Document:

Unassociated Document

     

    Exhibit
      10.57

     

     

    SUBSCRIPTION
      AGREEMENT

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
“Agreement”),
      dated
      as of November 30, 2006, by and among Diamond Entertainment Corporation, a
      New
      Jersey corporation (the “Company”),
      and
      the subscribers identified on the signature page hereto (each a “Subscriber”
and
      collectively “Subscribers”).

     

    WHEREAS,
      the
      Company and the Subscribers are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2) and/or Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscribers, as provided herein,
      and the Subscribers, in the aggregate, shall purchase up to Two Million Three
      Hundred Thousand Dollars ($2,300,000) (the "Purchase
      Price")
      of
      principal amount of 12% secured promissory notes of the Company (“Note”
or
      “Notes”)
      and
      share purchase warrants (collectively the “Warrants”),
      in
      the form attached hereto as Exhibit
      A,
      to
      purchase shares of the Company’s no par value common stock (“Common
      Stock”)
      (the
“Warrant
      Shares”).
      The
      Notes, the Warrants and the Warrant Shares are collectively referred to herein
      as the "Securities";
      and

     

    WHEREAS,
      the
      aggregate proceeds of the sale of the Notes and the Warrants contemplated hereby
      will be held in escrow pursuant to the terms of a Funds Escrow Agreement to
      be
      executed by the parties substantially in the form attached hereto as
Exhibit
      B
      (the
      "Escrow
      Agreement").

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscribers hereby agree as follows:

     

    1.     (a). Closing
      Date.
      The
“Initial Closing Date” shall be the date that the Initial Closing Purchase Price
      is transmitted by wire transfer or otherwise credited to or for the benefit
      of
      the Company. The consummation of the transactions contemplated herein shall
      take
      place at the offices of Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
      1601, New York, New York 10176, upon the satisfaction or waiver of all
      conditions to closing set forth in this Agreement. Each of the Initial Closing
      Date and Second Closing Date (as defined in Section 1(c) below is referred
      to
      herein as a “Closing
      Date”.

    

       (b) Initial
      Closing.
      Subject
      to the satisfaction or waiver of the terms and conditions of this Agreement,
      on
      the Initial Closing Date, each Subscriber shall purchase and the Company shall
      sell to each Subscriber a Note in the principal amount designated on the
      signature page hereto (“Initial
      Closing Notes”),
      and
      Warrants as described in Section 2 of this Agreement (“Initial
      Closing Warrants”).
      The
      Principal Amount of the Notes to be purchased by the Subscribers on the Initial
      Closing Date shall be up to One Million One Hundred and Fifty Thousand Dollars
      ($1,150,000) (the “Initial
      Closing Purchase Price”).
      

    

    (c) Second
      Closing.
      The
      closing date in relation to up to One Million One Hundred and Fifty Thousand
      Dollars ($1,150,000) (the “Second
      Closing Purchase Price”)
      shall
      be on or before the fifth business day after the compliance with the Second
      Closing Condition as defined in Section 1(d) (the “Second
      Closing Date”).
      Subject to the satisfaction or waiver of the conditions to Closing, on the
      Second Closing Date, each Subscriber shall purchase and the Company shall sell
      to each Subscriber a Note in the Principal Amount designated on the signature
      page hereto (“Second
      Closing Notes”)
      and
      Warrants as described in Section 2 of this Agreement (“Second
      Closing Warrants”).
      The
      Second Closing Notes shall be of the same tenor as the Notes issuable on the
      Initial Closing Date and have the same maturity date as the Initial Closing
      Notes.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (d) Conditions
      to Second Closing.
      The
      occurrence of the Second Closing is expressly contingent on (i) compliance
      with
      the Second Closing Condition, (ii) the truth and accuracy, on the Second Closing
      Date of the representations and warranties of the Company and Subscriber
      contained in this Agreement except for changes that do not constitute a Material
      Adverse Event [as defined in Section 5(a)], (iii) continued compliance with
      the
      covenants of the Company set forth in this Agreement, (iv) the non-occurrence
      of
      any Event of Default (as defined in the Note and this Agreement) or an event
      that with the passage of time or the giving of notice could become an Event
      of
      Default, or other default by the Company of its obligations and undertakings
      contained in this Agreement. “Second
      Closing Condition”
shall
      mean the first to occur of (i) the actual effectiveness of the Registration
      Statement as defined in Section 11.1(iv) hereunder, or (ii) the delivery by
      the
      Company on or before January 31, 2007 of certified consolidated financial
      statements of the Company and all entities which are or will be direct or
      indirect subsidiaries of the Company after the closing of the transaction
      described in the Letter of Intent (“Acquisition”),
      all
      in order to satisfy the requirements of Form 8-K after giving effect to the
      Acquisition, certified by an independent certified public accountant, pursuant
      to General Accepted Accounting Principals in the United States, including a
      balance sheet, results of operations, cash flows and supporting schedules and
      consolidated financial statements for the fiscal year ended March
      31, 2006,
      and all
      in form and substance reasonably acceptable to Subscriber.

     

    (e) Second
      Closing Deliveries.
      On the
      Second Closing Date, the Company will deliver a certificate (“Second
      Closing Certificate”)
      signed
      by its chief executive officer or chief financial officer (i) representing
      the
      truth and accuracy of all the representations and warranties made by the Company
      contained in this Agreement, as of the Initial Closing Date, and the Second
      Closing Date, as if such representations and warranties were made and given
      on
      all such dates except for changes that do not constitute a Material Adverse
      Event [as defined in Section 5(a)], (ii) certifying that the information
      contained in the schedules and exhibits hereto is substantially accurate as
      of
      the Second Closing Date, except for changes that do not constitute a Material
      Adverse Effect, (iii) adopting and renewing the covenants and representations
      set forth in Sections 5, 8, 9, 10, 11, and 12 of this Agreement in relation
      to
      the Second Closing Date, Second Closing Notes, and Second Closing Warrants,
      (iv)
      representing timely compliance by the Company with the Second Closing Condition,
      (v) representing the timely compliance by the Company with the Company’s
      applicable registration requirements set forth in Section 11 of this Agreement,
      and (vi) certifying that an Event of Default nor an event that with the passage
      of time or the giving of notice could become an Event of Default, has not
      occurred. A legal opinion nearly identical to the legal opinion referred to
      in
      Section 6 of this Agreement shall be delivered to each Subscriber at the Second
      Closing in relation to the Company, Second Closing Notes, and Second Closing
      Warrants (“Second
      Closing Legal Opinion”).

     

    2. Warrants.
      On each
      Closing Date, the Company will issue and deliver Warrants to the Subscribers.
      One Warrant will be issued for each two Shares which would be issued on such
      Closing Date assuming the complete conversion of the Note on such Closing Date
      at the Conversion Price in effect on such Closing Date. The per Warrant Share
      exercise price to acquire a Warrant Share upon exercise of a Warrant shall
      be
      equal to Twelve Million Dollar pre-money valuation on a fully diluted basis.
      The
      Warrants shall be exercisable until five (5) years after the issue date of
      the
      Warrants. The holder of the Warrants is granted the registration rights set
      forth in this Agreement. The Warrant exercise price and amount of Warrant Shares
      issuable upon exercise of the Warrants shall be equitably adjusted to offset
      the
      effect of stock splits, stock dividends, pro rata distributions of property
      or
      equity interests to the Company’s shareholders, similar event and as otherwise
      described in the Warrant.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    3. Security
      Interest.
      The
      Subscribers have been granted a security interest in all assets of the Company
      including ownership of the Subsidiaries memorialized in a “Security
      Agreement”
dated
      June 30, 2006 and filed in the States of New Jersey and California under file
      numbers 2368529-1 and 06-7077741180, respectively. The Subscribers will be
      granted a security interest in all assets in Diamond Entertainment Corp., Jewel
      Products International, Inc. and DMEC Acquisition Inc. to be memorialized in
      a
“Security
      Agreement,
      a form
      of which is annexed hereto as Exhibit
      C.
      Each
      Subsidiary will execute and deliver to the Subscribers a form of “Guaranty”
      annexed
      hereto as Exhibit
      D.
      The
      Company will execute such other agreements, documents and financing statements
      reasonably requested by Subscribers, which will be filed at the Company’s
      expense with such jurisdictions, states and counties designated by the
      Subscribers. The
      Company will also execute all such documents reasonably necessary in the opinion
      of Subscribers to memorialize and further protect the security interest
      described herein. The Subscribers will appoint a Collateral Agent to represent
      them collectively in connection with the security interest to be granted to
      the
      Subscribers. The appointment will be pursuant to a “Collateral
      Agent Agreement”,
      a form
      of which is annexed hereto as Exhibit
      E.

    

    4. Subscriber's
      Representations and Warranties.
      Each
      Subscriber hereby represents and warrants to and agrees with the Company only
      as
      to such Subscriber that:

     

    (a) Information
      on Company.
      The
      Subscriber has been furnished with or has had access at the EDGAR Website of
      the
      Commission to the Company's Form 10-KSB for the year ended March 31, 2005 as
      filed with the Commission, together with all subsequently filed Forms 10-QSB,
      8-K, and filings made with the Commission available at the EDGAR website
      (hereinafter referred to collectively as the "Reports").
      The
      Subscriber has had an opportunity to ask questions and receive answers from
      representatives of the Company. In addition, the Subscriber has received in
      writing from the Company such other information concerning its operations,
      financial condition and other matters as the Subscriber has requested in writing
      (such other information is collectively, the "Other
      Written Information"),
      and
      considered all factors the Subscriber deems material in deciding on the
      advisability of investing in the Securities. 

     

    (b) Information
      on Subscriber.
      The
      Subscriber is, and will be at the time of exercise of any of the Warrants,
      an
      "accredited
      investor",
      as
      such term is defined in Regulation D promulgated by the Commission under the
      1933 Act, is experienced in investments and business matters, has made
      investments of a speculative nature and has purchased securities of United
      States publicly-owned companies in private placements in the past and, with
      its
      representatives, has such knowledge and experience in financial, tax and other
      business matters as to enable the Subscriber to utilize the information made
      available by the Company to evaluate the merits and risks of and to make an
      informed investment decision with respect to the proposed purchase, which
      represents a speculative investment. The Subscriber has the authority and is
      duly and legally qualified to purchase and own the Securities. The Subscriber
      is
      able to bear the risk of such investment for an indefinite period and to afford
      a complete loss thereof. The information set forth on the signature page hereto
      regarding the Subscriber is accurate.

     

    (c) Purchase
      of Notes and Warrants.
      On each
      Closing Date, the Subscriber will purchase the Notes and Warrants as principal
      for its own account for investment only and not with a view toward, or for
      resale in connection with, the public sale or any distribution
      thereof.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (d) Compliance
      with Securities Act.
      The
      Subscriber understands and agrees that the Securities have not been registered
      under the 1933 Act or any applicable state securities laws, by reason of their
      issuance in a transaction that does not require registration under the 1933
      Act
      (based in part on the accuracy of the representations and warranties of
      Subscriber contained herein), and that such Securities must be held indefinitely
      unless a subsequent disposition is registered under the 1933 Act or any
      applicable state securities laws or is exempt from such registration.
      Notwithstanding anything to the contrary contained in this Agreement, such
      Subscriber may transfer (without restriction and without the need for an opinion
      of counsel) the Securities to its Affiliates (as defined below) provided that
      each such Affiliate is an “accredited investor” under Regulation D and such
      Affiliate agrees to be bound by the terms and conditions of this Agreement.
      For
      the purposes of this Agreement, an “Affiliate”
of
      any
      person or entity means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      person or entity. Affiliate when employed in connection with the Company
      includes each Subsidiary [as defined in Section 5(a)] of the Company. For
      purposes of this definition, “control”
means
      the power to direct the management and policies of such person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

     

    (e) Shares
      Legend.
      The
      Warrant Shares and Shares shall bear the following or similar
      legend:

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
      OR AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO DIAMOND ENTERTAINMENT CORPORATION
      THAT SUCH REGISTRATION IS NOT REQUIRED."

     

    (f) Warrants
      Legend.
      The
      Warrants shall bear the following or
      similar legend:

     

    "THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE
      STATE
      SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO DIAMOND
      ENTERTAINMENT CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (g) Note
      Legend.
      The
      Note shall bear the following legend:

     

    "THIS
      NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
      THIS
      NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO DIAMOND ENTERTAINMENT CORPORATION
      THAT SUCH REGISTRATION IS NOT REQUIRED."

     

    (h) Communication
      of Offer.
      The
      offer to sell the Securities was directly communicated to the Subscriber by
      the
      Company. At no time was the Subscriber presented with or solicited by any
      leaflet, newspaper or magazine article, radio or television advertisement,
      or
      any other form of general advertising or solicited or invited to attend a
      promotional meeting otherwise than in connection and concurrently with such
      communicated offer.

     

    (i) Authority;
      Enforceability.
      This
      Agreement and other agreements delivered together with this Agreement or in
      connection herewith have been duly authorized, executed and delivered by the
      Subscriber and are valid and binding agreements enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights generally and to general principles of equity;
      and Subscriber has full corporate power and authority necessary to enter into
      this Agreement and such other agreements and to perform its obligations
      hereunder and under all other agreements entered into by the Subscriber relating
      hereto.

    

    (j) No
      Governmental Review.
      Each
      Subscriber understands that no United States federal or state agency or any
      other governmental or state agency has passed on or made recommendations or
      endorsement of the Securities or the suitability of the investment in the
      Securities nor have such authorities passed upon or endorsed the merits of
      the
      offering of the Securities.

    

    (k) Correctness
      of Representations.
      Each
      Subscriber represents as to such Subscriber that the foregoing representations
      and warranties are true and correct as of the date hereof and, unless a
      Subscriber otherwise notifies the Company prior to the Closing Date shall be
      true and correct as of the Closing Date.

    

    (l) Survival.
      The
      foregoing representations and warranties shall survive the Second Closing Date
      for a period of three years.

     

    5. Company
      Representations and Warranties.
      Except
      as set forth in the Reports, the Company represents and warrants to and agrees
      with each Subscriber that:

     

    (a) Due
      Incorporation.
      The
      Company and each of its Subsidiaries are corporations duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation and have the requisite corporate power to own its properties
      and
      to carry on its business as presently conducted.
      The
      Company is duly qualified as a foreign corporation to do business and is in
      good
      standing in each jurisdiction where the nature of the business conducted or
      property owned by it makes such qualification necessary, other than those
      jurisdictions in which the failure to so qualify would not have a Material
      Adverse Effect. For purpose of this Agreement, a “Material
      Adverse Effect”
shall
      mean a material adverse effect on the financial condition, results of
      operations, properties or business of the Company taken individually, or in
      the
      aggregate, as a whole. For purposes of this Agreement, “Subsidiary”
means,
      with respect to any entity at any date, any corporation, limited or general
      partnership, limited liability company, trust, estate, association, joint
      venture or other business entity) of which more than 50% of (i) the
      outstanding capital stock having (in the absence of contingencies) ordinary
      voting power to elect a majority of the board of directors or other managing
      body of such entity, (ii) in the case of a partnership or limited liability
      company, the interest in the capital or profits of such partnership or limited
      liability company or (iii) in the case of a trust, estate, association,
      joint venture or other entity, the beneficial interest in such trust, estate,
      association or other entity business is, at the time of determination, owned
      or
      controlled directly or indirectly through one or more intermediaries, by such
      entity. All the Company’s Subsidiaries as of the Closing Date are set forth on
Schedule
      5(a)
      hereto.

     

    
      
         

      

      
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    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company and each
      Subsidiary have been duly authorized and validly issued and are fully paid
      and
      nonassessable.

     

    (c) Authority;
      Enforceability.
      This
      Agreement, the Note, the Warrants, Security Agreement, Guaranty, Collateral
      Agent Agreement, the Funds Escrow Agreement, and any other agreements delivered
      together with this Agreement or in connection herewith (collectively
“Transaction
      Documents”)
      have
      been duly authorized, executed and delivered by the Company and are valid and
      binding agreements enforceable in accordance with their terms, subject to
      bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
      similar laws of general applicability relating to or affecting creditors' rights
      generally and to general principles of equity. The Company and Subsidiaries
      have
      full corporate power and authority necessary to enter into and deliver the
      Transaction Documents and to perform its obligations thereunder.

     

    (d) Additional
      Issuances.
      There
      are no outstanding agreements or preemptive or similar rights affecting the
      Company's common stock or equity and no outstanding rights, warrants or options
      to acquire, or instruments convertible into or exchangeable for, or agreements
      or understandings with respect to the sale or issuance of any shares of common
      stock or equity of the Company or Subsidiaries or other equity interest in
      any
      of the Subsidiaries of the Company except as described on Schedule
      5(d).
      The
      Common Stock of the Company on a fully diluted basis outstanding as of the
      last
      Business Day preceding the Closing Date is set forth on Schedule
      5(d).
      “Business
      Day”
shall
      mean any day that the New York Stock Exchange is open for trading for three
      or
      more hours.

     

    (e) Consents.
      No
      consent, approval, authorization or order of any court, governmental agency
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      Affiliates, nor the Company's shareholders is required for the execution by
      the
      Company of the Transaction Documents and compliance and performance by the
      Company of its obligations under the Transaction Documents, including, without
      limitation, the issuance and sale of the Securities. The Transaction Documents
      and the Company’s performance of its obligations thereunder has been approved
      unanimously by the Company’s directors.

     

    (f) No
      Violation or Conflict.
      Assuming the representations and warranties of the Subscribers in Section 4
      are
      true and correct, neither the issuance and sale of the Securities nor the
      performance of the Company’s obligations under this Agreement and all other
      agreements entered into by the Company relating thereto by the Company
      will:

     

    (i) violate,
      conflict with, result in a breach of, or constitute a default (or an event
      which
      with the giving of notice or the lapse of time or both would be reasonably
      likely to constitute a default) under (A) the articles or certificate of
      incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
      any decree, judgment, order, law, treaty, rule, regulation or determination
      applicable to the Company of any court, governmental agency or body, or
      arbitrator having jurisdiction over the Company or any of its subsidiaries
      or
      over the properties or assets of the Company or any of its Affiliates, (C)
      the
      terms of any bond, debenture, note or any other evidence of indebtedness, or
      any
      agreement, stock option or other similar plan, indenture, lease, mortgage,
      deed
      of trust or other instrument to which the Company or any of its Affiliates
      or
      subsidiaries is a party, by which the Company or any of its Affiliates or
      subsidiaries is bound, or to which any of the properties of the Company or
      any
      of its Affiliates or subsidiaries is subject, or (D) the terms of any "lock-up"
      or similar provision of any underwriting or similar agreement to which the
      Company, or any of its Affiliates or subsidiaries is a party except the
      violation, conflict, breach, or default of which would not have a Material
      Adverse Effect on the Company; or

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (ii) result
      in
      the creation or imposition of any lien, charge or encumbrance upon the
      Securities or any of the assets of the Company, its subsidiaries or any of
      its
      Affiliates; or

     

    (iii) result
      in
      the activation of any anti-dilution rights or a reset or repricing of any debt
      or security instrument of any other creditor or equity holder of the Company,
      nor result in the acceleration of the due date of any obligation of the Company;
      or

     

    (iv) result
      in
      the triggering of any piggy-back registration rights of any person or entity
      holding securities of the Company or having the right to receive securities
      of
      the Company.

     

    (g) The
      Securities.
      The
      Securities upon issuance:

     

    (i) are,
      or
      will be, free and clear of any security interests, liens, claims or other
      encumbrances, subject to restrictions upon transfer under the 1933 Act and
      any
      applicable state securities laws;

    

    (ii) have
      been, or will be, duly and validly authorized and on the date of issuance of
      the
      Shares upon conversion of the Notes and the Warrant Shares and upon exercise
      of
      the Warrants, the Shares and Warrant Shares will be duly and validly issued,
      fully paid and nonassessable and if registered pursuant to the 1933 Act, and
      resold pursuant to an effective registration statement will be free trading
      and
      unrestricted);

     

    (iii) will
      not
      have been issued or sold in violation of any preemptive or other similar rights
      of the holders of any securities of the Company;

     

    (iv) will
      not
      subject the holders thereof to personal liability by reason of being such
      holders; and

     

    (v) will
      have
      been issued in reliance upon an exemption from the registration requirements
      of
      and will not result in a violation of Section 5 under the 1933 Act.

     

    (h) Litigation.
      There
      is no pending or, to the best knowledge of the Company, threatened action,
      suit,
      proceeding or investigation before any court, governmental agency or body,
      or
      arbitrator having jurisdiction over the Company, or any of its Affiliates that
      would affect the execution by the Company or the performance by the Company
      of
      its obligations under the Transaction Documents. Except as disclosed in the
      Reports, there is no pending or, to the best knowledge of the Company, basis
      for
      or threatened action, suit, proceeding or investigation before any court,
      governmental agency or body, or arbitrator having jurisdiction over the Company,
      or any of its Affiliates which litigation if adversely determined would have
      a
      Material Adverse Effect on the Company.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (i) Reporting
      Company.
      The
      Company is a publicly-held company subject to reporting obligations pursuant
      to
      Section 13 of the 1934
      Act
      and has
      a class of common shares registered pursuant to Section 12(g) of the 1934 Act.
      Pursuant to the provisions of the 1934 Act, the Company has filed all reports
      and other materials required to be filed thereunder with the Commission during
      the preceding twelve months.

     

    (j) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any funds
      for unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds, (iii)
      failed to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) which is in violation
      of law, or (iv) violated in any material respect any provision of the Foreign
      Corrupt Practices Act of 1977, as amended.

     

    (k) Information
      Concerning Company.
      The
      Reports and Other Written Information contain all material information relating
      to the Company and its operations and financial condition as of their respective
      dates which information is required to be disclosed therein. Since the date
      of
      the financial statements included in the Reports, and except as modified in
      the
      Other Written Information or in the Schedules hereto, there has been no Material
      Adverse Event relating to the Company's business, financial condition or affairs
      not disclosed in the Reports. The Reports and Other Written Information do
      not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      taken
      as a whole, not misleading in light of the circumstances when made.

     

    (l) No
      Market Manipulation.
      The
      Company will not take, directly or indirectly, any action designed to, or that
      might reasonably be expected to, cause or result in stabilization or
      manipulation of the price of the Common Stock of the Company to facilitate
      the
      sale or resale of the Securities or affect the price at which the Securities
      may
      be issued or resold.

     

    (m) Stop
      Transfer.
      The
      Securities, when issued, will be restricted securities. The Company will not
      issue any stop transfer order or other order impeding the sale, resale or
      delivery of any of the Securities, except as may be required by any applicable
      federal or state securities laws and unless contemporaneous notice of such
      instruction is given to the Subscriber.

     

    (n) Defaults.
      The
      Company is not in violation of its articles of incorporation or bylaws. The
      Company is (i) not in default under or in violation of any other material
      agreement or instrument to which it is a party or by which it or any of its
      properties are bound or affected, which default or violation would have a
      Material Adverse Effect on the Company, (ii) not in default with respect to
      any
      order of any court, arbitrator or governmental body or subject to or party
      to
      any order of any court or governmental authority arising out of any action,
      suit
      or proceeding under any statute or other law respecting antitrust, monopoly,
      restraint of trade, unfair competition or similar matters, or (iii) to its
      knowledge not in violation of any statute, rule or regulation of any
      governmental authority which violation would have a Material Adverse Effect
      on
      the Company.

     

    (o) No
      Integrated Offering.
      Neither
      the Company, nor any of its Affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offer of the Securities pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the 1933 Act or any applicable
      stockholder approval provisions. Nor will the Company or any of its Affiliates
      or Subsidiaries take any action or steps that would cause the offer or issuance
      of the Securities to be integrated with other offerings. The Company will not
      conduct any offering other than the transactions contemplated hereby that will
      be integrated with the offer or issuance of the Securities.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (p) No
      General Solicitation.
      Neither
      the Company, nor any of its Affiliates, nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Securities.

     

    (q) No
      Undisclosed Liabilities.
      The
      Company has no liabilities or obligations which are material, individually
      or in
      the aggregate, which are not disclosed in the Reports and Other Written
      Information, other than those incurred in the ordinary course of the Company’s
      businesses since March 31, 2006 and which, individually or in the aggregate,
      would reasonably be expected to have a Material Adverse Effect other than as
      set
      forth in Schedule
      5(p).

     

    (r) No
      Undisclosed Events or Circumstances.
      Since
      March 31, 2006, no event or circumstance has occurred or exists with respect
      to
      the Company or its businesses, properties, operations or financial condition,
      that, under applicable law, rule or regulation, requires public disclosure
      or
      announcement prior to the date hereof by the Company but which has not been
      so
      publicly announced or disclosed in the Reports.

     

    (s) Capitalization.
      The
      authorized and outstanding capital stock of the Company as of the date of this
      Agreement and the Closing Date are set forth on Schedule
      5(d).
      Except
      as set forth on Schedule
      5(d),
      there
      are no options, warrants, or rights to subscribe to, securities, rights or
      obligations convertible into or exchangeable for or giving any right to
      subscribe for any shares of capital stock of the Company. All of the outstanding
      shares of Common Stock of the Company have been duly and validly authorized
      and
      issued and are fully paid and nonassessable.

     

    (t) Dilution.
      The
      Company's executive officers and directors understand the nature of the
      Securities being sold hereby and recognize that the issuance of the Securities
      will have a potential dilutive effect on the equity holdings of other holders
      of
      the Company’s equity or rights to receive equity of the Company. The board of
      directors of the Company has unanimously concluded, in its good faith business
      judgment that the issuance of the Securities is in the best interests of the
      Company. The Company specifically acknowledges that its obligation to issue
      the
      Warrant Shares upon exercise of the Warrants is binding upon the Company and
      enforceable regardless of the dilution such issuance may have on the ownership
      interests of other shareholders of the Company or parties entitled to receive
      equity of the Company.

     

    (u) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company, including but not limited to
      disputes or conflicts over payment owed to such accountants and lawyers, nor
      have there been any such disagreements during the two years prior to the Closing
      Date.

    

    (v) DTC
      Status.
      The
      Company’s transfer agent is a participant in and the Common Stock is eligible
      for transfer pursuant to the Depository Trust Company Automated Securities
      Transfer Program. The name, address, telephone number, fax number, contact
      person and email address of the Company transfer agent is set forth on
Schedule
      5(v)
      hereto.

    

    (w) Subsidiary
      Representations.
      The
      Company makes each of the representations contained in Sections 5(a), (b),
      (d),
      (f), (h), (k), (n), (q), (r), (s), (u) and (v) of this Agreement, as same relate
      to each Subsidiary of the Company.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (x) Company
      Predecessor.
      All
      representations made by or relating to the Company of a historical or
      prospective nature and all undertaking described in Sections 9(g) through 9(l)
      shall relate and refer to the Company, its predecessors, and the
      Subsidiaries.

    

    (v) Investment
      Company.
      Neither
      the Company nor any Affiliate is an “investment company” within the meaning of
      the Investment Company Act of 1940, as amended.

    

    (y) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the Company’s fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debt when such amounts
      are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt).

    

    (z) Letter
      of Intent.
      The
      Company and its Subsidiary, DMEC Acquisition, Inc. have executed a Letter of
      Intent for the acquisition of RX for Africa, a copy of which is annexed hereto
      as Exhibit
      F.

    

    (AA) Correctness
      of Representations.
      The
      Company represents that the foregoing representations and warranties are true
      and correct as of the date hereof in all material respects, and, unless the
      Company otherwise notifies the Subscribers prior to the Closing Date, shall
      be
      true and correct in all material respects as of the Closing Date.

     

    (BB) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of three years.

     

    6. Regulation
      D Offering.
      The
      offer and issuance of the Securities to the Subscribers is being made pursuant
      to the exemption from the registration provisions of the 1933 Act afforded
      by
      Section 4(2) of the 1933 Act and/or Rule 506 of Regulation D promulgated
      thereunder. On the Closing Date, the Company will provide an opinion reasonably
      acceptable to Subscriber from the Company's legal counsel opining on the
      availability of an exemption from registration under the 1933 Act as it relates
      to the offer and issuance of the Securities and other matters reasonably
      requested by Subscribers. A form of the legal opinion is annexed hereto as
      Exhibit
      G.
      The
      Company will provide, at the Company's expense, such other legal opinions in
      the
      future as are reasonably necessary for the issuance and resale of the Common
      Stock issuable upon exercise of the Warrants.

    

    7.1. Conversion
      of Note.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (a) Upon
      the
      conversion of a Note or part thereof, the Company shall, at its own cost and
      expense, take all necessary action, including obtaining and delivering, an
      opinion of counsel to assure that the Company's transfer agent shall issue
      stock
      certificates in the name of Subscriber (or its permitted nominee) or such other
      persons as designated by Subscriber and in such denominations to be specified
      at
      conversion representing the number of shares of Common Stock issuable upon
      such
      conversion. The Company warrants that no instructions other than these
      instructions have been or will be given to the transfer agent of the Company's
      Common Stock and that the certificates representing such shares shall contain
      no
      legend other than the usual 1933 Act restriction from transfer legend. If and
      when the Subscriber sells the Shares and Warrant Shares, assuming (i) the
      Registration Statement (as defined below) is effective and the prospectus,
      as
      supplemented or amended, contained therein is current and (ii) the Subscriber
      confirms in writing to the transfer agent that the Subscriber has complied
      with
      the prospectus delivery requirements, the restrictive legend can be removed
      and
      the Shares and Warrant Shares will be free-trading, and freely transferable.
      In
      the event that the Shares and Warrant Shares are sold in a manner that complies
      with an exemption from registration, the Company will promptly instruct its
      counsel to issue to the transfer agent an opinion permitting removal of the
      legend (indefinitely, if pursuant to Rule 144(k) of the 1933 Act, or for 90
      days
      if pursuant to the other provisions of Rule 144 of the 1933 Act). 

    

    (b) Subscriber
      will give notice of its decision to exercise its right to convert the Note,
      interest, any sum due to the Subscriber under the Transaction Documents or
      part
      thereof by telecopying an executed and completed Notice
      of Conversion
      (a form
      of which is annexed as Exhibit
      A
      to the
      Note) to the Company via confirmed telecopier transmission or otherwise pursuant
      to Section 13(a) of this Agreement. The Subscriber will not be
      required to surrender the Note
      until
      the Note has been fully converted or satisfied. Each date on which a Notice
      of
      Conversion is telecopied to the Company in accordance with the provisions hereof
      shall be deemed a Conversion
      Date.
      The
      Company will itself or cause the Company’s transfer agent to transmit the
      Company's Common Stock certificates representing the Shares issuable upon
      conversion of the Note to the Subscriber via express courier for receipt by
      such
      Subscriber within three (3) business days after receipt by the Company of the
      Notice of Conversion (such third day being the "Delivery
      Date").
      In
      the event the Shares are electronically transferable, then delivery of the
      Shares must
      be made
      by electronic transfer provided request for such electronic transfer has been
      made by the Subscriber
      and the Subscriber has complied with all applicable securities laws in
      connection with the sale of the Common Stock, including, without limitation,
      the
      prospectus delivery requirements. A Note representing the balance of the Note
      not so converted will be provided by the Company to the Subscriber if requested
      by Subscriber, provided the Subscriber delivers the
      original Note to the Company. In the event that a Subscriber elects not to
      surrender a Note for reissuance upon partial payment or conversion, the
      Subscriber hereby indemnifies the Company against any and all loss or damage
      attributable to a third-party claim in an amount in excess of the actual amount
      then due under the Note. “Business
      day”
and
      “trading
      day”
as
      employed in the Transaction Documents is a day that the New York Stock Exchange
      is open for trading for three or more hours.

     

    (c) The
      Company understands that a delay in the delivery of the Shares in the form
      required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
      described in Section 7.2 hereof, respectively after the Delivery Date or the
      Mandatory Redemption Payment Date (as hereinafter defined) could result in
      economic loss to the Subscriber. As compensation to the Subscriber for such
      loss, the Company agrees to pay (as liquidated damages and not as a penalty)
      to
      the Subscriber for late issuance of Shares in the form required pursuant to
      Section 7.1 hereof upon Conversion of the Note in the amount of $100 per
      business day after the Delivery Date for each $10,000 of Note principal amount
      being converted of the corresponding Shares which are not timely delivered.
      The
      Company shall pay any payments incurred under this Section in immediately
      available funds upon demand. Furthermore, in addition to any other remedies
      which may be available to the Subscriber, in the event that the Company fails
      for any reason to effect delivery of the Shares by the Delivery Date or make
      payment by the Mandatory Redemption Payment Date, the Subscriber may revoke
      all
      or part of the relevant Notice of Conversion or rescind all or part of the
      notice of Mandatory Redemption by delivery of a notice to such effect to the
      Company whereupon the Company and the Subscriber shall each be restored to
      their
      respective positions immediately prior to the delivery of such notice, except
      that the liquidated damages described above shall be payable through the date
      notice of revocation or rescission is given to the Company.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (d) Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law. In the event that the rate of interest or dividends required
      to
      be paid or other charges hereunder exceed the maximum permitted by such law,
      any
      payments in excess of such maximum shall be credited against amounts owed by
      the
      Company to the Subscriber and thus refunded to the Company.

    

    7.2. Mandatory
      Redemption at Subscriber’s Election.
      In the
      event (i) the Company is prohibited from issuing Shares, (ii) the Company fails
      to timely deliver Shares on a Delivery Date, (iii) upon the occurrence of any
      other Event of Default (as defined in the Note or in this Agreement), any of
      the
      foregoing that continues for more than twenty (20) business days, (iv) a Change
      in Control (as defined below), or (v) of the liquidation, dissolution or winding
      up of the Company, then at the Subscriber's election, the Company must pay
      to
      the Subscriber ten (10) business days after request by the Subscriber
      (“Calculation
      Period”),
      a sum
      of money determined by multiplying up to the outstanding principal amount of
      the
      Note designated by the Subscriber by 120%, together with accrued but unpaid
      interest thereon ("Mandatory
      Redemption Payment").
      The
      Mandatory Redemption Payment must be received by the Subscriber on the same
      date
      as the Shares otherwise deliverable or within ten (10) business days after
      request, whichever is sooner ("Mandatory
      Redemption Payment Date").
      Upon
      receipt of the Mandatory Redemption Payment, the corresponding Note principal
      and interest will be deemed paid and no longer outstanding. Liquidated damages
      calculated pursuant to Section 7.1(c) hereof, that have been paid or accrued
      for
      the ten day period prior to the actual receipt of the Mandatory Redemption
      Payment by the Subscriber shall be credited against the Mandatory Redemption
      Payment. For purposes of this Section 7.2, “Change
      in Control”
shall
      mean (i) the Company no longer having a class of shares publicly traded or
      listed on a Principal Market, (ii) the Company becoming a Subsidiary of another
      entity (other than a corporation formed by the Company for purposes of
      reincorporation in another U.S. jurisdiction), (iii) a majority of the board
      of
      directors of the Company as of the Closing Date no longer serving as directors
      of the Company except due to natural causes, (iv) the sale, lease or transfer
      of
      substantially all the assets of the Company or Subsidiaries, or (v) if the
      holders of the Company’s Common Stock as of the Closing Date beneficially own at
      any time after the Closing Date less than forty percent of the Common Stock
      owned by them on the Closing Date. 

    

    7.3. Maximum
      Conversion.
      The
      Subscriber shall not be entitled to convert on a Conversion Date that amount
      of
      the Note in connection with that number of shares of Common Stock which would
      be
      in excess of the sum of (i) the number of shares of common stock beneficially
      owned by the Subscriber and its Affiliates on a Conversion Date, and (ii) the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Subscriber
      and its Affiliates of more than 4.99% of the outstanding shares of common stock
      of the Company on such Conversion Date. Beneficial ownership shall be determined
      in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the
      Subscriber shall not be limited to aggregate conversions of only 4.99%. The
      Subscriber may decide whether to convert a Note or exercise Warrants to achieve
      an actual 4.99% ownership position.

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    7.4. Injunction
      Posting of Bond.
      In the
      event a Subscriber shall elect to convert a Note or part thereof or exercise
      the
      Warrant in whole or in part, the Company may not refuse conversion or exercise
      based on any claim that such Subscriber or any one associated or affiliated
      with
      such Subscriber has been engaged in any violation of law, or for any other
      reason, unless, an injunction from a court, on notice, restraining and or
      enjoining conversion of all or part of such Note or exercise of all or part
      of
      such Warrant shall have been sought and obtained by the Company
      or at
      the Company’s request or with the Company’s assistance, and
      the
      Company has posted a surety bond for the benefit of such Subscriber in the
      amount of 120% of the outstanding principal and interest of the Note, or
      aggregate purchase price of the Shares and Warrant Shares which are sought
      to be
      subject to the injunction, which bond shall remain in effect until the
      completion of arbitration/litigation of the dispute and the proceeds of which
      shall be payable to such Subscriber to the extent Subscriber obtains judgment
      in
      Subscriber’s favor.

    

    7.5. Buy-In.
      In
      addition to any other rights available to the Subscriber, if the Company fails
      to deliver to the Subscriber such shares issuable upon conversion of a Note
      by
      the Delivery Date and if after seven (7) business days after the Delivery Date
      the Subscriber or a broker on the Subscriber’s behalf, purchases (in an open
      market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by such Subscriber of the Common Stock which the
      Subscriber was entitled to receive upon such conversion (a "Buy-In"),
      then
      the Company shall pay in cash to the Subscriber (in addition to any remedies
      available to or elected by the Subscriber) the amount by which (A) the
      Subscriber's total purchase price (including brokerage commissions, if any)
      for
      the shares of Common Stock so purchased exceeds (B) the aggregate principal
      and/or interest amount of the Note for which such conversion was not timely
      honored,
      together with interest thereon at a rate of 15% per annum, accruing until such
      amount and any accrued interest thereon is paid in full (which amount shall
      be
      paid as liquidated damages and not as a penalty). For
      example, if the Subscriber purchases shares of Common Stock having a total
      purchase price of $11,000 to cover a Buy-In with respect to an attempted
      conversion of $10,000 of note principal and/or interest, the Company shall
      be
      required to pay the Subscriber $1,000,
      plus interest. The
      Subscriber shall provide the Company written notice indicating the amounts
      payable to the Subscriber in respect of the Buy-In.

    

    7.6. Adjustments.
      The
      Conversion Price, Warrant exercise price and amount of Shares issuable upon
      conversion of the Notes and exercise of the Warrants shall be adjusted as
      described in this Agreement, the Notes and Warrants.

     

    7.7. Redemption.
      The
      Note and Warrants shall not be redeemable or mandatorily convertible except
      as
      described in the Note and Warrants.

     

    8. Broker/Legal
      Fees. 

     

    (a) Broker.
      The
      Company on the one hand, and each Subscriber (for himself only) on the other
      hand, agrees to indemnify the other against and hold the other harmless from
      any
      and all liabilities to any persons claiming brokerage commissions or finder’s
      fees on account of services purported to have been rendered on behalf of the
      indemnifying party in connection with this Agreement or the transactions
      contemplated hereby and arising out of such party’s actions. The Company
      represents that there are no parties entitled to receive fees, commissions,
      or
      similar payments in connection with the Offering except that a due diligence
      fee
      of $75,000 (“Due
      Diligence Fee”)
      will
      be paid to The Lieberman Financial Group, Inc. upon the Initial Closing Date
      out
      of the funds held pursuant to the Escrow Agreement.

    

    (b)  Legal
      Fees.
      The
      Company shall pay to Grushko & Mittman, P.C., a cash fee of $25,000
      (“Legal
      Fees”)
      as
      reimbursement for services rendered to the Subscribers in connection with this
      Agreement and the purchase and sale of the Notes and Warrants (the “Offering”).
      The
      Legal Fees and reimbursement for estimated UCC searches and filing fees (less
      any amounts paid prior to a Closing Date), and estimated printing and shipping
      costs for the closing statements to be delivered to Subscribers, will be payable
      on the Initial Closing Date out of funds held pursuant to the Escrow
      Agreement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    9. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscribers as follows:

     

    (a) Stop
      Orders.
      The
      Company will advise the Subscribers, within two hours after the Company receives
      notice of issuance by the Commission, any state securities commission or any
      other regulatory authority of any stop order or of any order preventing or
      suspending any offering of any securities of the Company, or of the suspension
      of the qualification of the Common Stock of the Company for offering or sale
      in
      any jurisdiction, or the initiation of any proceeding for any such
      purpose.

     

    (b) Listing.
      The
      Company shall promptly secure the listing of the shares of Common Stock and
      the
      Warrant Shares upon each national securities exchange, or electronic or
      automated quotation system upon which they are or become eligible for listing
      and shall maintain such listing so long as any Notes or Warrants are
      outstanding. The Company will maintain the listing or quotation of its Common
      Stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq National
      Market System, Bulletin Board, or New York Stock Exchange (whichever of the
      foregoing is at the time the principal trading exchange or market for the Common
      Stock (the “Principal
      Market”)),
      and
      will comply in all respects with the Company's reporting, filing and other
      obligations under the bylaws or rules of the Principal Market, as applicable.
      The Company will provide the Subscribers copies of all notices it receives
      notifying the Company of the threatened and actual delisting of the Common
      Stock
      from any Principal Market. As of the date of this Agreement, the Bulletin Board
      is the Principal Market.

     

    (c) Market
      Regulations.
      The
      Company shall notify the Commission, the Principal Market and applicable state
      authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Securities to the
      Subscribers and promptly provide copies thereof to Subscriber.

     

    (d) Filing
      Requirements.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Second Closing Date, or (ii) until all the Shares and Warrant Shares have been
      resold or transferred by all the Subscribers pursuant to the Registration
      Statement or pursuant to Rule 144, without regard to volume limitations, the
      Company will (A) cause its Common Stock to continue to be registered under
      Section 12(b) or 12(g) of the 1934 Act, (B) comply in all respects with its
      reporting and filing obligations under the 1934 Act, (C) voluntarily comply
      with
      all reporting requirements that are applicable to an issuer with a class of
      shares registered pursuant to Section 12(g) of the 1934 Act, if Company is
      not
      subject to such reporting requirements, and (D) comply with all requirements
      related to any registration statement filed pursuant to this Agreement. The
      Company will use its best efforts not to take any action or file any document
      (whether or not permitted by the 1933 Act or the 1934 Act or the rules
      thereunder) to terminate or suspend such registration or to terminate or suspend
      its reporting and filing obligations under said acts until two (2) years after
      the Closing Date. Until the earlier of the resale of the Shares and the Warrant
      Shares by each Subscriber or two (2) years after the Closing Date, the Company
      will use its best efforts to continue the listing or quotation of the Common
      Stock on a Principal Market and will comply in all respects with the Company's
      reporting, filing and other obligations under the bylaws or rules of the
      Principal Market. The Company agrees to timely file a Form D with respect to
      the
      Securities if required under Regulation D and to provide a copy thereof to
      each
      Subscriber promptly after such filing.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (e) Use
      of
      Proceeds.
      The
      proceeds of the Offering will be employed by the Company for the purposes set
      forth on Schedule
      9(e)
      hereto.
      Except as set forth on Schedule
      9(e),
      the
      Purchase Price may not and will not be used for accrued and unpaid officer
      and
      director salaries, payment of financing related debt, redemption of outstanding
      notes or equity instruments of the Company, litigation related expenses or
      settlements, brokerage fees, nor non-trade obligations outstanding on a Closing
      Date.

     

    (f) Reservation.
      Prior
      to the Initial Closing Date, the Company undertakes to reserve, pro rata,
      on
      behalf of the Subscribers from its authorized but unissued common stock, a
      number of common shares equal to 150%
      of
      the amount of Common Stock necessary to allow each Subscriber to be able to
      convert all Notes issuable pursuant to this Agreement and interest thereon
      and
      reserve 100% of the amount of Warrant Shares issuable upon exercise of the
      Warrants. Failure to have sufficient shares reserved pursuant to this Section
      9(f) shall be a material default of the Company’s obligations under this
      Agreement and an Event of Default under the Note.

     

    (g) Taxes.
      From
      the date of this Agreement and until the conversion or satisfaction of the
      Note,
      in its entirety, and exercise of the Warrants, the Company will promptly pay
      and
      discharge, or cause to be paid and discharged, when due and payable, all lawful
      taxes, assessments and governmental charges or levies imposed upon the income,
      profits, property or business of the Company; provided, however, that any such
      tax, assessment, charge or levy need not be paid if the validity thereof shall
      currently be contested in good faith by appropriate proceedings and if the
      Company shall have set aside on its books adequate reserves with respect
      thereto, and provided, further, that the Company will pay all such taxes,
      assessments, charges or levies forthwith upon the commencement of proceedings
      to
      foreclose any lien which may have attached as security therefore.

     

    (h) Insurance.
      From
      the date of this Agreement and until the conversion or satisfaction of the
      Note,
      in its entirety, and exercise of the Warrants, the Company will keep its assets
      which are of an insurable character insured by financially sound and reputable
      insurers against loss or damage by fire, explosion and other risks customarily
      insured against by companies in the Company’s line of business, in amounts
      sufficient to prevent the Company from becoming a co-insurer and not in any
      event less than one hundred percent (100%) of the insurable value of the
      property insured less reasonable deductible amounts; and the Company will
      maintain, with financially sound and reputable insurers, insurance against
      other
      hazards and risks and liability to persons and property to the extent and in
      the
      manner customary for companies in similar businesses similarly situated and
      to
      the extent available on commercially reasonable terms.

     

    (i) Books
      and Records.
      From the
      date of this Agreement and until the conversion or satisfaction of the Note,
      in
      its entirety, and exercise of the Warrants, the Company will keep true records
      and books of account in which full, true and correct entries will be made of
      all
      dealings or transactions in relation to its business and affairs in accordance
      with generally accepted accounting principles applied on a consistent
      basis.

     

    (j) Governmental
      Authorities.
      From the
      date of this Agreement and until the conversion or satisfaction of the Note,
      in
      its entirety, and exercise of the Warrants, the Company shall duly observe
      and
      conform in all material respects to all valid requirements of governmental
      authorities relating to the conduct of its business or to its properties or
      assets.

     

    (k) Intellectual
      Property.
      From
      the date of this Agreement and until the conversion or satisfaction of the
      Note,
      in its entirety, and exercise of the Warrants, the Company shall maintain in
      full force and effect its corporate existence, rights and franchises and all
      licenses and other rights to use intellectual property owned or possessed by
      it
      and reasonably deemed to be necessary to the conduct of its business, unless
      it
      is sold for value.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (l) Properties.
      From the
      date of this Agreement and until the conversion or satisfaction of the Note,
      in
      its entirety, and exercise of the Warrants, the Company will keep its properties
      in good repair, working order and condition, reasonable wear and tear excepted,
      and from time to time make all necessary and proper repairs, renewals,
      replacements, additions and improvements thereto; and the Company will at all
      times comply with each provision of all leases to which it is a party or under
      which it occupies property if the breach of such provision could reasonably
      be
      expected to have a Material Adverse Effect.

     

    (m) Confidentiality/Public
      Announcement.
      From the
      date of this Agreement and until the sooner of (i) two (2) years after the
      Second Closing Date, or (ii) until all the Shares and Warrant Shares have been
      resold or transferred by all the Subscribers pursuant to the Registration
      Statement or pursuant to Rule 144, without regard to volume limitations, the
      Company agrees that except in connection with a Form 8-K or the Registration
      Statement or as otherwise required in any other Commission filing, it will
      not
      disclose publicly or privately the identity of the Subscribers unless expressly
      agreed to in writing by a Subscriber, only to the extent required by law and
      then only upon five days prior notice to Subscriber. In any event and subject
      to
      the foregoing, the Company shall file
      a
      Form 8-K or make a public announcement describing the Offering not later than
      the first business day after the Closing Date. In the Form 8-K or public
      announcement, the Company will specifically disclose the amount of common stock
      outstanding immediately after the Closing. A form of the proposed Form 8-K
      or
      public announcement to be employed in connection with the Closing is annexed
      hereto as Exhibit
      H.

     

    (n) Further
      Registration Statements.
      Except
      for a registration statement filed on behalf of the Subscribers pursuant to
      Section 11 of this Agreement, the Company will not file with the Commission
      or
      with state regulatory authorities, any registration statements including but
      not
      limited to Forms S-8, or amend any already filed registration statement to
      increase the amount of Common Stock registered therein, or reduce the price
      of
      which such Common Stock is registered therein without the consent of the
      Subscriber until the expiration of the “Exclusion
      Period”,
      which
      shall be defined as the first to occur of (i) the Registration Statement having
      been current and available for use in connection with the resale of all of
      the
      Registrable Securities (as defined in Section 11.1(i) for a period of 365 days,
      (ii) until all the Shares and Warrant Shares have been resold or transferred
      by
      the Subscribers pursuant to the Registration Statement or Rule 144, without
      regard to volume limitations, or (iii) the satisfaction of the Notes. The
      Exclusion Period will be tolled during the pendency of an Event of Default
      as
      defined in the Note.

     

    (o) Blackout.
      The
      Company undertakes and covenants that until the end of the Exclusion Period,
      the
      Company will not enter into any acquisition, merger, exchange or sale or other
      transaction that could have the effect of delaying the effectiveness of any
      pending Registration Statement or causing an already effective Registration
      Statement to no longer be effective or current for a period of twenty (20)
      or
      more days in the aggregate.

     

    (p) Non-Public
      Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf will provide any Subscriber or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Subscriber shall have agreed in writing to receive such
      information. The Company understands and confirms that each Subscriber shall
      be
      relying on the foregoing representations in effecting transactions in securities
      of the Company. The Company will offer to the Subscriber an opportunity to
      review and comment on the Registration Statement thereto between three and
      five
      business days prior to the proposed filing date thereof.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (q) Offering
      Restrictions.
      Until
      the expiration of the Exclusion Period and during the pendency of an Event
      of
      Default, except for the Excepted Issuances [as defined in Section 12(a)], the
      Company will not enter into an agreement to nor issue any equity, convertible
      debt or other securities convertible into common stock or equity of the Company
      nor modify any of the foregoing which may be outstanding at anytime, without
      the
      prior written consent of the Subscriber, which consent may be withheld for
      any
      reason. For so long as the Notes are outstanding, except for the Excepted
      Issuances, the Company will not enter into any equity line of credit or similar
      agreement, nor issue nor agree to issue any floating or variable priced equity
      linked instruments nor any of the foregoing or equity with price reset rights.
      The
      only
      officer, director, employee and consultant stock option or stock incentive
      plan
      currently in effect or contemplated by the Company has been submitted to the
      Subscribers. No other plan will be adopted nor may any options or equity not
      included in such plan be issued for so long as any sum is outstanding under
      the
      Note.

    

    (r) Board
      Representation or Attendance by Observer.
       The
      Company agrees until such time as 90% of the initial principal amount
      outstanding on the Notes shall have been fully paid or converted that the
      Subscriber shall have the right,
      but
      not
      the obligation,
      from
      time to time to designate in writing a nominee to serve as a member of the
      Board
      of Directors of the Company. The Company will nominate and secure the election
      of such designee as
      Director of the Company. During such time as the Subscriber has not exercised
      such rights, the Subscriber shall have the right to designate an observer,
      who
      shall be entitled to attend and participate (but not vote) in all meetings
      of
      the Board of Directors of the Company and to receive all notices, reports,
      information, correspondence and communications sent by the Company to members
      of
      the Board of Directors. All reasonable costs and expenses incurred in connection
      therewith by any such designated Director or observer, or by the Broker on
      behalf of such Director or observer, shall be reimbursed by the Company to
      the
      extent that the Company reimburses such expenses incurred by any directors
      of
      the Company. It
      is
      provided and agreed that the actions and advice of any person while serving
      pursuant to this section as a Director or an observer at meetings of the Board
      of Directors shall be construed to be the actions and advice of that person
      alone and not be construed as actions of any Subscriber as to any notice,
      requirements or rights of any Subscriber under the Transaction Documents, nor
      as
      action of any Subscriber to approve modifications, consents, amendments or
      waivers thereof; and all such actions or notices shall be deemed actions or
      notices to the Subscribers only when duly provided in writing and given in
      accordance with the provisions of the Transaction Documents. 
      The
      relationship between the Company and the Subscribers is, and shall at all times
      remain, solely that of the Company with a purchaser of its securities. The
      Subscribers neither undertake nor assume any responsibility or duty to the
      Company to review, inspect, supervise, pass judgment upon, or inform the Company
      of any matter in connection with any phase of the Company’s business,
      operations, or condition, financial or otherwise. The Company shall rely
      entirely upon its own judgment with respect to such matters, and any review,
      inspection, supervision, exercise of judgment, or information supplied to the
      Company by the Subscribers, or any representative or agent of the Subscribers,
      in connection with any such matter is for the protection of the Subscribers,
      and
      neither the Company nor any third party is entitled to rely thereon. It shall
      be
      deemed a default of a material obligation under the Notes if Company does not
      comply with the requirements of this section.

    

    (s) Additional
      Negative Covenants.
      So long
      as the Notes are outstanding and during the pendency of an Event of Default
      (as
      defined in the Note), without the consent of the Subscribers, the Company will
      not and will not permit any of its Subsidiaries to directly or
      indirectly:

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (i) create,
      incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
      arrangement, lien, charge, claim, security interest, security title, mortgage,
      security deed or deed of trust, easement or encumbrance, or preference, priority
      or other security agreement or preferential arrangement of any kind or nature
      whatsoever (including any lease or title retention agreement, any financing
      lease having substantially the same economic effect as any of the foregoing,
      and
      the filing of, or agreement to give, any financing statement perfecting a
      security interest under the Uniform Commercial Code or comparable law of any
      jurisdiction) (each, a “Lien”)
      upon
      any of its property, whether now owned or hereafter acquired except for (i)
      the
      Excepted Issuances, (ii) (a) Liens imposed by law for taxes that are not yet
      due
      or are being contested in good faith and for which adequate reserves have been
      established in accordance with generally accepted accounting principles; (b)
      carriers’, warehousemen’s, mechanics’, material men’s, repairmen’s and other
      like Liens imposed by law, arising in the ordinary course of business and
      securing obligations that are not overdue by more than 30 days or that are
      being
      contested in good faith and by appropriate proceedings; (c) pledges and deposits
      made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
      regulations; (d) deposits to secure the performance of bids, trade contracts,
      leases, statutory obligations, surety and appeal bonds, performance bonds and
      other obligations of a like nature, in each case in the ordinary course of
      business; (e) Liens created with respect to the financing of the purchase of
      new
      property in the ordinary course of the Company’s business up to the amount of
      the purchase price of such property, or (f) easements, zoning restrictions,
      rights-of-way and similar encumbrances on real property imposed by law or
      arising in the ordinary course of business that do not secure any monetary
      obligations and do not materially detract from the value of the affected
      property (each of (a) through (f), a “Permitted
      Lien”)
      and
      (iii) indebtedness for borrowed money which is not senior or pari passu in
      right
      of payment to the payment of the Notes;

     

    (ii) amend
      its
      certificate of incorporation, bylaws or its charter documents so as to adversely
      affect any rights of the Subscriber;

     

    (iii) repay,
      repurchase or offer to repay, repurchase or otherwise acquire or make any
      dividend or distribution in respect of any of its Common Stock, preferred stock,
      or other equity securities other than to the extent permitted or required under
      the Transaction Documents;

     

    (iv) prepay
      any financing related or other outstanding debt obligations; or

     

    (v) engage
      in
      any transactions with any officer, director, employee or any Affiliate of the
      Company, including any contract, agreement or other arrangement providing for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $10,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

    (t) Acquisition.
      The
      Company undertakes, covenants and agrees to consummate the acquisition of RX
      for
      Africa on the same terms as described in the Letter of Intent.

    

    (u) Financial
      Statements. The Company will deliver to the Subscribers on or before January
      31,
      2007 the financial statements described in Section 1(d) of this
      Agreement.

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    10. Covenants
      of the Company and Subscriber Regarding Indemnification.

     

    (a) The
      Company agrees to indemnify, hold harmless, reimburse and defend the
      Subscribers, the Subscribers' officers, directors, agents, Affiliates, control
      persons, and principal shareholders, against any claim, cost, expense,
      liability, obligation, loss or damage (including reasonable legal fees) of
      any
      nature, incurred by or imposed upon the Subscriber or any such person which
      results, arises out of or is based upon (i) any material misrepresentation
      by
      Company or material breach of any warranty by Company in this Agreement or
      in
      any Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any material
      breach or default in performance by the Company of any covenant or undertaking
      to be performed by the Company hereunder, or any other agreement entered into
      by
      the Company and Subscriber relating hereto.

     

    (b) Each
      Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, Affiliates, control
      persons against any claim, cost, expense, liability, obligation, loss or damage
      (including reasonable legal fees) of any nature, incurred by or imposed upon
      the
      Company or any such person which results, arises out of or is based upon (i)
      any
      material misrepresentation by such Subscriber in this Agreement or in any
      Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any material
      breach or default in performance by such Subscriber of any covenant or
      undertaking to be performed by such Subscriber hereunder, or any other agreement
      entered into by the Company and Subscribers, relating hereto.

     

    (c) In
      no
      event shall the liability of any Subscriber or permitted successor hereunder
      or
      under any Transaction Document or other agreement delivered in connection
      herewith be greater in amount than the dollar amount of the net proceeds
      actually received by such Subscriber upon the sale of Registrable Securities
      (as
      defined herein).

     

    (d) The
      procedures set forth in Section 11.6 shall apply to the indemnification set
      forth in Sections 10(a) and 10(b) above.

     

    11.1. Registration
      Rights.
      The
      Company hereby grants the following registration rights to holders of the
      Securities.

     

    (i) On
      one
      occasion, for a period commencing ninety-one (91) days after the Initial Closing
      Date, but not later than two (2) years after the Initial Closing Date, upon
      a
      written request therefor from any record holder or holders of more than 50%
      of
      the Shares issued and issuable upon conversion of the outstanding Notes and
      outstanding Warrant Shares, the Company shall prepare and file with the
      Commission a registration statement under the 1933 Act registering the
      Registrable Securities, as defined in Section 11.1(iv) hereof, which are the
      subject of such request for unrestricted public resale by the holder thereof.
      For purposes of Sections 11.1(i) and 11.1(ii), Registrable Securities shall
      not
      include Securities which are (A) registered for resale in an effective
      registration statement, (B) included for registration in a pending registration
      statement, or (C) which have been issued without further transfer restrictions
      after a sale or transfer pursuant to Rule 144 under the 1933 Act. Upon the
      receipt of such request, the Company shall promptly give written notice to
      all
      other record holders of the Registrable Securities that such registration
      statement is to be filed and shall include in such registration statement
      Registrable Securities for which it has received written requests within ten
      (10) days after the Company gives such written notice. Such other requesting
      record holders shall be deemed to have exercised their demand registration
      right
      under this Section 11.1(i).

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (ii) If
      the
      Company at any time proposes to register any of its securities under the 1933
      Act for sale to the public, whether for its own account or for the account
      of
      other security holders or both, except with respect to registration statements
      on Forms S-4, S-8 or another form not available for registering the Registrable
      Securities for sale to the public, provided the Registrable Securities are
      not
      otherwise registered for resale by the Subscribers or Holder pursuant to an
      effective registration statement, each such time it will give at least fifteen
      (15) days' prior written notice to the record holder of the Registrable
      Securities of its intention so to do. Upon the written request of the holder,
      received by the Company within ten (10) days after the giving of any such notice
      by the Company, to register any of the Registrable Securities not previously
      registered, the Company will cause such Registrable Securities as to which
      registration shall have been so requested to be included with the securities
      to
      be covered by the registration statement proposed to be filed by the Company,
      all to the extent required to permit the sale or other disposition of the
      Registrable Securities so registered by the holder of such Registrable
      Securities (the “Seller”
or
      “Sellers”).
      In
      the event that any registration pursuant to this Section 11.1(i) shall be,
      in
      whole or in part, an underwritten public offering of common stock of the
      Company, the number of shares of Registrable Securities to be included in such
      an underwriting may be reduced by the managing underwriter if and to the extent
      that the Company and the underwriter shall reasonably be of the opinion that
      such inclusion would adversely affect the marketing of the securities to be
      sold
      by the Company therein; provided, however, that the Company shall notify the
      Seller in writing of any such reduction. Notwithstanding the foregoing
      provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
      a delay of any registration statement referred to in this Section 11.1(i)
      without thereby incurring any liability to the Seller.

     

    (iii) If,
      at
      the time any written request for registration is received by the Company
      pursuant to Section 11.1(i), the Company has determined to proceed with the
      actual preparation and filing of a registration statement under the 1933 Act
      in
      connection with the proposed offer and sale for cash of any of its securities
      for the Company's own account and the Company actually does file such other
      registration statement, such written request shall be deemed to have been given
      pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of
      the
      holders of Registrable Securities covered by such written request shall be
      governed by Section 11.1(ii).

     

    (iv) The
      Company shall file with the Commission a Form SB-2 registration statement (the
      “Registration
      Statement”)
      (or
      such other form that it is eligible to use) in order to register the Registrable
      Securities for resale and distribution under the 1933 Act on or before February
      15, 2007 (the “Filing
      Date”),
      and
      cause the Registration Statement to be declared effective not later than April
      16, 2007 (the “Effective
      Date”).
      Subject to the limitation described in Section 11.1(v), the Company will
      register not less than a number of shares of Common Stock in the aforedescribed
      registration statement that is equal to 150% of the Shares issuable upon
      conversion of all of the Notes issuable to the Subscribers, and 100% of the
      Warrant Shares issuable pursuant to this Agreement upon exercise of the Warrants
      (collectively the “Registrable
      Securities”).
      The
      Registrable Securities shall be reserved and set aside exclusively for the
      benefit of each Subscriber and Warrant holder, pro rata
      based on
      the principal amount of Notes purchased by each Subscriber pursuant to this
      Agreement, and not issued, employed or reserved for anyone other than each
      such
      Subscriber and Warrant holder. The Registration Statement will immediately
      be
      amended or additional registration statements will be immediately filed by
      the
      Company as necessary to register additional shares of Common Stock to allow
      the
      public resale of all Common Stock included in and issuable by virtue of the
      Registrable Securities. Except with the written consent of the Subscriber,
      no
      securities of the Company other than the Registrable Securities will be included
      in the Registration Statement. It shall be deemed a Non-Registration Event
      if at
      any time after the date the Registration Statement described in this Section
      11.1(iv) is declared effective by the Commission (“Actual
      Effective Date”)
      the
      Company has registered for unrestricted resale on behalf of the Subscribers
      fewer than 125% of the amount of Common Shares issuable upon full conversion
      of
      all sums due under the Notes.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    
      	 	
              (v)

            	
              The
                amount of Registrable Securities required to be included in the
                Registration Statement as described in Section 11.1(iv) (“Initial
                Registrable Securities”)
                shall be limited to not less than 100% of the maximum amount
                (“Rule
                415 Amount”)
                of Common Stock which may be included in a single Registration Statement
                without exceeding registration limitations imposed by the Commission
                pursuant to Rule 415 of the 1933 Act but in no event not less than
                the
                greater of 53, 333, 334 shares of Common Stock or 130% of the Shares
                outstanding at the time the registration is filed (post reverse split
                shares)

            

    

     

    
      	 	
              (w)

            	
              .
                In the event that less than all of the Initial Registrable Securities
                are
                included in the Registration Statement as a result of the limitation
                described in this Section 11.1(v), then the Company will file additional
                Registration Statements each registering the Rule 415 Amount (each
                such
                Registration Statement a “Subsequent
                Registration Statement”),
                seriatim,
                until all of the Initial Registrable Securities have been registered.
                The
                Filing Date and Effective Date of each such additional Registration
                Statement shall be, respectively, fourteen (14) and forty-five (45)
                days
                after the first day such Subsequent Registration Statement may be
                filed
                without objection by the Commission based on Rule 415 of the 1933
                Act.

            

    

     

    (vi) Unless
      otherwise instructed in writing by a holder of Registrable Securities and only
      if the initial Registration Statement does not include all of the Registrable
      Securities, the Registrable Securities will be registered on behalf of each
      such
      holder in the Registration Statements based on Common Stock issuable upon
      conversion or exercise of Notes and Warrants, in the following order and
      priority:

     

    (A) Notes
      (based on the multiple set forth above).

     

    (B) Warrants.

     

    (C) Warrants
      issued to the Subscribers at any time based on exercise prices, with the lower
      exercise priced Warrant Shares being registered first and then the higher
      exercise priced Warrant Shares. In the case of Warrants with the same exercise
      prices but different Issue Dates, the later issued Warrants will be registered
      first.

     

    The
      foregoing notwithstanding, priority shall be given to Common Stock issuable
      upon
      conversion of actual outstanding Notes ahead of Warrant Shares.

     

    11.2. Registration
      Procedures.
      If and
      whenever the Company is required by the provisions of Section 11.1(i), 11.1(ii)
      or 11.1(iv) to effect the registration of any Registrable Securities under
      the
      1933 Act, the Company will, as expeditiously as possible: 

     

    (a) subject
      to the timelines provided in this Agreement, prepare and file with the
      Commission a registration statement required by Section 11, with respect to
      such
      securities and use its best efforts to cause such registration statement to
      become and remain effective for the period of the distribution contemplated
      thereby (determined as herein provided), promptly provide to the holders of
      the
      Registrable Securities copies of all filings and Commission letters of comment
      and notify Subscribers (by telecopier and by e-mail addresses provided by
      Subscribers) and Grushko & Mittman, P.C. (by telecopier and by email to
Counslers@aol.com)
      on or
      before 6:00 PM EST on the same business day that the Company receives notice
      that (i) the Commission has no comments or no further comments on the
      Registration Statement, and (ii) the registration statement has been declared
      effective (failure to timely provide notice as required by this Section 11.2(a)
      shall be a material breach of the Company’s obligation and an Event of Default
      as defined in the Notes
      and
      a Non-Registration Event as defined in Section 11.4 of this Agreement);

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (b) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective until such registration
      statement has been effective for a period of two (2) years, and comply with
      the
      provisions of the 1933 Act with respect to the disposition of all of the
      Registrable Securities covered by such registration statement in accordance
      with
      the Sellers’ intended method of disposition set forth in such registration
      statement for such period; 

     

    (c) furnish
      to the Sellers, at the Company’s expense, such number of copies of the
      registration statement and the prospectus included therein (including each
      preliminary prospectus) as such persons reasonably may request in order to
      facilitate the public sale or their disposition of the securities covered by
      such registration statement or make them electronically available; 

     

    (d) use
      its
commercially
      reasonable best efforts to register or qualify the Registrable Securities
      covered by such registration statement under the securities or “blue sky” laws
      of New York and such jurisdictions as the Sellers shall request in writing,
      provided, however, that the Company shall not for any such purpose be required
      to qualify generally to transact business as a foreign corporation in any
      jurisdiction where it is not so qualified or to consent to general service
      of
      process in any such jurisdiction; 

     

    (e) if
      applicable, list the Registrable Securities covered by such registration
      statement with any securities exchange on which the Common Stock of the Company
      is then listed; 

     

    (f) notify
      the Subscribers within two hours of the Company’s becoming aware that a
      prospectus relating thereto is required to be delivered under the 1933 Act,
      of
      the happening of any event of which the Company has knowledge as a result of
      which the prospectus contained in such registration statement, as then in
      effect, includes an untrue statement of a material fact or omits to state a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading in light of the circumstances then existing or which
      becomes subject to a Commission, state or other governmental order suspending
      the effectiveness of the registration statement covering any of the
      Shares;

     

    (g) provided
      same would not be in violation of the provision of Regulation FD under the
      1934
      Act, make available for inspection by the Sellers, and any attorney, accountant
      or other agent retained by the Seller or underwriter, all publicly available,
      non-confidential financial and other records, pertinent corporate documents
      and
      properties of the Company, and cause the Company's officers, directors and
      employees to supply all publicly available, non-confidential information
      reasonably requested by the seller, attorney, accountant or agent in connection
      with such registration statement; and

     

    (h) provide
      to the Sellers copies of the Registration Statement and amendments thereto
      five
      business days prior to the filing thereof with the Commission.

     

    11.3. Provision
      of Documents.
      In
      connection with each registration described in this Section 11, each Seller
      will
      furnish to the Company in writing such information and representation letters
      with respect to itself and the proposed distribution by it as reasonably shall
      be necessary in order to assure compliance with federal and applicable state
      securities laws. 

     

    
      
         

      

      
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    11.4. Non-Registration
      Events.
      The
      Company and the Subscribers agree that the Sellers will suffer damages if the
      Registration Statement is not filed by the Filing Date and not declared
      effective by the Commission by the Effective Date, and any registration
      statement required under Section 11.1(i) or 11.1(ii) is not filed within 60
      days
      after written request and declared effective by the Commission within 120 days
      after such request, and maintained in the manner and within the time periods
      contemplated by Section 11 hereof, and it would not be feasible to ascertain
      the
      extent of such damages with precision. Accordingly, if (A) the Registration
      Statement is not filed on or before the Filing Date, (B) is not declared
      effective on or before the Effective Date, (C) due to the action or inaction
      of
      the Company the Registration Statement is not declared effective within three
      (3) business days after receipt by the Company or its attorneys of a written
      or
      oral communication from the Commission that the Registration Statement will
      not
      be reviewed or that the Commission has no further comments, (D) if the
      registration statement described in Sections 11.1(i) or 11.1(ii) is not filed
      within 60 days after such written request, or is not declared effective within
      120 days after such written request, or (E) any registration statement described
      in Sections 11.1(i), 11.1(ii) or 11.1(iv) is filed and declared effective but
      shall thereafter cease to be effective without being succeeded within fifteen
      (15) business days by an effective replacement or amended registration statement
      or for a period of time which shall exceed thirty (30) days in the aggregate
      per
      year (defined as a period of 365 days commencing on the Actual Effective Date
      (each such event referred to in clauses A through E of this Section 11.4 is
      referred to herein as a "Non-Registration
      Event"),
      then
      the Company shall deliver to the holder of Registrable Securities, as Liquidated
      Damages, an amount equal to two percent (2%) for each thirty (30) days or part
      thereof of the Aggregate Principal Amount of the Notes remaining unconverted
      and
      purchase price of Shares issued upon conversion of the Notes and exercise of
      the
      Warrants owned of record by such holder which are subject to such
      Non-Registration Event. The Company must pay the Liquidated Damages in cash.
      The
      Liquidated Damages must be paid within ten (10) days after the end of each
      thirty (30) day period or shorter part thereof for which Liquidated Damages
      are
      payable. In the event a Registration Statement is filed by the Filing Date
      but
      is withdrawn prior to being declared effective by the Commission, then such
      Registration Statement will be deemed to have not been filed. All
      oral
      or written comments received from the Commission relating to the Registration
      Statement must be satisfactorily responded to within
      ten (10) business days after receipt of comments from the Commission.
      Failure
      to
      timely respond to Commission comments is a Non-Registration Event for which
      Liquidated Damages shall accrue and be payable by the Company to the holders
      of
      Registrable Securities at the same rate set forth above. Notwithstanding the
      foregoing, the Company shall not be liable to the Subscriber under this Section
      11.4 for any events or delays occurring as a consequence of the acts or
      omissions of the Subscribers contrary to the obligations undertaken by
      Subscribers in this Agreement. Liquidated Damages will not accrue nor be payable
      pursuant to this Section 11.4 nor will a Non-Registration Event be deemed to
      have occurred for times during which Registrable Securities are transferable
      by
      the holder of Registrable Securities pursuant to Rule 144(k) under the 1933
      Act.

     

    11.5. Expenses.
      All
      expenses incurred by the Company in complying with Section 11, including,
      without limitation, all registration and filing fees, printing expenses (if
      required), fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including reasonable counsel fees) incurred
      in connection with complying with state securities or “blue sky” laws, fees of
      the National Association of Securities Dealers, Inc., transfer taxes, and fees
      of transfer agents and registrars, are called “Registration
      Expenses.”
All
      underwriting discounts and selling commissions applicable to the sale of
      Registrable Securities are called "Selling
      Expenses."
      The
      Company will pay all Registration Expenses in connection with the registration
      statement under Section 11. Selling Expenses in connection with each
      registration statement under Section 11 shall be borne by the Seller and may
      be
      apportioned among the Sellers in proportion to the number of shares sold by
      the
      Seller relative to the number of shares sold under such registration statement
      or as all Sellers thereunder may agree.

     

    
      
         

      

      
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    11.6. Indemnification
      and Contribution.

     

    (a) In
      the
      event of a registration of any Registrable Securities under the 1933 Act
      pursuant to Section 11, the Company will, to the extent permitted by law,
      indemnify and hold harmless the Seller, each officer of the Seller, each
      director of the Seller, each underwriter of such Registrable Securities
      thereunder and each other person, if any, who controls such Seller or
      underwriter within the meaning of the 1933 Act, against any losses, claims,
      damages or liabilities, joint or several, to which the Seller, or such
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in any registration statement
      under which such Registrable Securities was registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not misleading
      in light of the circumstances when made, and will subject to the provisions
      of
      Section 11.6(c) reimburse the Seller, each such underwriter and each such
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action; provided, however, that the Company shall not be liable
      to
      the Seller to the extent that any such damages arise out of or are based upon
      an
      untrue statement or omission made in any preliminary prospectus if (i) the
      Seller failed to send or deliver a copy of the final prospectus delivered by
      the
      Company to the Seller with or prior to the delivery of written confirmation
      of
      the sale by the Seller to the person asserting the claim from which such damages
      arise, (ii) the final prospectus would have corrected such untrue statement
      or
      alleged untrue statement or such omission or alleged omission, or (iii) to
      the
      extent that any such loss, claim, damage or liability arises out of or is based
      upon an untrue statement or alleged untrue statement or omission or alleged
      omission so made in conformity with information furnished by any such Seller,
      or
      any such controlling person in writing specifically for use in such registration
      statement or prospectus. 

     

    (b) In
      the
      event of a registration of any of the Registrable Securities under the 1933
      Act
      pursuant to Section 11, each Seller severally but not jointly will, to the
      extent permitted by law, indemnify and hold harmless the Company, and each
      person, if any, who controls the Company within the meaning of the 1933 Act,
      each officer of the Company who signs the registration statement, each director
      of the Company, each underwriter and each person who controls any underwriter
      within the meaning of the 1933 Act, against all losses, claims, damages or
      liabilities, joint or several, to which the Company or such officer, director,
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in the registration statement
      under which such Registrable Securities were registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not misleading,
      and will reimburse the Company and each such officer, director, underwriter
      and
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action, provided, however, that the Seller will be liable hereunder
      in any such case if and only to the extent that any such loss, claim, damage
      or
      liability arises out of or is based upon an untrue statement or alleged untrue
      statement or omission or alleged omission made in reliance upon and in
      conformity with information pertaining to such Seller, as such, furnished in
      writing to the Company by such Seller specifically for use in such registration
      statement or prospectus, and provided, further, however, that the liability
      of
      the Seller hereunder shall be limited to the net proceeds actually received
      by
      the Seller from the sale of Registrable Securities covered by such registration
      statement.

     

    
      
         

      

      
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    (c) Promptly
      after receipt by an indemnified party hereunder of notice of the commencement
      of
      any action, such indemnified party shall, if a claim in respect thereof is
      to be
      made against the indemnifying party hereunder, notify the indemnifying party
      in
      writing thereof, but the omission so to notify the indemnifying party shall
      not
      relieve it from any liability which it may have to such indemnified party other
      than under this Section 11.6(c) and shall only relieve it from any liability
      which it may have to such indemnified party under this Section 11.6(c), except
      and only if and to the extent the indemnifying party is prejudiced by such
      omission. In case any such action shall be brought against any indemnified
      party
      and it shall notify the indemnifying party of the commencement thereof, the
      indemnifying party shall be entitled to participate in and, to the extent it
      shall wish, to assume and undertake the defense thereof with counsel
      satisfactory to such indemnified party, and, after notice from the indemnifying
      party to such indemnified party of its election so to assume and undertake
      the
      defense thereof, the indemnifying party shall not be liable to such indemnified
      party under this Section 11.6(c) for any legal expenses subsequently incurred
      by
      such indemnified party in connection with the defense thereof other than
      reasonable costs of investigation and of liaison with counsel so selected,
      provided, however, that, if the defendants in any such action include both
      the
      indemnified party and the indemnifying party and the indemnified party shall
      have reasonably concluded that there may be reasonable defenses available to
      it
      which are different from or additional to those available to the indemnifying
      party or if the interests of the indemnified party reasonably may be deemed
      to
      conflict with the interests of the indemnifying party, the indemnified parties,
      as a group, shall have the right to select one separate counsel and to assume
      such legal defenses and otherwise to participate in the defense of such action,
      with the reasonable expenses and fees of such separate counsel and other
      expenses related to such participation to be reimbursed by the indemnifying
      party as incurred.

     

    (d) In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the 1933 Act in any case in which either (i) a Seller, or any controlling
      person of a Seller, makes a claim for indemnification pursuant to this Section
      11.6 but it is judicially determined (by the entry of a final judgment or decree
      by a court of competent jurisdiction and the expiration of time to appeal or
      the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 11.6 provides
      for indemnification in such case, or (ii) contribution under the 1933 Act may
      be
      required on the part of the Seller or controlling person of the Seller in
      circumstances for which indemnification is not provided under this Section
      11.6;
      then, and in each such case, the Company and the Seller will contribute to
      the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that the Seller is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the registration statement bears
      to
      the public offering price of all securities offered by such registration
      statement, provided, however, that, in any such case, (y) the Seller will not
      be
      required to contribute any amount in excess of the public offering price of
      all
      such securities sold by it pursuant to such registration statement; and (z)
      no
      person or entity guilty of fraudulent misrepresentation (within the meaning
      of
      Section 11(f) of the 1933 Act) will be entitled to contribution from any person
      or entity who was not guilty of such fraudulent misrepresentation.

     

    11.7. Delivery
      of Unlegended Shares.

     

    (a) Within
      three (3) business days (such third business day being the “Unlegended
      Shares Delivery Date”)
      after
      the business day on which the Company has received (i) a notice that Shares
      or
      Warrant Shares or any other Common Stock held by a Subscriber have been sold
      pursuant to the Registration Statement or Rule 144 under the 1933 Act, (ii)
      a
      representation that the prospectus delivery requirements, or the requirements
      of
      Rule 144, as applicable and if required, have been satisfied, and (iii) the
      original share certificates representing the shares of Common Stock that have
      been sold, and (iv) in the case of sales under Rule 144, customary
      representation letters of the Subscriber and/or Subscriber’s broker regarding
      compliance with the requirements of Rule 144, the Company at its expense, (y)
      shall deliver, and shall cause legal counsel selected by the Company to deliver
      to its transfer agent (with copies to Subscriber) an appropriate instruction
      and
      opinion of such counsel, directing the delivery of shares of Common Stock
      without any legends including the legend set forth in Section 4(i)
      above
      (the “Unlegended
      Shares”);
      and
      (z) cause the transmission of the certificates representing the Unlegended
      Shares together with a legended certificate representing the balance of the
      submitted Shares certificate, if any, to the Subscriber at the address specified
      in the notice of sale, via express courier, by electronic transfer or otherwise
      on or before the Unlegended Shares Delivery Date. 

     

    
      
         

      

      
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    (b) In
      lieu
      of delivering physical certificates representing the Unlegended Shares, if
      the
      Company’s transfer agent is participating in the Depository Trust Company
      (“DTC”)
      Fast
      Automated Securities Transfer program, upon request of a Subscriber, so long
      as
      the certificates therefor do not bear a legend and the Subscriber is not
      obligated to return such certificate for the placement of a legend thereon,
      the
      Company shall cause its transfer agent to electronically transmit the Unlegended
      Shares by crediting the account of Subscriber’s prime Broker with DTC through
      its Deposit Withdrawal Agent Commission system. Such delivery must be made
      on or
      before the Unlegended Shares Delivery Date.

    

    (c) The
      Company understands that a delay in the delivery of the Unlegended Shares
      pursuant to Section 11 hereof later than two business days after the Unlegended
      Shares Delivery Date could result in economic loss to a Subscriber. As
      compensation to a Subscriber for such loss, the Company agrees to pay late
      payment fees (as liquidated damages and not as a penalty) to the Subscriber
      for
      late delivery of Unlegended Shares in the amount of $100 per business day after
      the Delivery Date for each $10,000 of purchase price of the Unlegended Shares
      subject to the delivery default. If during any 360 day period, the Company
      fails
      to deliver Unlegended Shares as required by this Section 11.7 for an aggregate
      of thirty (30) days, then each Subscriber or assignee holding Securities subject
      to such default may, at its option, require the Company to redeem all or any
      portion of the Shares and Warrant Shares subject to such default at a price
      per
      share equal to 120% of the Purchase Price of such Common Stock and Warrant
      Shares (“Unlegended
      Redemption Amount”).
      The
      amount of the aforedescribed liquidated damages that have accrued or been paid
      for the twenty day period prior to the receipt by the Subscriber of the
      Unlegended Redemption Amount shall be credited against the Unlegended Redemption
      Amount. The Company shall pay any payments incurred under this Section in
      immediately available funds upon demand.

     

    (d) In
      addition to any other rights available to a Subscriber, if the Company fails
      to
      deliver to a Subscriber Unlegended Shares as required pursuant to this
      Agreement, within seven (7) business days after the Unlegended Shares Delivery
      Date and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an
      open market transaction or otherwise) shares of common stock to deliver in
      satisfaction of a sale by such Subscriber of the shares of Common Stock which
      the Subscriber was entitled to receive from the Company (a "Buy-In"),
      then
      the Company shall pay in cash to the Subscriber (in addition to any remedies
      available to or elected by the Subscriber) the amount by which (A) the
      Subscriber's total purchase price (including brokerage commissions, if any)
      for
      the shares of common stock so purchased exceeds (B) the aggregate purchase
      price
      of the shares of Common Stock delivered to the Company for reissuance as
      Unlegended Shares  together
      with interest thereon at a rate of 15% per annum, accruing until such amount
      and
      any accrued interest thereon is paid in full (which amount shall be paid as
      liquidated damages and not as a penalty). For
      example, if a Subscriber purchases shares of Common Stock having a total
      purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
      price of shares of Common Stock delivered to the Company for reissuance as
      Unlegended Shares, the Company shall be required to pay the Subscriber
      $1,000,
      plus interest. The
      Subscriber shall provide the Company written notice indicating the amounts
      payable to the Subscriber in respect of the Buy-In.

     

    (e) In
      the
      event a Subscriber shall request delivery of Unlegended Shares as described
      in
      Section 11.7 and the Company is required to deliver such Unlegended Shares
      pursuant to Section 11.7, the Company may not refuse to deliver Unlegended
      Shares based on any claim that such Subscriber or any one associated or
      affiliated with such Subscriber has been engaged in any violation of law, or
      for
      any other reason, unless, an injunction or temporary restraining order from
      a
      court, on notice, restraining and or enjoining delivery of such Unlegended
      Shares or exercise of all or part of said Warrant shall have been sought and
      obtained
      and the
      Company has posted a surety bond for the benefit of such Subscriber in the
      amount of 120% of the amount of the aggregate purchase price of the Common
      Stock
      and Warrant Shares which are subject to the injunction or temporary restraining
      order, which bond shall remain in effect until the completion of
      arbitration/litigation of the dispute and the proceeds of which shall be payable
      to such Subscriber to the extent Subscriber obtains judgment in Subscriber’s
      favor.

    

    
      
         

      

      
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    12. (a) Right
      of First Refusal.
      Until
      one year after the Actual Effective Date, the Subscribers shall be given not
      less than ten (10) business days prior written notice of any proposed sale
      by
      the Company of its common stock or other securities or debt obligations, except
      in connection with (i) full or partial consideration in connection with a
      strategic merger, acquisition, consolidation or purchase of substantially all
      of
      the securities or assets of corporation or other entity which holders of such
      securities or debt are not at any time granted registration rights, (ii)
      the
      Company’s issuance of securities in connection with strategic license agreements
      and other partnering arrangements so long as such issuances are not for the
      purpose of raising capital and which holders of such securities or debt are
      not
      at any time granted registration rights, (iii) the Company’s issuance of Common
      Stock or the issuances or grants of options to purchase Common Stock pursuant
      to
      stock option plans and employee stock purchase plans described on Schedule
      5(d)
      hereto at prices equal to or higher than the closing price of the Common Stock
      on the issue date of any of the foregoing, (iv) as a result of the exercise
      of
      Warrants or conversion of Notes which are granted or issued pursuant to this
      Agreement or that have been issued prior to the Closing Date, the issuance
      of
      which has been disclosed in a Report filed not less than five (5) days prior
      to
      the Closing Date, and (v) the payment of any interest on the Notes and
      Liquidated Damages pursuant to the Transaction Documents (collectively
      the foregoing are “Excepted
      Issuances”).
      The
      Subscribers who exercise their rights pursuant to this Section 12(a) shall
      have
      the right during the ten (10) business days following receipt of the notice
      to
      purchase such offered common stock, debt or other securities in accordance
      with
      the terms and conditions set forth in the notice of sale in the same proportion
      to each other as their purchase of Notes in the Offering. In the event such
      terms and conditions are modified during the notice period, the Subscribers
      shall be given prompt notice of such modification and shall have the right
      during the ten (10) business days following the notice of modification to
      exercise such right. 

     

    (b) Favored
      Nations Provision.
      Other
      than in connection with the Excepted Issuances, if at any time while Notes
      or
      Warrants are outstanding the Company shall offer, issue or agree to issue any
      common stock or securities convertible into or exercisable for shares of common
      stock (or modify any of the foregoing which may be outstanding) to any person
      or
      entity at a price per share or conversion or exercise price per share which
      shall be less than the Conversion Price in respect of the Shares, or if less
      than the Warrant exercise price in respect of the Warrant Shares, without the
      consent of each Subscriber holding Notes, Shares, Warrants, or Warrant Shares,
      then the Company shall issue, for each such occasion, additional shares of
      Common Stock to each Subscriber so that the average per share purchase price
      of
      the shares of Common Stock issued to the Subscriber (of only the Common Stock
      or
      Warrant Shares still owned by the Subscriber) is equal to such other lower
      price
      per share and the maximum Conversion Price and maximum Warrant exercise price
      shall automatically be adjusted to such other lower price per Share. The average
      Purchase Price of the Shares and average exercise price in relation to the
      Warrant Shares shall be calculated separately for the Shares and Warrant Shares.
      The foregoing calculation and issuance shall be made separately for Shares
      received upon conversion and separately for Warrant Shares. The delivery to
      the
      Subscriber of the additional shares of Common Stock shall be not later than
      two
      (2) business days after the closing date of the transaction giving rise to
      the
      requirement to issue additional shares of Common Stock. The Subscriber is
      granted the registration rights described in Section 11 hereof in relation
      to
      such additional shares of Common Stock except that the Filing Date and Effective
      Date vis-à-vis such additional common shares shall be, respectively, the
      thirtieth (30th)
      and
      sixtieth (60th)
      date
      after the closing date giving rise to the requirement to issue the additional
      shares of Common Stock. For purposes of the issuance and adjustment described
      in
      this paragraph, the issuance of any security of the Company carrying the right
      to convert such security into shares of Common Stock or of any warrant, right
      or
      option to purchase Common Stock shall result in the issuance of the additional
      shares of Common Stock upon the sooner of the agreement to or actual issuance
      of
      such convertible security, warrant, right or option and again at any time upon
      any subsequent issuances of shares of Common Stock upon exercise of such
      conversion or purchase rights if such issuance is at a price lower than the
      Conversion Price or Warrant exercise price in effect upon such issuance. The
      rights of the Subscriber set forth in this Section 12 are in addition to any
      other rights the Subscriber has pursuant to this Agreement, the Note, any
      Transaction Document, and any other agreement referred to or entered into in
      connection herewith. The Subscriber is also given the right to elect to
      substitute any term or terms of any other offering in connection with which
      the
      Subscriber has rights as described in Section 12(a), for any term or terms
      of
      the Offering in connection with Securities owned by Subscriber as of the date
      the notice described in Section 12(a) is required to be given to
      Subscriber.

     

    
      
         

      

      
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    (c) Maximum
      Exercise of Rights.
      In the
      event the exercise of the rights described in Sections 12(a) and 12(b)
would
      result in the issuance of an amount of common stock of the Company that would
      exceed the maximum amount that may be issued to a Subscriber calculated in
      the
      manner described in Section 7.3 of this Agreement, then the issuance of such
      additional shares of common stock of the Company to such Subscriber will be
      deferred in whole or in part until such time as such Subscriber is able to
      beneficially own such common stock without exceeding the maximum amount set
      forth calculated in the manner described in Section 7.3 of this Agreement.
      The
      determination of when such common stock may be issued shall be made by each
      Subscriber as to only such Subscriber.

     

    13. Miscellaneous.

     

    (a) Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Company, to: Diamond Entertainment
      Corporation, 800 Tucker Lane, Walnut, California 91789, Attn: James
      Lu,
      CEO,
      telecopier: (909) 869-1990, with a copy by telecopier only to: Owen M.
      Naccarato, Esq., Naccarato & Associates, 18301 Von Karman Avenue, Suite 430,
      Irvine, CA 92612, telecopier: (949) 851-9262, and (ii) if to the Subscriber,
      to:
      the one or more addresses and telecopier numbers indicated on the signature
      pages hereto, with an additional copy by telecopier only to: Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
      telecopier: (212) 697-3575.

     

    (b) Entire
      Agreement; Assignment.
      This
      Agreement and other documents delivered in connection herewith represent the
      entire agreement between the parties hereto with respect to the subject matter
      hereof and may be amended only by a writing executed by both parties. Neither
      the Company nor the Subscribers have relied on any representations not contained
      or referred to in this Agreement and the documents delivered herewith. No right
      or obligation of the Company shall be assigned without prior notice to and
      the
      written consent of the Subscribers. 

     

    
      
         

      

      
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    (c) 
      Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission.

     

    (d) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to conflicts
      of laws principles
      that would result in the application of the substantive laws of another
      jurisdiction. Any action brought by either party against the other concerning
      the transactions contemplated by this Agreement shall be brought only in the
      civil or state courts of New York or in the federal courts located in New York
      County. The
      parties and the individuals executing this Agreement and other agreements
      referred to herein or delivered in connection herewith on behalf of the Company
      agree to submit to the jurisdiction of such courts and waive trial by
      jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.

     

    (e) Specific
      Enforcement, Consent to Jurisdiction.
      To the
      extent permitted by law, the Company and Subscriber acknowledge and agree that
      irreparable damage would occur in the event that any of the provisions of this
      Agreement were not performed in accordance with their specific terms or were
      otherwise breached. It is accordingly agreed that the parties shall be entitled
      to one or more preliminary and final injunctions to prevent or cure breaches
      of
      the provisions of this Agreement and to enforce specifically the terms and
      provisions hereof, this being in addition to any other remedy to which any
      of
      them may be entitled by law or equity. Subject to Section 13(d) hereof, each
      of
      the Company, Subscriber and any signator hereto in his personal capacity hereby
      waives, and agrees not to assert in any such suit, action or proceeding, any
      claim that it is not personally subject to the jurisdiction in New York of
      such
      court, that the suit, action or proceeding is brought in an inconvenient forum
      or that the venue of the suit, action or proceeding is improper. Nothing in
      this
      Section shall affect or limit any right to serve process in any other manner
      permitted by law.

     

    (f) Damages.
      In the
      event the Subscriber is entitled to receive any liquidated damages pursuant
      to
      the Transactions, the Subscriber may elect to receive the greater of actual
      damages or such liquidated damages.

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    (g) Independent
      Nature of Subscribers.  
        The
      Company acknowledges that the obligations of each Subscriber under the
      Transaction Documents are several and not joint with the obligations of any
      other Subscriber, and no Subscriber shall be responsible in any way for the
      performance of the obligations of any other Subscriber under the Transaction
      Documents. The
      Company acknowledges that each Subscriber has represented that the decision
      of
      each Subscriber to purchase Securities has been made by such Subscriber
      independently of any other Subscriber and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company which may have been made or given by
      any
      other Subscriber or by any agent or employee of any other Subscriber, and no
      Subscriber or any of its agents or employees shall have any liability to any
      Subscriber (or any other person) relating to or arising from any such
      information, materials, statements or opinions.  The
      Company acknowledges that nothing contained in any Transaction Document, and
      no
      action taken by any Subscriber pursuant hereto or thereto (including, but not
      limited to, the (i) inclusion of a Subscriber in the Registration Statement
      and
      (ii) review by, and consent to, such Registration Statement by a Subscriber)
      shall be deemed to constitute the Subscribers as a partnership, an association,
      a joint venture or any other kind of entity, or create a presumption that the
      Subscribers are in any way acting in concert or as a group with respect to
      such
      obligations or the transactions contemplated by the Transaction Documents. 
The Company acknowledges that each Subscriber shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of the Transaction Documents, and it shall not be necessary for
      any other Subscriber to be joined as an additional party in any proceeding
      for
      such purpose.  The Company acknowledges that it has elected to provide all
      Subscribers with the same terms and Transaction Documents for the convenience
      of
      the Company and not because Company was required or requested to do so by the
      Subscribers.  The Company acknowledges that such procedure with respect to
      the Transaction Documents in no way creates a presumption that the Subscribers
      are in any way acting in concert or as a group with respect to the Transaction
      Documents or the transactions contemplated thereby.

     

    (h) Consent.
      As used
      in the Agreement, “consent of the Subscribers” or similar language means the
      consent of holders of not less than 75% of the total of the Shares issued and
      issuable upon conversion of outstanding Notes owned by Subscribers on the date
      consent is requested.

     

    (i) Equal
      Treatment.
      No
      consideration shall be offered or paid to any person to amend or consent to
      a
      waiver or modification of any provision of the Transaction Documents unless
      the
      same consideration is also offered and paid to all the parties to the
      Transaction Documents.

     

    

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (A)

     

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

     

    
      	 	 	 
	 	
              DIAMOND
                ENTERTAINMENT CORPORATION

              a
                New
                Jersey corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ /s/
              James
              Lu
	 	
              

            
	 	
              Name:
                James Lu

              Title:
                President

              

              Dated:
                November 30, 2006

            

     

    

    

    
      	
              SUBSCRIBER

            	
              INITIAL
                CLOSING PURCHASE PRICE

            	
              SECOND
                CLOSING PURCHASE PRICE

            
	
              LONGVIEW
                FUND, LP

              600
                Montgomery Street, 44th Floor

              San
                Francisco, CA 94111

              Fax:
                (415) 981-5301

               

               

               

              _______________________________________

              (Signature)

            	
              $1,000,000.00

            	
              $1,000,000.00

            

    

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (B)

     

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

     

    
       

      
        	 	 	 
	 	
                DIAMOND
                  ENTERTAINMENT CORPORATION

                a
                  New
                  Jersey corporation

              
	 
 	 
 	 
 
	 	By:  	/s/ /s/
                James
                Lu
	 	
                

              
	 	
                Name:
                  James Lu

                Title:
                  President

                

                Dated:
                  November 30, 2006

              

       

    

    

    

    
      	
              SUBSCRIBER

            	
              INITIAL
                CLOSING PURCHASE PRICE

            	
              SECOND
                CLOSING PURCHASE PRICE

            
	
              ALPHA
                CAPITAL ANSTALT

              Pradafant
                7

              9490
                Furstentums

              Vaduz,
                Lichtenstein

              Fax:
                011-42-32323196

               

               

               

               

               

              _______________________________________

              (Signature)

            	
              $150,000.00

            	
              $150,000.00

            

    

    

    

    

    32Unassociated Document

    Exhibit
      10.58

    

     Diamond
      Entertainment Corporation

    800
      Tucker Lane,

    Walnut,
      California 91789

    
      
        

      
November 19, 2006

    

    RX
      for
      Africa and Rx
      Africa
      (Ethiopia) P.L.C.

      

    LETTER
      OF INTENT

    

    This
      letter of intent sets forth an outline whereby the following acquisition of
      RX
      for Africa (“Private Company”) by DMEC Acquisition Inc., (“DMECA”), a New Jersey
      Corporation and a wholly owned subsidiary of Diamond Entertainment Corporation
      (“DMEC”), would occur in this order on the closing date with these related
      transactions: 

    

    ASSUMPTIONS:

    

      
        	
                a.

              	
                The
                  acquisition will take the form of a triangular
                  acquisition

              
	
                b.

              	
                The
                  acquisition will be pursuant to New Jersey General Corporations
                  code
                  section 4A:10-5.1, Merger of subsidiary corporation, subsection
                  (1).

              
	
                c.

              	
                bridge
                  loan of $1,150K ($1,000K from Longview and $150K form Alpha Capital
                  AG) to
                  DMEC in the form of two convertible notes of which $850,000 will
                  be loaned
                  by DMEC to Rx Africa (Ethiopia) P.L.C upon execution of this
                  LOI.

              
	 	 
	 	
                A
                  second traunch of $1,150k ($1,000K from Longview and $150K form
                  Alpha
                  Capital AG) will be funded to DMEC also in the form of two convertible
                  notes upon the the first event to occur of (i) the actual effectiveness
                  of
                  the Registration Statement as defined in Section 11.1(iv) hereunder,
                  or
                  (ii) the delivery by the Company on or before January 31, 2007
                  of
                  certified consolidated financial statements of the Company and
                  all
                  entities which are or will be direct or indirect subsidiaries of
                  the
                  Company after the closing of the transaction and upon the signing
                  of a
                  definitive merger agreement.

              
	 	 
	 	
                The
                  terms of the loan Rx Africa (Ethiopia) P.L.C will be principal
                  due upon
                  closing the cquisition plus 14% interest per Annum, payable inkind
                  (net
                  effect is that the loan balance would ero out on an intercompany
                  basis).
                  

              
	 	 
	
                d.

              	
                security
                  interest in Rx
                  Africa (Ethiopia) P.L.C. assets
                  on behalf of the investor will be issued. 

              

      

    STEPS:

    

      
        	
                1.

              	
                The
                  BOD’s for DMECA approve the acquisition of RX for Africa.
                  

              
	
                2.

              	
                Rx
                  of Africa acquires Rx Africa (Ethiopia) P.L.C.

              
	
                3.

              	
                DMECA
                  will acquire 100% of RX for Africa in exchange approximately 85%
                  of DMEC’s
                  stock.

              
	
                3.

              	
                An
                  8K is filed disclosing the acquisition by DMECA. Audited financials
                  for RX
                  for Africa (including Rx Africa (Ethiopia) P.L.C.) will need to
                  be
                  submitted within 71 days of the date of this letter. 

              
	
                4.

              	
                DMEC
                  files a 14C proxy to approve a change in the name of DMEC to RX
                  for Africa
                  plus any other corporate business.

              

      

       

    

    Additional
      Information: 

    

    PRE-ACQUISITION
      CAPITALIZATION

    

    DMEC: 
      Immediately prior to the acquisition, DMEC will have 800,000,000 issued and
      authorized shares outstanding. Subsequent to a 30 to 1 reverse split, 26,666,667
      shares will be issued and outstanding.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Letter
      of Intent

    Page
      2 of 3

    November
      19, 2006

     

    

    POST-ACQUISITION
      CAPITALIZATION

     

    DMECA
      will acquire 100% of RX for Africa in exchange for eighty five percent (85%)
      of
      the issued and outstanding shares of DMEC Common Stock (post reverse split),
      calculated as follows:

    

      
        	
                1.

              	
                Current
                  Outstanding Shares: 

              	
                26,666,667
                  fully diluted

              
	
                2.

              	
                Shares
                  issued to RX for Africa: 

              	
                151,111,113
                  shares. 

              
	
                3.

              	
                Total
                  Post Acquisition Shares:

              	
                177,777,780
                  Shares

              

      

    ADDITIONAL
      TERMS

     

    
      
        	
                Board
                  of Directors

              	
                Upon
                  closing the current Board of Directors of DMEC will resign except
                  for
                  James Lu. James Lu will subsequently appoint a new director.
                  

              
	 	 
	
                Legal

              	
                RX
                  for Africa / DMEC shall each be responsible for their own pre-Acquisition
                  fees, including legal, accounting, and any regulatory fees.
                  

              
	 	 
	
                Acquisition
                  

              	 
	
                Agreement

              	
                The
                  parties shall use their best efforts to consummate the Acquisition
                  pursuant to an Acquisition Agreement which shall contain among
                  other
                  hings, appropriate representations and warranties of each company
                  and
                  their respective principal shareholders

              
	 	 
	
                Due
                  Diligence

              	 
	
                Authorization

              	
                Each
                  party shall have the right to conduct a legal and financial audit
                  of the
                  other party prior to the Merger. All such due diligence shall be
                  satisfactory to each party in its sole discretion as a condition
                  to the
                  consummation of the Merger. Consummation of the Merger shall be
                  further
                  subject to approval by the shareholders and Board of Directors
                  of each
                  party.

              
	 	 
	
                Limitations
                  on 

              	 
	
                Further
                  Discussions

              	
                For
                  a period of forty five (45) days after the acceptance of this Term
                  Sheet,
                  to induce Client Corp. (Rx for Africa), to proceed with their due
                  diligence of DMEC, DMEC agrees that it shall not discuss or enter
                  into any
                  agreements with any other person with respect to financing or any
                  potential merger of DMEC with another
                  party.

              

      

    

    

    

    Pre
      and Concurrent Acquisition Conditions:

    

    1.     
      RX for Africa acquires Rx Africa (Ethiopia) P.L.C.

     

    2.     
      Rx Africa (Ethiopia) P.L.C. has audited financial statements within 71
      days.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Letter
      of Intent

    Page
      3 of 3

    November
      15, 2006

    

     

    SIGNATURES

     

    Agreed
      and accepted this ____ day of November, 2006

    

    

      Diamond
        Entertainment Corporation 

       

      

        
          	
                  By:

                	
                  /s/
                    James
                    Lu                                       
                            

                
	 	
                  President

                
	 	 
	 	 
	
                  DMECA

                	 
	 	 
	
                   

                	 
	
                  By:
                    

                	
                  /s/
                    James
                    Lu                                        
                          

                
	 	
                  President

                

        

      

      Rx
        for Africa / Rx
        Africa (Ethiopia) P.L.C

      

      By:       
        ______________________________

                    
        President

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