Document:

ex10-2.htm

    Exhibit
      10.2

     

    ASSET
      PURCHASE AGREEMENT

    Between

    VEMICS,
      INC.

    and

    E
      LEARNING DESKTOP VENTURES, INC.

    

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

    

    1.           
      Sale of business
      assets.

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

     

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

     

    
      
        	
                Target
                  Net Revenue:

              	
                US$1,500,000

              
	
                Date
                  to Reach Target Net Revenue:

              	
                February
                  28, 2008

              

      

    

    

    

    
      	
              
              

              
              

              %
                of Target Net

              Revenue
                Reached

            	
              Percentage
                of

              Warrant
                which will be

              exercisable

            	
              Number
                of shares which will be

              exercisable
                under the Warrant

            
	
              Less
                than 65%

            	
              -0-%
                (no Warrant to be issued)

            	
              -0-
                shares (no warrant to be issued)

            
	
              65%

            	
              45%

            	
              337,500
                shares

            
	
              75%

            	
              60%

            	
              450,000
                shares

            
	
              85%

            	
              75%

            	
              562,500
                shares

            
	
              95%

            	
              90%

            	
              675,000
                shares

            
	
              100%
                or more

            	
              100%

            	
              750,000
                shares

            

    

     

     

    (2)           
      Additional
      Warrant.

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

     

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

    

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

    

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

    

    
      	
               

            	
              4.

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

            

    

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.           
      No assumption of liabilities
      by Vemics

    

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

    

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

    

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

    

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

     

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

    

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

    

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

    

    6.           
      Excepted
      transactions.  None.

    

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

    

    (b)           
      Unavailable
      material.  None.

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

     

    10.           
      Employment of E. James
      Pennington

    

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

    

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

    

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

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

     

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

    

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

    

    if
      to
      Vemics, addressed to:

    Fred
      Zolla, President

    Vemics,
      inc.

    523
      Avalon Gardens Drive

    Nanuet,
      New York 10954

    

    And
      if to
      EL Desktop:

    E.
      James
      Pennington, President

    E
      Learning Desktop Ventures Inc

    2301
      Haines Rd # 201

    Mississauga
      ON Canada

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

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

    

    VEMICS:                                                                                    
      EL DESKTOP:

    Vemics,
      Inc.                                                                                
E Learning Desktop Ventures Inc.

    

    

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

    Fred
      Zolla,
      President                                                 E.
      James Pennington, President

     

    
      
        	
                Exhibits:

              	
                A

              	
                Asset
                  List

              
	 	
                A-1
                  through A-5

              	
                Contracts

              
	 	
                B

              	
                Leases

              
	 	
                C

              	
                Warrant

              
	 	
                D

              	
                Current
                  Financial Obligations

              
	 	
                E

              	
                Patents

              
	 	
                F

              	
                Insurance

              
	 	
                G

              	
                Vemics
                  Disclosure Documents

              
	 	
                H

              	
                Employment
                  Agreementex10-3.htm

     

    Exhibit
      10.3

     

     

    

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

    

    

    VEMICS,
      INC.

    

    SECURED
      CONVERTIBLE PROMISSORY
      NOTE

    BRIDGE
      FUNDING

    

    US$445,000       December
      2, 2005

    

     

    

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

    

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

    

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

    

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

    

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

    

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

    

    4. Conversion.

    

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

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

    

     

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

    

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

     

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

     

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

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

    

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

    

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

    

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

    

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

    

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

    

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

    

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

    

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

    

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

    

    [SIGNATURE
      PAGE
      FOLLOWS]

    

    

    
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

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

    

    

    VEMICS,
      INC.

    

    By:
/s/ 
Fred
      Zolla                  

    Name:
      Fred Zolla

    Title:
      CEO

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    EXHIBIT
      A

     

    

    JOINT
      SECURITY AGREEMENT

    

    

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

    

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

     

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

    

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

    

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

    

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

    

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

    

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
               
(d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

    5.10 Accounts.
      With respect to the
      Accounts:

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

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

    

    

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

    

    [the
      remainder of this page is
      intentionally left blank]

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

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

    

    “DEBTOR”

    

    VEMICS,
      INC.

    

    

    By: /s/
      Fred
      Zolla                   

    Name: 
Fred
      Zolla

    Title: 
CEO

    

    

    

    “SECURED
      PARTY”

    

    VALIANT
      HOLDING
      CO.

    

    

    By:      

    Name: 

    Title:

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