desktop represents
and warrants to Vemics that (1) all contracts being assigned to Vemics under
this Agreement (including the Contracts) are in full force and effect and are
valid and enforceable in accordance with their terms, (2) no party to any such
contract is in breach in any manner whatsoever of its liabilities, duties and/or
obligations under such contract and (3) such contracts are fully assignable to
Vemics as written without the need of any consents or approvals.

    

    (c)           
No Assumption of
liabilities.  Vemics shall not now and/or in the future assume,
pay, perform, or discharge any debts, obligations, contracts, agreements, leases
and liabilities of EL Desktop of any kind, character, or description, whether
accrued, absolute, contingent, or otherwise (regardless of whether reflected or
reserved against on EL Desktop's balance sheets, books of account, and records);
provided, however, that, subject to the terms and conditions of this Agreement,
Vemics shall assume and agree to discharge and perform, when due, any those
debts, obligations and liabilities arising entirely after the Closing Date under
those contracts, agreements and leases included in the Assets (excluding any
debts, obligations and/or liabilities accruing, arising out of or relating to
any breach or default by EL Desktop on or prior to the Closing Date under any
such contracts, agreements and leases included in the Assets).  EL
Desktop agrees to fully pay or otherwise satisfy when due, and to indemnify,
hold harmless and defend Vemics from and against, all claims, debts,
liabilities, obligations, duties, defense costs (including reasonable attorneys'
fees), judgments and other expenses arising out of those debts, obligations,
contracts, agreements, leases and/or liabilities of EL Desktop not specifically
assumed by Vemics under this Agreement.

     

    
      
        
        

      

      
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    (d)           
Assurance.  EL
Desktop warrants and represents that Vemics shall not be subjected to any
liability to any third party as the result of this Agreement, except as
otherwise provided in Section 1(c) with respect to debts, obligations and
liabilities arising entirely after closing under those contracts, agreements and
leases included in the Assets.

    

    (e)           
Conveyances.  The
sale, conveyance, transfer, assignment, and delivery of the Assets shall be
effected by deeds, bills of sale, endorsements, assignments, drafts, checks, and
other instruments of transfer and conveyance, in form and substance acceptable
to Vemics (collectively, the "Closing Documents'', which shall be executed and
delivered by EL Desktop at closing.

     

    (f)           
Additional
documents.  EL Desktop shall, at any one or more times after
the Closing Date, upon Vemics' request, execute, acknowledge, and deliver all
further deeds, assignments, transfers, conveyances, powers of attorney, and
assurances, and do all other acts and things, that are required or appropriate
to assign, transfer, grant, convey, assure, and confirm to Vemics, or to its
successors and assigns, or to aid and assist in collecting and reducing to
possession, any of or all the Assets to Vemics, and/or any of or all the
obligations of EL Desktop to be assigned to, and assumed, paid, performed,
and/or discharged by Vemics pursuant to this Agreement.

    

    2.           
Composition of purchase
price.  On the terms and subject to the conditions herein set
forth, Vemics shall issue and deliver to EL Desktop on the Closing
Date:

    

    (a)           
Common
stock.  At closing, Vemics will issue to EL Desktop an
aggregate of one million one hundred eleven thousand one hundred twelve
(1,111,112) restricted shares (the "Shares") of Vemics common stock, with a par
value of $.00I per share (the "Common Stock"), all of which Shares shall be
registered in the name of EL Desktop. With respect to said Shares, (i) at
closing stock certificates representing one million (1,000,000) restricted
shares of Common Stock will be delivered by Vemics to EL Desktop, and (ii) at
closing stock certificates representing the remaining one hundred eleven
thousand one hundred twelve (111,112) restricted shares of Common Stock (the
"Escrowed Shares") will be presented by Vemics to EL Desktop along with a blank
stock power relating to said Escrowed Shares, and thereupon EL Desktop will sign
the stock power in blank (with a signature guaranty) and deliver said signed
stock power and said stock certificates representing the Escrowed Shares to
Vemics to be held in escrow pursuant to this Agreement.  Vemics will
hold said stock power and Escrowed Shares in escrow to offset any losses, debts,
obligations or liabilities which may be borne or incurred by Vemics due to,
arising out of or otherwise relating to any breach or violation of this
Agreement (including without limitation Section 1(c) of this Agreement) by EL
Desktop (collectively, "Losses").  If by July 16, 2007, Vemics has not
borne or incurred any Losses, and EL Desktop is not in breach or violation of
any term and condition of this Agreement (including without limitation Section
1(c) of this Agreement), then, subject to the terms and conditions of this
Agreement, the Escrowed Stock will be released by Vemics to EL Desktop. If on or
prior to July 16, 2007, Vemics has borne or incurred any Losses, or EL Desktop
is in breach or violation of any term and condition of this Agreement (including
without limitation Section 1(c) of this Agreement), then on July 16, 2007,
Vemics shall so notify EL Desktop, and may offset its Losses and any other
damages incurred or to be incurred by Vemics as a result thereof on a
dollar-for-dollar basis against the Escrowed Shares, in which event each such
Escrowed Share shall be valued at the average of the closing prices of Vemics
Common Stock over the 30 trading days immediately preceding July 16, 2007, as
reported in the pink sheets or, if Vemics Common Stock is traded on an exchange,
as reported by such exchange (if Vemics Common Stock is not traded in the pink
sheets or on an exchange an any date during said 30 trading days, each Escrowed
Shares shall be valued at US$.90); provided, however, in the event any such
Losses and/or other damages have not been liquidated on or prior to July 16,
2007 (including without limitation any Losses or damages which may be reasonably
anticipated by Vemics to be incurred after July 16, 2007), then, for purposes of
any such offset, on July 16, 2007, Vemics may make a reasonable estimate of the
amount of such unliquidated Losses and/or other damages which Vemics may incur.
In the event of any such offset by Vemics, the Escrowed Shares as to which the
offset is applied (rounded up to the next whole share) shall be deemed
repurchased by Vemics from - EL Desktop and to thereupon become authorized but
unissued shares, and any Escrowed Shares as to which the offset is not applied
shall, subject to the terns and conditions of this Agreement, be released and
delivered to EL Desktop.

     

    
      
        
        

      

      
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    (b)           
Common stock bonus - Warrant
and Additional Warrant.

    

    (1)           
Warrant.  Subject
to the provisions of this Section, on February 28, 2008, Vemics will issue to EL
Desktop a warrant for restricted shares of Vemics Common Stock, not to exceed
750,000 restricted shares of Vemics' Common Stock, with a strike price of US$.90
per share of Common Stock and a term of 5 (five) years, which warrant shall be
in the form attached hereto as Exhibit C (the "Warrant").  The number
of restricted shares of Vemics Common Stock to be subject to the Warrant will be
based on the amount of net revenue received by Vemics which is generated by E.
James Pennington ("Pennington") as an employee of Vemics between the Closing
Date and February 28, 2008, according to the matrix below; provided, however,
that no Warrant shall be issued if the amount of net revenue received by Vemics
which is generated by the International Education Solutions Division directed by
E James Pennington between the Closing Date and February 28, 2008, is not at
least US$975,000:

     

    
      
        	
                Target
      Net Revenue:

              	
                US$1,500,000

              
	
                Date
      to Reach Target Net Revenue:

              	
                February
      28, 2008

              

      

    

    

    

    
      	
              
              

              
              

              %
      of Target Net

              Revenue
      Reached

            	
              Percentage
      of

              Warrant
      which will be

              exercisable

            	
              Number
      of shares which will be

              exercisable
      under the Warrant

            
	
              Less
      than 65%

            	
              -0-%
      (no Warrant to be issued)

            	
              -0-
      shares (no warrant to be issued)

            
	
              65%

            	
              45%

            	
              337,500
      shares

            
	
              75%

            	
              60%

            	
              450,000
      shares

            
	
              85%

            	
              75%

            	
              562,500
      shares

            
	
              95%

            	
              90%

            	
              675,000
      shares

            
	
              100%
      or more

            	
              100%

            	
              750,000
      shares

            

    

     

     

    (2)           
Additional
Warrant.

    

    (i) Subject
to the provisions of this Section, on February 28, 2008, Vemics will issue to EL
Desktop an additional warrant for 750,000 restricted shares of Vemics Common
Stock, with a strike price equal to 90% of the average of the closing prices of
Vemics Common Stock over the 30 trading days immediately preceding February 28,
2008 (as reported in the pink sheets or, if Vemics Common Stock is traded on an
exchange, as reported by such exchange) (if Vemics Common Stock is not traded in
the pink sheets or on an exchange an any date during said 30 trading days, a
share of Vemics Common Stock shall be valued at US$.90 so that the strike price
would be US$.81), if the amount of net revenue received by Verities which is
generated by Pennington as an employee of Vemics between the Closing Date and
February 28, 2008, is US$2,250,000 or more. If Vemics does, or is obligated to,
issue such an additional warrant to EL Desktop pursuant to this Section
2(b)(2)(i), then no additional warrant shall be issued or issuable pursuant to
Section 2(b)(2)(ii).

    

    (ii) Subject
to the provisions of this subsection, if Vemics does not and is not obligated to
issue an additional warrant to EL Desktop pursuant to Section 2(b)(2)(i), then
on February 28, 2009, Vemics will issue to EL Desktop an additional warrant for
750,000 restricted shares of Vemics Common Stock, with a strike price equal to
90% of the average of the closing prices of Vemics Common Stock over the thirty
trading days immediately preceding February 28, 2009 (as reported in the pink
sheets or, if Vemics Common Stock is traded on an exchange, as reported by such
exchange) (if Vemics Common Stock is not traded in the pink sheets or on an
exchange an any date during said 30 trading days, a share of Vemics Common Stock
shall be valued at US$.90 so that the strike price would be US$.81), if the
amount of Vemics' net revenue which is generated by Pennington as an employee of
Vemics between March 1, 2008 and February 28, 2009, is US$3,000,000 or
more.

     

    
      
        
        

      

      
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    (iii) Any
additional warrant issued by Vemics pursuant to this Section 2(b)(2) (an
"Additional Warrant") shall be for a term of 5 (five) years, and shall be in
substantially the same form as the Warrant attached hereto as Exhibit
C.  In the event any stock split, reverse stock split,
recapitalization, merger, consolidation, conversion, or similar transaction to
which Vemics is a party occurs prior to the issuance of any Additional Warrant,
then, notwithstanding Sections 2(b)(2)(i) and (ii) above, Vemics may, in ifs
reasonable discretion, appropriately adjust the strike price and/or number,
class or type of shares to be received upon exercise of the Additional Warrant
as if the Additional Warrant had been issued immediately prior to such event or
transaction.

    

    (c)           
Restrictions and
Rights.  The following provisions shall apply to the Vemics
Shares, the Warrant, Additional Warrant and the Additional Shares (as defined
below):

    

    (1)           
The Shares are not, and if and when issued neither (i) the Warrant and any
securities issued upon exercise of the Warrant, (ii) the Additional Warrant and
any securities upon exercise of the Additional Warrant, nor (iv) the Additional
Shares will be, registered under the Securities Act of 1933, as amended
("Securities Act"), or under any state "blue sky" laws (collectively, "State
Acts"). The Shares are, and if and when issued (i) the Warrant and any
securities issued upon exercise of the Warrant, (ii) the Additional Warrant and
any securities upon exercise of the Additional Warrant, and (iii) the Additional
Shares will be, "restricted securities," as that term is defined in U.S.
Securities and Exchange Commission ("SEC") Rule 144, and may not be sold,
assigned, transferred or otherwise disposed of unless registered under the
Securities Act and all applicable State Acts or unless exemptions from such
registration requirements are available for such transaction.

    

    (2) The
certificate or certificates evidencing the Vemics Shares (including any Escrowed
Shares) to be delivered to EL Desktop, or, if and when issued, evidencing (i)
the Warrant and any securities issued upon exercise of the Warrant, (ii) the
Additional Warrant and any securities issued upon exercise of the Additional
Warrant, and (iii) the Additional Shares, will bear a restrictive legend
substantially in the following form as long as applicable:

    

    "THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THESE SECURITIES
IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
LAWS."

    

    (3) 
(i)            If, at any
time after the first anniversary of the Closing Date, Vemics files a
registration statement under the Securities Act for purposes of a public
offering of securities of the Vemics for its own account, it shall notify EL
Desktop in writing (the "Company Notice"). EL Desktop shall have the right (the
"Piggyback Right"), subject to the limitations set forth in this Section, to
include in any such registration statement all or any portion of the Vemics'
Shares and Additional Shares then held by EL Desktop. In order to exercise the
Piggyback Right, EL Desktop shall give written notice to Vemics (the "Piggyback
Notice") no later than fifteen (15) days following the date on which the Vemics
gives the Company Notice. The Piggyback Notice shall set forth the number of
Vemics' Shares and Additional Shares that EL Desktop desires to include in the
registration statement. All expenses of any such registration will be paid by
the Vemics.

     

    
      
        
        

      

      
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    (ii) If the
registration statement under which Vemics gives a notice under this Section is
for an underwritten offering, Vemics shall so advise the EL Desktop in the
Company Notice.  In such event, the right of any EL Desktop to be
included in a registration pursuant to this Section shall be conditioned upon EL
Desktop's participation in such underwritten offering and the inclusion of EL
Desktop's Vemics' Shares and Additional Shares in the underwritten offering to
the extent provided herein. All holders of Vemics' Shares and Additional Shares
proposing to distribute their shares by means of such underwritten offering
(including without limitation EL Desktop) shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by Vemics. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing or other
factors require a limitation of the number of shares to be underwritten, the
number of shares that may be included in the underwriting shall be allocated,
first, to Vemics; second, if and to the extent permitted by the underwriter, to
EL Desktop with respect to the Vemics' Shares and Additional Shares; and third,
if and to the extent permitted by the underwrite, to any other stockholder of
Vemics (i.e., other than EL Desktop) on a pro rata basis. No such reduction
shall reduce the securities being offered by Vemics for its own account to be
included in the registration and underwriting.  If EL Desktop
disapproves of the terms of any such underwriting, EL Desktop may elect to
withdraw therefrom by written notice to Vemics and the underwriter, delivered at
least twenty (20) business days prior to the effective date of the registration
statement.

    

    (iii)           
Vemics shall have the right to terminate or withdraw any registration initiated
by it under this Section prior to the effectiveness of such registration whether
or not EL Desktop has elected to include securities in such
registration.

    

    (4)           
With a view to making available to EL Desktop the benefits of SEC Rule 144 and
any other rule or regulation of the SEC that may at any time permit EL Desktop
to sell securities of Vemics to the public without registration, Vemics agrees
to use reasonable efforts, after the first anniversary of Closing Date and so
long as the EL Desktop owns any Vemics' Shares or Additional Shares, to: (i)
make and keep available adequate current public information with respect to
Vemics, as those terms are understood and defined in SEC Rule 144; (ii) to file
with the SEC in a timely manner all reports and other documents required of
Vemics under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (at any time after Vemics has become subject to such reporting
requirements); and (iii) furnish to any EL Desktop forthwith upon request (A) to
the extent accurate, a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144, the Securities Act, and the
Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after Vemics so qualifies); and (B) to
the extent accurate, a copy of the most recent annual or quarterly report of
Vemics and such other reports and documents so filed by Vemics.

    

    (d)           
Cash or Additional
Shares. Vemics shall pay to EL Desktop Creditors up to US$250,000 in cash
to satisfy any outstanding debts, liabilities or obligations to EL Desktop's
present creditors (collectively, the "Cash Payments") identified in "Exhibit D "
(collectively the "EL Desktop Creditors") with payment to be made to EL Desktop
Creditors on before the date indicated on said "Exhibit D".  This
Section 2(d) is subject to Section I (c) above, and in the event of any
inconsistency, Section 1(c) shall control.  Any such Cash Payments so
made by Vemics will be used by EL Desktop to satisfy its current financial
obligations, and Vemics may require a final determination of what these
financial obligations are prior to making any such Cash Payment. Exhibit D is a
list prepared by EL Desktop of its current financial obligations.  No
Cash Payments so made by Vemics will be paid, directly or indirectly, by EL
Desktop to the management or shareholders of EL Desktop, except for such monies
as are due for back salaries, expenses and documented loans made to EL Desktop
(excluding direct equity investments made by, and any convertible debentures
held by, management or shareholders of EL Desktop, which shall not be paid or
otherwise satisfied, in whole or in part, directly or indirectly, with any such
Cash Payments by Vemics).  If on or before September 15, 2007, Vemics
has not made Cash Payments aggregating US$250,000 pursuant to this Section 2(d),
then on September 16, 2007, Vemics will issue to EL Desktop such number of
additional restricted shares (the "Additional Shares") of Vemics Common Stock,
registered in the name of EL Desktop and rounded up to the next whole share, as
shall have an aggregate value equal to the difference between US$250,000 and the
dollar amount of the aggregate Cash Payments (if any) made by Vemics on or prior
to September 15, 2007. For this purpose, each Additional Share shall be valued
at the average of the closing prices of Vemics Common Stock over the 30 trading
days immediately preceding September 16, 2007, as reported in the pink sheets
or, if Vemics Common Stock is traded on an exchange, as reported by such
exchange (if Vemics Common Stock is not traded in the pink sheets or on an
exchange an any date during said 30 trading days, each Escrowed Shares shall be
valued at US$.90).

    

    (e)           
Excluded property.
Vemics shall not acquire, and EL Desktop shall retain, all assets and
property of EL Desktop which are not assigned to Vemics pursuant to this
Agreement.

     

    
      
        
        

      

      
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    (f)           
Transfer of Lease
Interests.  EL Desktop covenants and agrees that it will offer
to transfer to Vemics, for no additional consideration, any lease or leasehold
interest in the properties it has in its possession now (referred to in Exhibit
B.) or in the future (at which time Vemics will have sole option whether to
accept or reject said lease interest). With respect to all leases and leasehold
interests currently held by EL Desktop (referred to in Exhibit B), Vemics shall
furnish an estoppel certificate from each lessor under such leases, whereby the
lessors will verify that each of the leases is not in default and is in full
force and effect as of the date of closing. Such estoppel certificate shall
contain a provision whereby the lessor consents to the transfer. With respect to
all leases and leasehold interests currently held by EL Desktop (referred to in
Exhibit B), Vemics will accept or reject such assignment at closing. With
respect to all leases and leasehold interests that EL Desktop obtains after the
Effective Date, within 10 days of entering into or otherwise obtaining such
lease or leasehold interest, EL Desktop shall provide written notice thereof to
Vemics, which notice shall be accompanied by a complete and correct copy of the
applicable lease and any other documents and agreements related thereto, along
with an estoppel certificate as described above in this Section 2(f) from the
applicable lessor; Vemics shall have 30 days after receipt of all of the
foregoing from EL Desktop to accept or reject the assignment of such new lease
or leasehold interest.

     

    (g)           
Vemics '
account.  From and after the Effective Date, all operations
relating to EL Desktop's Assets to be conveyed to Vemics shall be for the
account, and shall accrue to the benefit, of Vemics.

    

    3.           
Representations and warranties
of EL Desktop.  EL Desktop hereby represents and warrants to
Vemics as follows:

    

    (a)           
Duly
organized.  EL Desktop is a corporation duly organized and
validly existing in good standing under the laws of Canada, and is entitled to
own or lease its properties and to carry on its business as and in the places
where such properties are now owned, leased, or operated and such business is
now conducted.

    

    (b)           
Subsidiary corporations.
EL Desktop has no subsidiary corporations.

    

    (c)           
Leases. Exhibit B is a
list and brief description of all material leases and agreements under which EL
Desktop leases, holds, and operates real property or significant items of
personal property. All such leases and agreements are assignable except as
stated therein, and no material adverse claim against, or defect in, the
interest purportedly leased or given under or by any such instrument exists. EL
Desktop is not in default with respect to any instrument on such list. EL
Desktop owns outright and has good and marketable title to all the assets and
properties listed in Exhibit A, Exhibit A-1 through Exhibit A-5, and Exhibit
B.

    

    (d)           
Intangible
property.  Exhibit E is a list of all material United States
and Canadian patents, patent applications, and trademarks owned by or registered
in the name of EL Desktop or in which EL Desktop has any rights, and in each
case a brief description of the nature of such rights. EL Desktop is not a
licensor in respect of any United States or Canadian patents, trademarks, trade
names, and applications therefor, except as stated in such list.

    

    (e)           
Insurance. Exhibit F
contains a brief description of all material policies of fire, liability, and
other forms of insurance held by EL Desktop.

    

    (f)           
Authorization.  EL
Desktop's Board of Directors have approved this Agreement and the transactions
contemplated herein, and have authorized the execution and delivery of this
Agreement by EL Desktop. This Agreement and the transactions contemplated
herein, including the conveyance, assignment, transfer, and delivery of the
Assets of EL Desktop, have been consented to in writing by the shareholders of
record of EL Desktop who are entitled to vote thereon. This Agreement and the
transactions contemplated herein have been authorized and approved by all
necessary corporate action of EL Desktop.

    

    This
Agreement constitutes the legal, valid and binding obligation of EL Desktop,
enforceable against EL Desktop in accordance with its terms. When executed and
delivered by EL Desktop, the Closing Documents will constitute the legal, valid
and binding obligations of EL Desktop, enforceable against EL Desktop in
accordance with their respective terms.

     

    
      
        
        

      

      
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    (g)           
EL Desktop has the Legal right, power, authority and ability to execute and
deliver this Agreement and the Closing Documents and to perform its obligations
thereunder, including without limitation to transfer all of the Assets to
Vemics. EL Desktop hereby certifies that its intellectual property, patents,
copyrights, and trademarks do not and will not infringe upon or misappropriate
any intellectual property, copyright, patent, right of publicity or privacy
(including but not limited to defamation), trade secret, trademark, or other
proprietary rights of any third party. In addition, EL Desktop hereby certifies
that none of its Assets are subject to any lien or encumbrance by any third
party. EL Desktop also certifies that the Contracts referenced herein are in
good standing and that EL Desktop is in full performance and compliance with
said Contracts and said Contracts are not subject to any right, setoff or
encumbrance by any third party.

    

    (h)           
EL Desktop's performance of this Agreement will not conflict with any other
contract or other agreement to which EL Desktop is a party or otherwise
bound.

    

    (i)           
EL Desktop warrants that none of the Assets are subject to any lien or
encumbrance of any kind in favor of any lender or other person.

     

    (j)           
EL Desktop agrees to indemnify, hold harmless and defend Vemics from and against
all claims, defense costs (including reasonable attorneys' fees), judgments and
other expenses arising out of the breach of any provisions of this Agreement by
EL Desktop.

    

    (k)           
EL Desktop is acquiring the Shares, the Warrant, the Additional Warrant and the
Additional Shares for its own account and will not sell, assign, transfer, or
otherwise dispose of any of the Shares, the Warrant (or any securities issued
upon exercise of the Warrant), the Additional Warrant (or any securities issued
upon exercise of the Additional Warrant), any of the Additional Shares
(collectively, the "Vemics Securities"), or any interest in any of the Vemics
Securities, without registration under the Securities Act, and all applicable
State Acts, except in a transaction which is exempt from such registration
requirements. EL Desktop has no pm-existing plan or proposal to, and EL Desktop
has not and will not within the one-year period following the Closing Date,
distribute or adopt a plan or proposal to distribute any or all of the Vemics
Securities to its shareholders and/or other persons, whether in connection with
a dissolution of EL Desktop or otherwise, without the prior written consent of
Vemics or unless such Vemics Securities have been registered under the
Securities Act and all applicable State Acts.

    

    EL
Desktop has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risk of an investment in the Vemics
Securities, and has obtained, in its judgment, sufficient information from
Vemics to evaluate the merits and risks of an investment in the Vemics
Securities. EL Desktop has been provided the opportunity to obtain information
and documents concerning Vemics and the Vemics Securities, and has been given
the opportunity to ask questions of and receive answers from, the directors and
officers of Vemics concerning Vemics and the Vemics Securities and other matters
pertaining to this investment. EL Desktop acknowledges and agrees that it has
obtained from EL Desktop, and has reviewed, those documents listed on Exhibit G
(the "Vemics Disclosure Documents"). EL Desktop is aware of the risks inherent
in an investment in Vemics, and specifically the risks of an investment in the
Vemics Securities (including without limitation the risks referred to in the
Vemics Disclosure Documents). In addition, EL Desktop is aware and acknowledges
that there can be no assurance of the future viability or profitability of
Vemics, nor can there be any assurance relating to the current or future value
of the Vemics Common Stock or any of the other Vemics Securities.

    

    
      	
               

            	
              4.

            	
              Representations and warranties
      of Vemics Vemics represents and warrants to EL Desktop as follows:
      

            

    

    

    (a)           
Duly
organized.  Vemics is a corporation duly organized and validly
existing in good standing under the laws of Nevada, and is entitled to own or
lease its properties and to carry on its business as and in the places where
such properties are now owned, leased, or operated and such business is now
conducted.

    

    (b) Securities. The Shares and
any Additional Shares, when issued and delivered as provided herein, will be
Vemics' duly authorized, validly issued and outstanding, fully paid and
non-assessable shares of Vemics Common Stock. The Warrant and the Additional
Warrant, if and when issued and delivered as provided herein, will be Vemics'
duly authorized, validly issued and outstanding, warrants, and if and when any
securities are issued upon any exercise of the Warrant or the Additional
Warrant, such securities will be the duly authorized, validly issued and
outstanding, fully paid and non-assessable securities of Vemics.

    

    (c)           
Authorization. Vemics'
Board of Directors has approved this and authorized this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    5.           
No assumption of liabilities
by Vemics

    

    (a)           
Except as otherwise provided in Section 1(c), EL Desktop acknowledges that
Vemics is acquiring EL Desktop's Assets hereunder without any assumption of EL
Desktop's liabilities. EL Desktop covenants that it shall fully and timely
satisfy all its present liabilities to creditors.

    

    (b)           
EL Desktop will hold Vemics harmless against all claims for products, service,
and professional liability against EL Desktop arising out of sales of products
or services rendered by EL Desktop.

    

    (c)           
EL Desktop represents that it has disclosed all its debts, liabilities and
obligations to Vemics, and that EL Desktop has no undisclosed
liabilities.

    

    (d)           
EL Desktop has paid or will pay or fully provide for all Canadian, United States
and state income and other taxes which relate to the conduct of its business
through the Closing Date. EL Desktop represents that there is no pending tax
claim or dispute on taxes which might result in a lien against EL Desktop's
Assets.

     

    (e)           
Bulk sales
law.  The parties hereby waive EL Desktop's compliance with the
provisions of any applicable bulk sales laws. EL Desktop shall hold a sufficient
amount of the cash in trust to pay all its creditors as and when their claims
come due, and hold and save Vemics harmless against any loss, damage or expense,
including reasonable attorneys' fees and court costs, incurred by Vemics as a
result of or attributable to the parties' failure to comply with such
provisions.

    

    (f)           
Division of taxation
notice.  EL Desktop shall cooperate with Vemics and give all
required information to the Canadian Division of Taxation as required by the
Canadian Division of Taxation, and shall cooperate with Vemics and give all
required information to Vemics and the Internal Revenue Services as required by
the Internal Revenue Code, and shall timely complete and execute such tax
returns, forms, notices and/or reports as may be required in connection with the
foregoing.

    

    (g)           
Licensing. EL Desktop
will comply with all United States and Canadian laws regarding licensing and
import/export restrictions of technology.

    

    6.           
Excepted
transactions.  None.

    

    7.           
Access to
records.  (a) Available material. Before the Closing Date, each
party's officers and accredited representatives shall each have full access to
the other party's plants, properties, books, accounts, and records of every
kind, including, without limitation, the other party's monthly balance sheets
and income and operating statements, and each will furnish the other with all
additional financial and operating data and other information as to its business
and properties that is from time to time reasonably requested. Each party shall
authorize and direct its respective independent auditors to make available to
the other party before the Closing Date any information, including access to
work papers, requested by such party. Before the Closing Date, each party may
also have representatives present at the taking of inventories by the
other.

    

    (b)           
Unavailable
material.  None.

    

    (c)           
Confidentiality. Vemics
and EL Desktop mutually acknowledge that, pursuant to their respective rights to
inspect the other's plants, properties, books, accounts and records, and EL
Desktop's receipt of the Vemics Disclosure Documents, as provided in this
Agreement, they may become privy to the other's Confidential Information, and
that communication of such Confidential Information to third parties (whether
such communication is authorized by Vemics or EL Desktop respectively or
otherwise), or the unauthorized use of one party's Confidential Information by
the other party, could damage the other's business after the transaction is
completed. Vemics and EL Desktop therefore mutually agree to take reasonable
steps to insure that such Confidential Information about the other, obtained by
Vemics or EL Desktop respectively, or any of their respective employees,
officers, agents, attorneys, or other accredited representatives, shall remain
confidential, shall not be used by them except as authorized by this Agreement,
and not be disclosed or revealed to third parties; provided, however, that it is
agreed that Vemics may use and disclose any Confidential Information of EL
Desktop that is included among the Assets acquired by Vemics pursuant to this
Agreement.  "Confidential Information" includes information not
ordinarily known by noncompany personnel, including customer lists, supplier
lists, trade secrets, channels of distribution, pricing policy and records,
inventory records, and all other information normally understood to be
confidential or otherwise designated as such by EL Desktop or Vemics
respectively.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    8.           
(a)            Closing date.  The
closing under this Agreement shall take place at 523 Avalon Gardens, Nanuet, NY
10954, Eastern Daylight Time, on January 25, 2007, at 10:00 AM, or such other
date as shall be mutually agreed upon by Vemics and EL Desktop (the "Closing
Date").

    

    (b)           
Payment.  All
payments required to be made under this Agreement shall be made in the time
period prescribed in this Agreement All stock to be issued to EL Desktop shall
be issued on the applicable dates set forth herein, subject to the escrow
provision set forth herein.

    

    (c)           
All Assets shall be transferred to Vemics on the Closing Date of this
transaction or, with respect to Assets which may arise after the Closing Date,
at such future date as set forth herein.

    

    9.           
Approval of Vemics' Board of
Directors.  Vemics had previously called a meeting of its Board
of Directors at which time the Board of Directors of Vemics approved this
Agreement and its execution, delivery, and performance by Vemics.

     

    10.           
Employment of E. James
Pennington

    

    (a)           
Principal.  Vemics
affirms that it intends to employ Pennington in a principal executive capacity
from and after the Closing Date, as Senior Vice
President  International Sales, and EL Desktop hereby affirms that it
is its understanding that Pennington intends to enter into the Vemics'
employment in such a capacity from and after the Closing Date. After closing,
Pennington will receive compensation of US$120,000.00 per annum, plus bonuses
and commissions to be determined, as shall be set forth in a separate Employment
Agreement between Vemics and Pennington to be executed and delivered at closing
(the "Employment Agreement"). The Employment Agreement will have a term of 3
years, and will contain such other terms and conditions, including, but not
limited to, appropriate non-competition, non-solicitation, and non-disclosure
provisions as are usual and customary. This Employment Agreement shall be
substantially in the form attached hereto as Exhibit H.

    

    (c) Right to
terminate.  If Pennington should die on or before the Closing
Date, Vemics may terminate this Agreement by giving EL Desktop written notice on
or before the Closing Date of Vemics' exercise of such termination
rights.  If Vemics does not exercise its option to terminate, EL
Desktop may terminate this Agreement by giving written notice to Vemics on or
before the Closing Date. It shall be a condition precedent to Vemics obligation
to close under this Agreement that Pennington executed and delivers the
Employment Agreement on or before the Closing Date.

    

    11.           
Survival of representations
and warranties.  EL Desktop's representations and warranties
made in this Agreement shall survive for a period of 24 months after the Closing
Date, except for the representation and warranty contained in Sections 1(c),
1(d), 5 and 14 (relating, in general, to EL Desktop's debts, liabilities and
obligations not being assumed by Vemics), which shall continue to survive until
all debts, liabilities and obligations are satisfied in full by EL Desktop and
all applicable preference periods have expired.

    Vemics'
representations and warranties made in this Agreement shall not survive the
Closing Date, and Vemics shall not have any subsequent liability with regard
thereto.

    

    12.           
Consent of third party.
(a) Assignments. To the extent that the assignment of any contract, license,
lease, commitment, sales order, purchase order or any other Asset to be assigned
to Vemics requires the consent of a third party, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. EL Desktop will diligently pursue and use its best
efforts to obtain any required consent of the third parties to the assignment to
Vemics of any such contracts, licenses, leases, commitments, sales orders,
purchase orders or other Assets of EL Desktop. If such consent is not obtained
prior to the Closing Date, EL Desktop will cooperate with Vemics in any
reasonable arrangement designed to provide for Vemics the benefits under any
such contracts, licenses, leases, commitments, sales orders, purchase orders or
other Asset, including enforcement, at the cost and for the benefit of Vemics,
of all EL Desktop's rights against the third party arising out of a breach or
cancellation by such third party or otherwise.

    

    (b)           
Accounts receivable.
Vemics may collect for its account all EL Desktop receivables and other items
that are transferred to Vemics, and may endorse EL Desktop's name on all checks
received on account of such items. EL Desktop shall deliver to Vemics all cash
or other property EL Desktop receives for such items.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    13.           
Fees and
expenses.  Each party shall pay their own fees and expenses
incurred in preparing this Agreement, carrying it into effect, and consummating
the transactions contemplated hereby.

    

    14.           
Waiver of compliance with bulk
sale requirements.  Vemics waives EL Desktop's compliance
provisions with the provisions of the bulk sales law as enacted in any
applicable jurisdiction. EL Desktop, however, shall indemnify and hold Vemics
harmless from all debts, liabilities and obligations of EL Desktop which are not
assumed by Vemics under this Agreement, and from any and all liabilities
resulting from noncompliance with the bulk sales law, including, but not limited
to, all costs and expenses incurred in connection with the defense or settlement
of any such liability or obligation (including without limitation reasonable
attorneys fees).

    

    15.           
(a)            Assignment of agreement. This
Agreement shall not be assignable by either party except with the other's
written consent, which shall not be unreasonably withheld, conditioned or
delayed.

    

    (b) Third
parties.  Nothing in this Agreement, expressed or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement

     

    16.           
Brokerage.  Each
party represents and warrants to the other that there are no rights to or claims
for brokerage commissions or finders' fees in connection with the transactions
contemplated by this agreement, insofar as such rights or claims are alleged to
be based on arrangements or agreements made by it or on its behalf, and each of
the parties agrees to indemnify the other against and hold it harmless from all
liabilities arising from any such right or claim (including, without limitation,
cost of counsel fees in connection therewith).

    

    17.           
Notices.  All
notices and other communications ("Notices') to be given hereunder by either
party to the other shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid,

    

    if to
Vemics, addressed to:

    Fred
Zolla, President

    Vemics,
inc.

    523
Avalon Gardens Drive

    Nanuet,
New York 10954

    

    And if to
EL Desktop:

    E. James
Pennington, President

    E
Learning Desktop Ventures Inc

    2301
Haines Rd # 201

    Mississauga
ON Canada

    

    The
address for delivery of Notices may be changed by any party upon furnishing to
the other the new address for Notices in accordance with the provisions of this
paragraph.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    18.           
Entire
agreement.  This Agreement, and the Closing Documents, contains
the entire agreement between the parties with respect to the transactions
contemplated herein, and is intended by the parties to be an integration of all
of the promises, agreements, conditions, understandings, warran­ties,
representations and covenants between the parties hereto with respect to the
subject matter hereof All Exhibits referred to in this Agreement and attached
hereto are hereby incorporated herein by reference. Each party has caused to be
included herein all representations and warranties that it considers material
for the purposes of the transactions contemplated hereby, based upon
investigations which each of them has made of the other's business and affairs.
The representations and warranties contained herein constitute all the
representations and warranties upon which the parties have relied. Nothing
contained in this Agreement, any Closing Document, nor any of the exhibits
referred to herein or any other instrument or document furnished by either party
to the other after the Closing Date in relation to this transaction, contains or
will contain any untrue statement of any material fact or omits or will omit to
state any material fact required to be stated in order to make such statement,
document, or other instrument not misleading.

    

    19.           
Execution.  This
Agreement is being executed and delivered by the parties as of the Effective
Date.

    

    20.           
Governing
law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the principles of choice of law or conflicts of law.

    

    21.           
Severability of provisions.
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision hereof shall in
no way affect the validity or enforcement of any other provision, or any part
thereof.

    

    22.           
Headings.   The
captions and titles in this Agreement are for convenience and reference only,
and shall not be used to define, limit, or otherwise construe its teams and
provisions.

    

    23.           
Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.

    

    24.           
Actions necessary to complete
transaction.  Each party hereby agrees to execute and deliver
all such other documents or instruments and to take any action that is
reasonably required to effectuate the transactions contemplated by this
Agreement.

    

    25.           
Non-waiver.  No
delay or failure by either party to exercise any right hereunder, and no partial
or single exercise of any such right, shall constitute a waiver of that or any
other right, or release the other party from any claims arising out of or
connected with this Agreement, unless otherwise expressly provided
herein..

    

    26.           
Binding
effect.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

    

    27.           
Time of essence. Time
is of the essence of this Agreement.

     

    In
witness whereof the parties have caused this Agreement to be duly executed by
their respective officers.

    

    VEMICS:                                                                    EL
DESKTOP:

    Vemics,
Inc.                                                                E
Learning Desktop Ventures Inc.

    

    

    By /s/ Fred
Zolla                                                        By
/s/ E. James
Pennington                         

    Fred
Zolla,
President                                                 E.
James Pennington, President

     

    
      
        	
                Exhibits:

              	
                A

              	
                Asset
      List

              
	 	
                A-1
      through A-5

              	
                Contracts

              
	 	
                B

              	
                Leases

              
	 	
                C

              	
                Warrant

              
	 	
                D

              	
                Current
      Financial Obligations

              
	 	
                E

              	
                Patents

              
	 	
                F

              	
                Insurance

              
	 	
                G

              	
                Vemics
      Disclosure Documents

              
	 	
                H

              	
                Employment
      Agreement

              

      

    

     

     

    

    
      
        
        

      

      
        11ex10-3.htm

     

    Exhibit 10.3

     

     

    

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

    

    

    VEMICS, INC.

    

    SECURED CONVERTIBLE PROMISSORY
NOTE

    BRIDGE FUNDING

    

    US$445,000       December
2, 2005

    

     

    

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

    

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

    

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

    

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

    

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

    

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

    

    4. Conversion.

    

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

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

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

    

     

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

    

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

     

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

     

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

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

    

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

    

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

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

    

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

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

    

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

    

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

    

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

    

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

    

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

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

     

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

    

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

    

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

    

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

    

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

    

    [SIGNATURE PAGE
FOLLOWS]

    

    

    
      

    

    

    
      
        
        

      

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

    

    

    VEMICS, INC.

    

    By: /s/  Fred
Zolla                  

    Name: Fred Zolla

    Title: CEO

    

    

    

    

    
      
        
        

      

      
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    EXHIBIT
A

     

    

    JOINT
SECURITY AGREEMENT

    

    

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

    

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

     

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

    

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

    

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

    

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

    

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

    

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
                (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

    

    

    
      
        
        

      

      
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              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

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

    

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

    

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

    

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

    

    5.10 Accounts. With respect to the
Accounts:

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

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

    

    

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

    

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

    

    “DEBTOR”

    

    VEMICS,
INC.

    

    

    By: /s/ Fred
Zolla                   

    Name:  Fred
Zolla

    Title:  CEO

    

    

    

    “SECURED PARTY”

    

    VALIANT HOLDING
CO.

    

    

    By:      

    Name: 

    Title: 

    

    

    

    
      
         

      

      
        13

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