-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NBd1cR27SldvPT5exOqP9MwGw2EJ4pEQIL1aaddqWvSMwKPcC0TpraPUuPhQyM6k 22fBCCdZdrfd7BDeIGe96A== 0000930413-06-008835.txt : 20061222 0000930413-06-008835.hdr.sgml : 20061222 20061222165008 ACCESSION NUMBER: 0000930413-06-008835 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20061208 ITEM INFORMATION: Changes in Registrant.s Certifying Accountant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061222 DATE AS OF CHANGE: 20061222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: New Era Marketing Inc CENTRAL INDEX KEY: 0001357800 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 000000000 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-52159 FILM NUMBER: 061297580 BUSINESS ADDRESS: STREET 1: 102620 SOUTHERN HIGHLANDS PARKWAY STREET 2: SUITE 110-433 CITY: LAS VEGAS STATE: NV ZIP: 89141 BUSINESS PHONE: 626-335-7750 MAIL ADDRESS: STREET 1: 102620 SOUTHERN HIGHLANDS PARKWAY STREET 2: SUITE 110-433 CITY: LAS VEGAS STATE: NV ZIP: 89141 8-K/A 1 c45896_8ka.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________ FORM 8-K/A (Amendment No. 1) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 8, 2006 NEW ERA MARKETING, INC. (Exact name of registrant as specified in its charter) - --------------------------------------------------------------------------------------------------- NEVADA 333-135647 20-3155365 - --------------------------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.) incorporation) - ---------------------------------------------------------------------------------------------------
927 LINCOLN ROAD, SUITE 200, MIAMI, FLORIDA 33139 ------------------------------------------------------------ (Address of principal executive offices, including zip code) (305) 674-1511 ---------------------------------------------------- (Registrant's telephone number, including area code) 10620 SOUTHERN HIGHLANDS PARKWAY, SUITE 110-433, LAS VEGAS, NEVADA 89141 -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) EXPLANATORY NOTE The registrant is filing this Form 8-K/A in order to amend the Current Report on Form 8-K filed on December 13, 2006, by filing the letter from Moore & Associates, its former independent registered public accounting firm, to the SEC as well as to include certain other exhibits. All information contained in this Amendment No. 1 to Form 8-K is as of the original filing date of the Form 8-K dated December 13, 2006 and does not reflect any subsequent information or events other than as described above. FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This Current Report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, demand and acceptance of services, changes in governmental policies and regulations, economic conditions, the impact of competition and pricing, and other risks defined in this document and in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of New Era Marketing, Inc., are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, New Era Marketing, Inc. disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT Effective December 11, 2006, we dismissed Moore & Associates, Chartered ("MOORE") as our independent registered public accounting firm. Moore had previously been engaged as the principal accountant to audit our financial statements. The reason for the dismissal of Moore is that, following the consummation of the Acquisition on December 11, 2006, our primary business unit became the business previously conducted by Fearless. The independent registered public accounting firm of Fearless was the firm of Kempisty & Company, Certified Public Accountants, P.C. ("KEMPISTY"). We believe that it is in our best interest to have Kempisty continue to work with our business, and we therefore retained Kempisty as our new independent registered public accounting firm, effective as of December 11, 2006. The decision to change accountants was approved by our board of directors on December 11, 2006. From inception through December 11, 2006, there were no disagreements with Moore on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Moore, would have caused it to make reference to the matter in connection with its reports. Moore's audit reports for the year ended March 31, 2006 as well as its report for the six-month period ended September 30, 2006 did not contain an adverse opinions or disclaimer of opinion, nor was it modified as to uncertainty, audit scope, or accounting principles. However, Moore's reports on the above financial statements of the Company did contain a going concern opinion. The Company has made the contents of this Current Report on Form 8-K available to Moore and requested it to furnish a letter to the Commission as to whether Moore agrees or disagrees with, or wishes to clarify, our expression of their views. A copy of Moore's letter to the Commission is filed with this Amendment No. 1 to the Current Report on Form 8-K originally filed on December 13, 2006. As of December 11, 2006, Kempisty was engaged as the Company's new independent registered public accountant firm. The appointment of Kempisty was approved by the Company's board of directors. From February 23, 2004 (inception) through December 11, 2006, the Company did not consult Kempisty regarding either: (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements; or (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-B. -1- ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS. The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K/A. 2.1 Contribution Agreement dated as of December 8, 2006 and entered into by and among New Era Marketing, Inc., Fearless Yachts, LLC and the other signatories thereto. (1) 4.1 Form of Securities Purchase Agreement dated as of April 2006 and entered into by and among Fearless Yachts, LLC and the investors being signatories thereto (the "PURCHASERS"). (2) 4.2 Form of Secured Promissory Note to be issued by the Company to the Purchasers following the closing of the Acquisition. (2) 4.3 Form of Warrant to be issued by the Company to the Purchasers following the closing of the Acquisition. (2) 4.4 Form of Registration Rights Agreement dated as of April 2006 and entered into by and among Fearless Yachts, LLC and the Purchasers. (2) 4.5 Form of Security Agreement to be entered into by the Company and the Purchasers upon the issuance of the Notes. (2) 16. Letter from Moore & Associates, Chartered to the Securities & Exchange Commission. (2) 99.1 Audited financial statements of Fearless Yachts, LLC for the period ended September 30, 2006 and the fiscal year ended December 31, 2005. (1) 99.2 Audited financial statements of New Era Marketing, Inc. for the period from inception on July 19, 2005 through the fiscal year ended on March 31, 2006, and unaudited financial statements for the six months ended September 30, 2006. (3) 99.3 Unaudited pro forma consolidated financial statements for the six months ended September 30, 2006 and the year ended March 31, 2006. (1) (1) Incorporated herein by reference from our Form 8-K filed on December 13, 2006. (2) Filed herewith. (3) Incorporated herein by reference from our 10-KSB and 10-QSB filings dated September 7, 2006 and November 21, 2006, respectively. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: December 22, 2006 NEW ERA MARKETING, INC. By: /s/ Jeffrey Binder -------------------------- Name: Jeffrey Binder Title: Chief Executive Officer -3- EX-4.1 2 c45896_ex4-1.txt EXHIBIT 4.1 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of April ___, 2006, by and among FEARLESS YACHTS, LLC, a Missouri limited liability company, with an address at 9 Gateway Drive, Collinsville, Illinois 62234, (the "COMPANY"), Robert Kornstein, as Purchaser Designee (the "PURCHASER DESIGNEE") and each of the purchasers set forth on SCHEDULE A hereto (each a "Purchaser," and collectively, the "PURCHASERS"). (The Company, the Purchasers and the Purchaser Designee may sometimes be referred to herein individually as a "PARTY" and collectively as the "PARTIES.") RECITALS: A. The Purchasers desire to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement (i) 10% Senior Secured Promissory Notes of the Company, in the form attached hereto as EXHIBIT A, in the aggregate principal amount of Eight Hundred Thousand ($800,000) Dollars (each, a "PROMISSORY NOTE" and collectively, the "PROMISSORY NOTES"), and (ii) Membership Interest Purchase Warrants of the Company, in the form attached hereto as EXHIBIT B, to purchase such indeterminate percentage of membership interests (the "INTERESTS") of the Company (the "WARRANTS") as provided for in the Warrant, upon the terms and subject to the limitations and conditions set forth in such Warrants; PROVIDED, HOWEVER, that the percentage of Interests for which the Warrant is exercisable (the "WARRANT INTERESTS") and the exercise price shall be determined at the close of a private offering of the Company resulting in gross proceeds to the Company of at least $5,000,000 (the "QUALIFIED OFFERING"). B. Each Purchaser wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Promissory Notes and amount of Warrants as is set forth opposite the name of such Purchaser on SCHEDULE A hereto. C. The obligations of the Company under the Promissory Note will be (i) secured by a perfected security interest in and lien upon the assets of the Company pursuant to the terms of a Security Agreement (the "SECURITY AGREEMENT"), in the form as attached hereto as EXHIBIT C, (ii) guaranteed by Gary R. Fears ("FEARS") pursuant to the terms of a guaranty (the "GUARANTY"), in the form as attached hereto as EXHIBIT D, (iii) further secured by confessions of judgment executed by the Company (the "COMPANY CONFESSION OF JUDGMENT") and Fears (the "FEARS CONFESSION OF JUDGMENT" and, together with the Company Confession of Judgment, the "CONFESSIONS OF JUDGMENT") in the forms as attached hereto as EXHIBIT E and EXHIBIT F, respectively, and which Confessions of Judgment will be deposited into escrow at the Closing Date pursuant to the Escrow Agreement (as hereinafter defined). D. Contemporaneous with the issuance and sale of the Promissory Notes and Warrants to the Purchasers, (i) the Company and the Purchasers will enter into a Registration Rights Agreement (the "REGISTRATION RIGHTS Agreement") in the form as annexed hereto as EXHIBIT G, (ii) the Company, the Purchaser Designee, Fears, and Anthony G. Tumminello, as escrow agent (the "ESCROW AGENT") will enter into an escrow agreement in the form as attached hereto as EXHIBIT H, relating to the Confessions of Judgment (the "ESCROW AGREEMENT" and, together with this Agreement, the Promissory Note, the Guaranty, the Confessions of Judgment and the Security Agreement, are collectively referred to herein as the "CREDIT DOCUMENTS" and, the Credit Documents together with the Warrant and the Registration Rights Agreement, are collectively referred to as the "TRANSACTION DOCUMENTS"). E. The Purchasers and the Company wish to hereby designate Robert Kornstein, or any other person designated in writing from time to time by the Purchasers holding a majority of the outstanding principal and interest on the Promissory Notes to act on behalf of the Purchasers on all matters relating to the Credit Documents as Purchaser Designee, and to receive notice on behalf of such Purchasers for such documents NOW THEREFORE, the Company and each of the Purchasers severally (and not jointly) hereby agree as follows: 1. PURCHASE AND SALE OF PROMISSORY NOTES AND WARRANTS. a. PURCHASE OF PROMISSORY NOTES AND WARRANTS. On the Closing Date (as defined below), and subject to satisfaction by all parties (or waivers) to the conditions for closing set forth herein, the Company shall issue and sell to each Purchaser and each Purchaser severally agrees to purchase from the Company such principal amount of Promissory Notes and number of Warrants as is set forth opposite their names on SCHEDULE A hereto. b. FORM OF PAYMENT. On the Closing Date (as defined below), and subject to satisfaction by all parties (or waiver) to the conditions for Closing set forth herein, each Purchaser shall pay a purchase price for each Promissory Note and the Warrants to be issued and sold to it at the Closing (as defined below) in an amount equal to the principal amount of the Promissory Note purchased by such purchaser as is set forth beside such purchaser's name on SCHEDULE A hereto (the "PURCHASE PRICE") by wire transfer of immediately available funds (or as otherwise mutually agreed) to the Company, in accordance with the Company's written wiring instructions. c. CLOSING DATE. Subject to the satisfaction (or waiver) of the conditions set forth in Section 5 and Section 6 below, the date and time of the issuance and sale of the Promissory Notes and the Warrants pursuant to this Agreement (the "CLOSING DATE") shall be April 15, 2006, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the "CLOSING") shall occur on the Closing Date at the offices of Hodgson Russ LLP, located at 60 East 42nd Street, New York, New York 10165, or at such other location as may be agreed to be the parties. 2. PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Purchaser severally (and not jointly) represents and warrants to the Company solely as to such Purchaser that: a. INVESTMENT PURPOSE. As of the date hereof (and in the case of the Warrants, the date of exercise thereof), each Purchaser is purchasing the Promissory Notes, the Warrants and the Interests issuable upon exercise thereof (the "WARRANT INTERESTS" and, collectively with the Promissory Notes and Warrants, the "SECURITIES"), for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act of 1933, as amended (the "1933 ACT"); PROVIDED, HOWEVER, that by making the representations herein, the Purchaser does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. b. ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED INVESTOR"). c. RELIANCE ON EXEMPTIONS. The Purchaser understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities. d. INFORMATION. The Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Purchaser or its advisors. The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigation conducted by Purchaser or any of its advisors or representatives shall modify, amend or affect Purchaser's right to rely on the Company's representations and warranties contained in Section 3 below. The Purchaser understands that its investment in the Securities involves a significant degree of risk. e. EVALUATION OF RISKS. The Purchaser, on its own and after conferring with its professional advisors and counsel, has such knowledge and experience in financial tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Company and of 2 protecting its interests in connection with this transaction. The Purchaser recognizes that its investment in the Company involves a high degree of risk and illiquidity. f. NO LEGAL ADVICE FROM THE COMPANY. The Purchaser acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his, her or its own legal counsel and investment and tax advisors. The Purchaser is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction. g. GOVERNMENTAL REVIEW. The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon, reviewed or made any recommendation or endorsement of the Securities. h. TRANSFER OR RE-SALE. The Purchaser understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (A) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (B) the Purchaser shall have delivered to the Company an opinion of counsel (which opinion shall be reasonably acceptable to counsel for the Company) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (C) the Securities are sold or transferred to an "AFFILIATE" (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("RULE 144")) of the Purchaser who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(h) and who is an Accredited Investor, or (D) the Securities are sold pursuant to Rule 144; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder other then as specifically provided for herein. i. LEGENDS. The Purchaser understands that the Promissory Notes and the Warrants and, until such time as the Warrant Interests have been registered under the 1933 Act, or otherwise, may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT." The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. The Purchaser agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. j. AUTHORIZATION; ENFORCEMENT. This Agreement, and all of the other documents executed by Purchaser has been duly executed and delivered by or on behalf of the Purchaser, and each such agreement 3 constitutes a valid and binding agreement of the Purchaser enforceable in accordance with its terms. The Purchaser hereby appoints the Purchaser Designee to act on its behalf for all matters where consent of the Purchaser is required. k. RESIDENCY. The Purchaser is a resident of the jurisdiction set forth immediately below such Purchaser's name on the signature pages hereto. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Purchaser that, as of the Closing Date: a. ORGANIZATION AND QUALIFICATION. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida. The Company is duly qualified as a foreign limited liability company to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. "MATERIAL ADVERSE Effect" means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. b. AUTHORIZATION; ENFORCEMENT. (i) The Company has all requisite limited liability company power and authority to enter into and perform to terms of this Agreement, and Transaction Documents to which it is a party, and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, and Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Promissory Notes and the Warrants and the issuance and reservation for issuance of the Warrant Interests issuable upon exercise thereof) have been, or will be prior to their issuance, duly authorized by the Company's [MANAGERS] and, no further consent or authorization of the Company, its managers or members is required, (iii) this Agreement has been duly executed and delivered by the Company, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Transaction Documents to which the Company is a party, each of such documents will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally. c. CAPITALIZATION. The Company currently has 3 members which had one class of Interest as set forth on SCHEDULE 3(C). All of the members are parties to the Operating Agreement (as herein defined). No membership interests of the Company are subject to preemptive rights or any other similar rights of the members of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in SCHEDULE 3(C), as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any membership interests of the Company, or arrangements by which the Company is or may become bound to issue Interests or other Securities of the Company, and (ii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Promissory Notes, the Warrants, or Warrant Interests. The Company has furnished to the Purchaser true and correct copies of the Company's Articles of Organization as in effect on the date hereof ("ARTICLES OF ORGANIZATION"), the limited liability company operating agreement entered into among the Company and its members as in effect on the date hereof (the "OPERATING AGREEMENT"), and the terms of all securities convertible into or exercisable for Interests and the material rights of the holders thereof in respect thereto. d. ISSUANCE OF INTERESTS. The Warrant Interests are (or shall be) duly authorized and reserved for issuance and, upon exercise by a Purchaser of the Warrants in accordance with their respective terms and execution by the Purchaser of the Operating Agreement (which hereinafter shall be deemed to include any similar shareholders or other agreement that may be entered into between the successors of the Company and the members), will, when issued, cause the Purchaser to be duly admitted as a member of the Company holding the 4 percentage of Interests as provided for in the Operating Agreement, and free from all liens, claims and encumbrances with respect to the issue thereof subject only to the terms of the Operating Agreement and shall not be subject to preemptive rights or other similar rights of members or equity owners of the Company and will not impose personal liability upon the holder thereof other then tax liabilities that may accrue to the Purchaser as a result of the allocation of profits to such Purchaser. e. NO CONFLICTS. The execution, delivery and performance of the Transaction Documents to which the Company is a party and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Warrant Interests) will not (i) conflict with or result in a violation of any provision of the Articles of Organization or Operating Agreement, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). The Company is not in violation of its Articles of Organization, Operating Agreement or other organizational documents and the Company is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) under, and the Company has not taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party or by which any property or assets of the Company is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Promissory Notes, the Security Agreement or the Warrants in accordance with the terms hereof or thereof or to issue and sell the Promissory Notes and Warrants in accordance with the terms hereof and to issue the Warrant Interests upon exercise of the Warrants and execution by the Purchaser of the Operating Agreement. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. f. ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, or its officers or directors in their capacity as such, that could have a Material Adverse Effect. g. NO MATERIALLY ADVERSE CONTRACTS, ETC. To the best of the Company's knowledge, the Company is not subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which, to the knowledge of the Company, has or is expected in the future to have a Material Adverse Effect. h. CERTAIN TRANSACTIONS. Except for arm's length transactions or as contemplated by the Operating Agreement or as disclosed in this Agreement, none of the managers, officers, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, managers and officers), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, manager or such employee. i. DISCLOSURE. To the best of the Company's knowledge, all information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Purchasers pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to 5 make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. j. ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF SECURITIES. The Company acknowledges and agrees that the Purchasers are acting solely in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Purchasers' purchase of the Securities. k. NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Purchasers. l. BROKER'S AND FINDER'S FEES. Except as set forth on SCHEDULE 3(L), no person is or will be entitled to, or will have any claim for, a broker's, finder's, investment banker's, financial adviser's or similar fee from the Company in connection with this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby. m. PERMITS; COMPLIANCE. To the best of the Company's knowledge, the Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the "COMPANY PERMITS"), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. The Company has not received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect. n. TITLE TO PROPERTY. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects as would not have a Material Adverse Effect. o. INSURANCE. The Company is insured by insurers set forth on SCHEDULE 3 (P). p. FOREIGN CORRUPT PRACTICES. To the best of the Company's knowledge, neither the Company, nor any officer or Manager or other person acting on behalf of the Company has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. q. NO INVESTMENT COMPANY. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an "INVESTMENT COMPANY"). The Company is not controlled by an Investment Company. 4. COVENANTS. 6 a. BEST EFFORTS. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 5 and 6 of this Agreement as applicable to them. b. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Purchasers at the applicable closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to each Purchaser on or prior to the Closing Date. c. USE OF PROCEEDS. The Company shall use the proceeds from the sale of the Promissory Notes and the Warrants in the manner set forth in SCHEDULE 4(C) attached hereto and made a part hereof. d. FINANCIAL INFORMATION. For as long as the Promissory Notes are outstanding, the Company agrees to make available to the Purchasers through their representative a copy of its annual financial statements within 90 days after the end of each fiscal year. e. RESERVATION OF INTERESTS. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of Interests to provide for the full exercise of the outstanding Warrants and issuance of the Warrant Interests in connection therewith (based on the Exercise Price of the Warrants in effect from time to time). f. COVENANTS RELATING TO PROMISSORY NOTE. For so long as any principal or interest is outstanding on the Promissory Notes the Company shall not, without consent of the Purchaser Designee or, if no Purchaser Designee is then appointed, then by consent of holders of a majority of the outstanding principal amount of Promissory Notes that will be outstanding immediately after the consummation of taking such action: (i) effect a merger or consolidation resulting in a Change of Control (as hereinafter defined). The term "CHANGE OF CONTROL" shall mean any merger or consolidation or similar transaction in which securities possessing more then fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, whether or not the Company or a subsidiary is the surviving corporation; (ii) sell, transfer or otherwise dispose of more than 25% of the consolidated assets of the Company (computed either on the basis of book value, as determined in accordance with generally accepted accounting principles consistently applied, or fair market value) in any transaction or series of related transactions outside of the ordinary course of the Company's business consistent with past practice; (iii) sell or transfer in any transaction or series of related transactions, any of the Company's assets to any person or entity that is an Affiliate of the Company, other then a sale or transfer in the ordinary course of business; (iv) declare or pay any distribution or dividend, in cash or otherwise on any of the Interests of the Company, or redeem, purchase or otherwise acquire any of its Interests now or hereafter outstanding; (v) issue any notes or other securities with preferences in seniority or payment that are superior to the rights granted in the Promissory Notes, or enter into any other transaction or make modifications to the Company's Operating Agreement that materially and adversely affects the Promissory Notes as a class; (vi) issue to any Manager or member holding greater then 5% of the Interests any Interests or other equity securities (other then issuances in accordance with any currently existing warrants, 7 options or derivative securities), options, warrants, convertible securities or other securities of the Company other than in accordance with a distribution, stock-split, reclassification or reorganization in which the purchase of Interests issuable under the warrants are appropriately adjusted. Notwithstanding the foregoing, the increase in any Manager's or member's percentage of Interest resulting from a redemption by the Company of Interests of any member shall not be deemed an issuance of any Interests or other securities in violation of this subparagraph (vi); (vii) enter into any transaction with any Manager or Affiliate, except for any arms-length employment agreements; and (viii) incur any indebtedness other than (1) trade payables incurred in the ordinary course of business and (2) all existing indebtedness or otherwise resulting from existing agreements or obligations of the Company; PROVIDED, HOWEVER, that the Company may take any of the foregoing actions without the consent of the Purchaser Designee, if contemporaneous with the consummation of such action, the principal and interest on the Promissory Notes are repaid in full; and PROVIDED FURTHER, that the Company may take any of the actions set forth in subparagraphs (i), or (ii) above without the consent of the Purchaser Designee, if, in addition to the foregoing payment of principal and interest, the obligations of the Company with respect to the Warrants and the Warrant Interests shall be assumed by any successor entity to the Company. 5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder to issue and sell the Promissory Notes and Warrants to a Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: a. The Purchasers shall each have executed this Agreement and any other Transaction Documents to which it is a party and delivered the same to the Company. b. The Purchasers shall have delivered the Purchase Price in accordance with Section 1(b) above such that the full $800,000 in cleared and available funds is in escrow. c. The representations and warranties of the Purchasers in the Transaction Documents to which they are a party (including, for the avoidance of doubt, all Credit Documents executed on their behalf), shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the applicable Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Transaction Documents to be performed, satisfied or complied with by the applicable Purchaser at or prior to the Closing Date. d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. 6. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE. The obligation of each Purchaser hereunder to purchase the Promissory Notes and Warrants at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for such Purchaser's sole benefit and may be waived by such Purchaser at any time in its sole discretion: a. The Company shall have executed this Agreement and delivered the same to the Purchaser. 8 b. The Company shall have delivered to such Purchaser duly executed Promissory Notes (in such denominations as the Purchaser shall request), Warrants and the Registration Rights Agreement in accordance with Section 1(b) above. c. The Company shall have executed and delivered to the Purchaser Designee the Security Agreement. d. The Company shall have executed the Escrow Agreement and delivered the same to the Escrow Agent along with the executed Company Confession of Judgment. e. Gary M. Fears shall have executed and delivered to the Purchaser Designee the Guaranty. f. Gary M. Fears shall have executed and delivered to the Escrow Agent the Escrow Agreement and the executed Fears Confession of Judgment. g. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Purchaser shall have received a certificate or certificates, executed by a Manager of the Company, executed on behalf of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Purchaser. h. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. 7. GOVERNING LAW; MISCELLANEOUS. a. GOVERNING LAW. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. THE PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE. b. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 9 c. HEADINGS. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement. d. SEVERABILITY. In the event that any provision of this Agreement is invalid or enforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser or the Purchaser Designee makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Company and the Purchasers Designee. f. NOTICES. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be: If to the Company: Fearless Yachts, LLC 9 Gateway Drive Collinsville, Illinois 01803 Attn.: Gary R. Fears Tel.: (800) 495-0711 Fax: (618) 346-9022 With copy to: Hodgson Russ LLP 60 East 42nd St., 37th Floor New York, New York 10022 Attn.: Jeffrey A. Rinde, Esq. Tel.: (212) 661-3535 Fax.: (212) 972-1677 If to a Purchaser: To the address set forth beside such Purchaser's name on SCHEDULE A hereto, with a copy to the Purchaser Designee to the address set forth on SCHEDULE A hereto. Each party shall provide notice to the other party of any change in address. g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Notwithstanding the foregoing, subject to Section 2(h), any Purchaser may assign its rights hereunder to any person that purchases Securities in a private transaction from a Purchaser or to any of its "AFFILIATES" without the consent of the Company, provided that such person duly executes this Agreement and the other documents that the assigning Purchaser is required to execute. 10 h. THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. i. SURVIVAL. The representations and warranties of the Company and the agreements and covenants set forth in Sections 3, 4, and 7 shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Purchasers. j. PUBLICITY. Except as may be required by applicable law, neither the Purchasers nor the Purchaser Designee may issue a publicity or press release or announcement or otherwise make any public disclosure concerning this Agreement, any of the other Transaction Documents or the transactions contemplated hereby or thereby, without prior written approval by the Company. k. FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. l. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. m. REMEDIES. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchasers by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Purchaser Representative, on behalf of the Purchasers shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. Purchasers acknowledge that Purchaser Representative is solely responsible for all actions taken by it on behalf of the Purchasers and Purchaser's sole remedy with respect to any losses or damages sustained by Purchaser as a result of Purchaser Representative's actions or failure to timely act, shall be limited to claims against Purchaser Representative. n. EXPENSES/APPOINTMENT OF PURCHASER DESIGNEE. The Company shall pay an aggregate of up to Twenty - Five Thousand Dollars ($25,000) of the out-of-pocket costs and expenses incurred by the Purchaser Designee in connection with the Transaction Documents and the transactions contemplated hereby and thereby, including without limitation, the fees and expenses of counsel to the Purchasers, the out-of-pocket expenses incurred in connection with Purchaser's due diligence investigation of the Company (including fees of any consultants), and travel and other out-of-pocket expenses of Purchaser relating to the transactions contemplated by this Agreement and the other Transaction Documents. The Purchasers each hereby irrevocably appoint Robert Kornstein as the Purchaser Designee, as representative and attorney-in-fact of such Purchaser for the purposes specified in this Agreement and under the Credit Documents. Without prior notice to any Purchaser, the Purchaser Designee shall have full, exclusive and irrevocable authority on behalf of each of the Purchasers to (a) receive on each Purchaser's behalf the documents and instruments to be delivered at the Closing pursuant to this Agreement; (b) waive any condition, or right to any of the Credit Documents which is of general applicability to all Purchasers to the obligation of Purchaser under this Agreement; (c) modify, amend or supplement this Agreement or any of the Credit Documents, unless such modification, amendment or supplement would have a disproportionate material adverse effect on any particular Purchaser as compared to all Purchasers; (d) take any other action in connection with this Agreement, the Credit Documents and the transactions contemplated hereby, unless such action would have a disproportionate material adverse effect on any particular Purchaser as compared to all Purchasers; and (e) execute and deliver any document or instrument in furtherance of Credit Documents that are deemed by the Purchaser Designee to be necessary or desirable in the exercise of his authority, but in all other respects as attorney-in-fact and agent on behalf of Purchasers with respect to any matter relating to the Credit Documents or enforcement thereof. The foregoing authorization is granted and conferred by the Purchasers in consideration of the grant of such 11 authorization by each of the Purchasers and in consideration of the agreements and covenants of the Company contained herein. In consideration of, and except as provided by, the foregoing, this authorization granted to the Purchaser Designee shall be absolute and unconditional and shall only be terminated by the Purchasers upon written consent of Purchaser's holding a majority of the outstanding principal amount of Promissory Notes. The Purchaser Designee shall also act as the Lender's Agent as defined in the Collateral Documents. The Purchaser Designee may resign or may be replaced from time to time by consent of holders of the majority of outstanding principal and interest on the Promissory Notes. The Company shall be entitled to rely on the acts of Purchaser Designee on all matters without further investigation. In the event no Purchaser Designee is appointed then all actions requiring consent of Purchaser Designee shall only require consent of a majority of outstanding principal amount of Promissory Notes. 12 IN WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this Agreement to be duly executed as of the date first above written. FEARLESS YACHTS, LLC By: -------------------------------- Name: Gary R. Fears, Manager PURCHASER DESIGNEE: ------------------------------------ Robert Kornstein PURCHASERS: [SIGNATURE PAGES FOLLOW] 13 PURCHASER SIGNATURE PAGE The undersigned Purchaser has read the Securities Purchase Agreement dated as of April __, 2006 and acknowledges that execution of this Purchaser Signature Page shall constitute the undersigned's execution of such agreement. I hereby subscribe for an aggregate of $_________ Promissory Notes and Warrants hereby deliver good funds with respect to this subscription for the Securities. I am a resident of the State of __________________. - -------------------------------------------------------------------------------- PLEASE PRINT ABOVE THE EXACT NAME(S) IN WHICH THE SECURITIES ARE TO BE HELD My address is: ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- 14 I acknowledge that the offering of the Securities is subject to the Federal securities laws of the United States and state securities laws of those states in which the Securities are offered, and that, pursuant to the U.S. Federal securities laws and state securities laws, the Securities may be purchased by persons who come within the definition of an "ACCREDITED INVESTOR" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act ("REGULATION D"). By initialing one of the categories below, I represent and warrant that I come within the category so initialed and have truthfully set forth the factual basis or reason I come within that category. All information in response to this paragraph will be kept strictly confidential. I agree to furnish any additional information that the Company deems necessary in order to verify the answers set forth below. NOTE: YOU MUST EITHER INITIAL THAT AT LEAST ONE CATEGORY. INDIVIDUAL PURCHASER: (A PURCHASER WHO IS AN INDIVIDUAL MAY INITIAL EITHER CATEGORY I, II, OR III) Category I ______ I am a director or executive officer of the Company. Category II ______ I am an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with my spouse, presently exceeds $1,000,000. EXPLANATION. In calculation of net worth, you may include equity in personal property and real estate, including your principal residence, cash, short term investments, stocks and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property. Category III ______ I am an individual (not a partnership, corporation, etc.) who had an individual income in excess of $200,000 in 2004 and 2005, or joint income with my spouse in excess of $300,000 in 2004 and 2005, and I have a reasonable expectation of reaching the same income level in 2006. 15 ENTITY PURCHASERS: (A PURCHASER WHICH IS A CORPORATION, LIMITED LIABILITY COMPANY, PARTNERSHIP, TRUST, OR OTHER ENTITY MAY INITIAL EITHER CATEGORY IV, V, VI, VII OR VIII) Category IV ______ The Purchaser is an entity in which all of the equity owners are "ACCREDITED INVESTORS" as defined in Rule 501(a) of Regulation D. IF RELYING UPON THIS CATEGORY ALONE, EACH EQUITY OWNER MUST COMPLETE A SEPARATE COPY OF THIS AGREEMENT. _____________________________________________________ _____________________________________________________ _____________________________________________________ (describe entity) Category V ______ The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities offered, whose purchase is directed by a "SOPHISTICATED PERSON" as described in Rule 506(b)(2)(ii) of Regulation D. Category VI ______ The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000. _____________________________________________________ _____________________________________________________ _____________________________________________________ (describe entity) Category VII ______ The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. _____________________________________________________ _____________________________________________________ _____________________________________________________ (describe entity) Executed this _____ day of __________, 2006 at ________________, ______________. SIGNATURES INDIVIDUAL ------------------------------------ Name - ------------------------------------ ------------------------------------ 16 Signature (Individual) Street address Address to Which Correspondence Should be Directed - ------------------------------------ ------------------------------------ Signature (All record holders should City, State and Zip Code sign) - ------------------------------------ ------------------------------------ Name(s) Typed or Printed Tax Identification or Social Security Number ( ) ------------------------------------ Telephone Number - ------------------------------------ Name(s) Typed or Printed (All recorded holders should sign) 17 CORPORATION, PARTNERSHIP, TRUST ENTITY OR OTHER Address to Which Correspondence Should be Directed: - ------------------------------------ ------------------------------------ Type of Entity (i.e., corporation, Street Address partnership, etc.) By: -------------------------------- ------------------------------------ *Signature Tax Identification or Social Security Number - ------------------------------------ ------------------------------------ State of Formation of Entity City, State and Zip Code - ------------------------------------ Name Typed or Printed Its: ( ) -------------------------------- ------------------------------------ Title Telephone Number *If Promissory Notes and Warrants are being subscribed for by an entity, the Certificate of Signatory must also be completed. 18 CERTIFICATE OF SIGNATORY To be completed if Securities are being subscribed for by an entity. I,__________________________________, am the ___________________________ of ___________________________________________________ (the "Entity"). I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Securities Purchase Agreement and to purchase and hold the Securities. The Securities Purchase Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity. IN WITNESS WHEREOF, I have hereto set my hand this ______ day of April, 2006. ------------------------------------ Signature 19 ACCEPTANCE AGREED AND ACCEPTED: FEARLESS YACHTS, LLC. By: -------------------------------- Gary R. Fears Manager Date: April__, 2006 20 LIST OF SCHEDULES AND EXHIBITS SCHEDULE A - LIST OF PURCHASERS SCHEDULE 3(C) - OUTSTANDING SECURITIES AND OPTIONS SCHEDULE 3(P) - INSURANCE SCHEDULE 4(C) - USE OF PROCEEDS EXHIBIT A - 10% SENIOR SECURED PROMISSORY NOTE EXHIBIT B - MEMBERSHIP INTEREST PURCHASE WARRANTS EXHIBIT C - SECURITY AGREEMENT EXHIBIT D - GUARANTY EXHIBIT E - FEARS CONFESSION OF JUDGMENT EXHIBIT F - CONFESSIONS OF JUDGMENT EXHIBIT G - REGISTRATION RIGHTS AGREEMENT EXHIBIT H - ESCROW AGREEMENT SCHEDULE A - LIST OF PURCHASERS 22 SCHEDULE 3(C) - OUTSTANDING SECURITIES AND OPTIONS 23 SCHEDULE 3(P) - INSURANCE 24 SCHEDULE 4(C) - USE OF PROCEEDS 25 EX-4.2 3 c45896_ex4-2.txt EXHIBIT 4.2 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NEW ERA MARKETING, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. Principal Amount: Issue Date: December __, 2006 18% SENIOR SECURED PROMISSORY NOTE FOR VALUE RECEIVED, New Era Marketing, Inc., a Nevada corporation (the "BORROWER"), hereby promises to pay to _____________________, with an address at __________________, ________________ (the "HOLDER") or its registered assigns or successors in interest or order, without demand, the sum of __________________ ($__________) ("PRINCIPAL AMOUNT"), with simple and unpaid interest thereon, at or before the close of business on the Maturity Date. For purposes of this Note, the term "MATURITY DATE" shall mean the earliest to occur of: (i) April 1, 2007; (ii) the closing of a private financing in which equity or equity-linked securities are sold (the "FINANCING") and (iii) an Event of Default. This 18% Senior Secured Promissory Note (the "NOTE") has been issued pursuant to the terms of a contribution agreement (the "CONTRIBUTION AGREEMENT") under which the Borrower agreed to issue this Note in exchange for the surrender by the Holder of the note originally issued thereto by Fearless Yachts, LLC ("Fearless") pursuant that certain Securities Purchase Agreement (the "PURCHASE AGREEMENT") between Fearless, the Holder, a Purchaser Designee and certain other holders of other notes issued by Fearless, dated of even date herewith, and shall, to the extent not inconsistent with the terms of this Note and the Contribution Agreement, be governed by the terms of such Purchase Agreement. Unless otherwise separately defined herein, all capitalized terms used in this Note shall have the same meaning as is set forth in the Purchase Agreement. The following terms shall apply to this and all other Notes: 1 INTEREST 1.1 INTEREST RATE. Interest on this Note shall accrue at a rate per annum (the "INTEREST RATE") equal to eighteen percent (18%). Interest shall be calculated on the basis of a 360-day year. Interest on the Principal Amount shall accrue from the date of this Note and be payable pursuant to Section 2 hereof on the Maturity Date, whether by acceleration or otherwise. 1.2 TRANSFER. Subject to compliance with applicable securities laws, this Note, and the rights evidenced hereby, may be transferred, sold, pledged, hypothecated or otherwise granted as security by any registered holder hereof (a "TRANSFEROR"). On the surrender for exchange of this Note, with a duly executed Transferor's endorsement (the "TRANSFEROR ENDORSEMENT FORM") and together with an executed Security Agreement and an opinion of counsel reasonably satisfactory to the Company that the transfer of this Note will be in compliance with applicable securities laws, the Company at the expense of the Transferor, will issue and deliver to or on the order of the Transferor thereof a new Note or Notes of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "TRANSFEREE"), calling in the aggregate on the face or faces thereof for the Principal Amount called for on the face or faces of the Note so surrendered by the Transferor. No such transfers shall result in a public distribution of the Note. 1.3 REPLACEMENT. Upon receipt of a duly executed, notarized and written statement (which shall include (a) a covenant from the Holder to indemnify the Borrower against any and all loss or damage attributable to a third-party claim in an amount in excess of the actual amount then due under the Note, and (b) an express authorization that the Borrower may offset any such amounts against amounts then due under the Note) from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof), or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Borrower shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note. 2 REPAYMENT 2.1 PAYMENT IN CASH. All principal and interest shall be paid on the Maturity Date. 2.2 PREPAYMENT PENALTY. The Borrower has the option of prepaying the outstanding Principal Amount of this Note and any accrued interest thereon, in whole or in part, at any time prior to the Maturity Date, PROVIDED, HOWEVER that if the Note is paid prior to April 1, 2007, then the amount that will be payable in order to satisfy the Note shall be equal to 103.333% of the principal amount of this Note (the "PREPAYMENT AMOUNT"). If the Borrower fails to pay any portion of the Prepayment Amount the unpaid portion shall remain outstanding and will accrue interest at 18% until repaid in full. 3 EVENTS OF DEFAULT. 3.1 The occurrence of any of the following events, after fifteen (15) days written notice thereof by the Holder or Purchaser Designee to the Borrower, shall be an "EVENT OF DEFAULT" under this Note: 3.1.1 the Borrower shall fail to make the payment of any amount outstanding on the date such payment is due hereunder; or 3.1.2 the Borrower shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors' rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or 3.1.3 a proceeding or case shall be commenced in respect of the Borrower, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Borrower or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clauses (i), (ii), or (iii) shall continue undismissed, or unstayed and in effect, for a period of sixty (60) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Borrower or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Borrower and shall continue undismissed, or unstayed and in effect for a period of sixty (60) days; or 3.1.4 any material breach of any representation, warranty or covenant of the Company made herein; or 3.1.5 the security interests granted to the Holder in the security agreement dated of even date herewith and entered into by and among the Borrower, the Holder and Robert Kornstein as the Lender's Agent (the "SECURITY AGREEMENT") shall be determined to be void, voidable, invalid or unperfected or are ineffective to provide the Lender's Agent on behalf of Holder with a perfected, security interest in the collateral covered by the Security Agreement senior to all other security interests in the collateral other than as contemplated by said agreement. 3.2 REMEDIES UPON AN EVENT OF DEFAULT. If an Event of Default shall have occurred and 2 shall be continuing, the Lender's Agent on behalf of the Holder may at any time at its option declare by Notice in writing to the Borrower (the "ACCELERATION NOTICE"), (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable as of the date of the such Acceleration Notice, and thereupon, the same shall be accelerated and so due and payable, PROVIDED, HOWEVER, that upon the occurrence of an Event of Default described in Sections 3.1.2 or 3.1.3 above, the outstanding principal balance and accrued interest hereunder shall be automatically due and payable and/or (b) exercise or otherwise enforce any one or more of the Holder's rights, powers, privileges, remedies and interests under the Purchase Agreement, the Contribution Agreement, the guaranty to be issued by Gary Fears substantially as attached hereto as EXHIBIT A (the "FEARS GUARANTY"), the guaranty to be issued by Fearless substantially as attached hereto as EXHIBIT B (the "FEARLESS GUARANTY"), the warrant to be issued by the Company substantially as attached hereto as EXHIBIT C (the "WARRANT") and this Note or applicable law. No course of delay on the part of the Lender's Agent or Holder shall operate as a waiver thereof or otherwise prejudice the right of the Holder. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. 4 MISCELLANEOUS 4.1 NOTICES. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be as follows: (i) if to the Borrower: New Era Marketing, Inc. 927 Lincoln Road, Suite 200 Miami, FL 33139 Attn.: Jeffrey Binder, CEO Tel.: (305) 674-1511 Fax: (305) 674-1311 With a copy to (which shall not constitute notice): Hodgson Russ LLP 60 East 42nd St., 37th Floor New York, New York 10022 Attn.: Jeffrey A. Rinde, Esq. Tel.: (212) 661-3535 Fax.: (212) 972-1677 (ii) if to the Holder: To the name and address set forth above, With a copy to the Purchaser Designee at: Robert Kornstein 15 W. 72nd Street, Apt. 15J New York, NY 10023 Fax: 212-580-5811 3 4.2 AMENDMENT PROVISION. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented. This Note may only be amended by written agreement executed by the issuer and Holder or the Purchaser Designee acting on such Holder's behalf. 4.3 ASSIGNABILITY. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. 4.4 GOVERNING LAW. This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties and the individual signing this Note on behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. 4.5 MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. 4.6 CONSTRUCTION. Each party acknowledges that it has been afforded the opportunity to have its legal counsel participate in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other. 4.7 SHAREHOLDER STATUS. The Holder shall not have rights as a shareholder of the Borrower as a result of being a holder of this Note. 4.8 PURCHASER DESIGNEE. The Lender's Agent shall be the Purchaser Designee, as defined in the Purchase Agreement and as may be replaced from time to time in accordance therewith. Any notice to or by the Lenders or any actions, waiver or enforcement rights that may be taken or asserted by Lender may only be taken by the then acting Purchaser Designee on such Lender's behalf. In the event that no Purchaser Designee is appointed, then all actions or consents that may be taken by the Lender's Agent may be taken upon consent of holders of a majority of the outstanding principal amount of Notes. 4 IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the ___ day of December, 2006. NEW ERA MARKETING, INC. By: -------------------------------- Name: Jeffrey Binder Title: Chief Executive Officer 5 EX-4.3 4 c45896_ex4-3.txt EXHIBIT 4.3 THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON DECEMBER __, 2011 (THE "EXPIRATION DATE"). NO. __ FACE AMOUNT: $_________ NEW ERA MARKETING, INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK For VALUE RECEIVED, _________________ ("WARRANTHOLDER"), is entitled to purchase, subject to the provisions of this warrant (the "WARRANT"), from NEW ERA MARKETING, INC., a Nevada corporation (the "COMPANY"), at any time not later than 5:00 P.M., Eastern time on the Expiration Date (as defined above), shares of common stock of the Company (the "SHARES"). The number of Shares for which this Warrant is exercisable (the "WARRANT SHARES") and the exercise price of such Warrant Shares (the "WARRANT PRICE") shall be determined in accordance with this Warrant upon the price determination date (as hereinafter defined, the "PRICE DETERMINATION DATE"). For purposes of this Warrant, the Price Determination Date shall be the earlier to occur of: (i) the consummation of the next private placement offering (the "OFFERING"), if any, of the Company's equity or equity-linked securities (the "OFFERING PRICE DATE"), or (ii) April 1, 2007 (the "VWAP PRICE DATE"). The Warrant Price and number of Warrant Shares purchasable upon exercise of this Warrant shall be subject to adjustment from time to time after the Price Determination Date as described herein. This Warrant is being issued pursuant to the exchange offer made to the holders of the warrants (the "FEARLESS WARRANTS") originally issued by Fearless Yachts, LLC ("FEARLESS") pursuant to the Securities Purchase Agreement, dated as of April 26, 2006 (the "PURCHASE AGREEMENT"), by and among Fearless, the Purchaser Designee and such holders of Fearless Warrants in connection with the consummation of the Contribution Agreement dated as of December 8, 2006, by and among the Company, Fearless and the other signatories thereto (the "CONTRIBUTION AGREEMENT"). Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein. If the applicable Price Determination Date shall be the Offering Price Date, then (i) the number of Warrant Shares for which this Warrant is exercisable shall be determined by dividing the Face Amount set forth above by the dollar price paid for each Share (or, if equity-linked securities are sold in the Offering, then for each Share into which such securities are convertible or exercisable, as the case may be) by the investors in the Offering (the "OFFERING PRICE") and multiplying such number by 1.5 and, (ii) the Warrant Price for the Warrant Shares shall be determined by multiplying the Offering Price by 0.75. If the applicable Price Determination Date shall be the VWAP Price Date, then (i) the number of Warrant Shares for which this Warrant is exercisable shall be determined by dividing the Face Amount set forth above by the volume weighted average price of the Shares for the twenty (20) days preceding, but not including, April 1, 2007 (the "VWAP PRICE") and multiplying such number by 1.5 and, (ii) the Warrant Price for the Warrant Shares shall be determined by multiplying the VWAP Price by 0.75. The Warrant may be exercised in whole or in part at any time and from time to time until the Expiration Date. Immediately after the Price Determination Date the Company shall advise the Warrantholder of the number of Warrant Shares and Warrant Price applicable to this Warrant and the Warrantholder may submit this Warrant for a replacement warrant containing the relevant Warrant Share and Warrant Price information. Section 1. REGISTRATION. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder. Section 2. TRANSFERS. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer, properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. Section 3. EXERCISE OF WARRANT. Subject to the provisions hereof, the Warrantholder may exercise this Warrant, in whole or in part, at any time prior to its expiration upon surrender of the Warrant, together with delivery of a duly executed Warrant exercise form, in the form attached hereto as APPENDIX A (the "EXERCISE AGREEMENT") and payment by cash, certified check or wire transfer of funds (or, in certain circumstances, by cashless exercise as provided below) of the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder's designee as of the close of business on the date on which this Warrant shall have been surrendered (or the date evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company has been provided to the Company), the Warrant Price shall have been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The Warrant Shares shall be in such denominations as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder, as specified in the Exercise Agreement. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such Warrant Shares, deliver to the Warrantholder a new Warrant representing the right to purchase the number of Warrant Shares with respect to which this Warrant shall not then have been exercised. As used herein, "business day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties contained in Section 2 of the Purchase Agreement are true and correct in all material respects with respect to the Warrantholder as of the time of such exercise. Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. Except as provided in the Purchase Agreement, the Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant, and a similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the Warrantholder in respect of which such Shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's reasonable satisfaction that such tax has been paid. The Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such tax is due. 2 Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon surrender and cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like amount of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. Section 7. RESERVATION OF SHARES. The Company shall at all times reserve and keep available out of its authorized but unissued Shares, solely for the purpose of providing for the exercise of the Warrants, such number of Warrant Shares as shall be sufficient to permit the exercise of the Warrants in accordance with their respective terms. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid Shares of the Company. Section 8. ADJUSTMENTS. Subject and pursuant to the provisions of this Section 8, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. (a) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend, make any distribution or make a distribution on its Shares or any other securities, combine its outstanding number of Shares into a smaller number of Shares or issue by reclassification of its outstanding Shares or any equity securities (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then (i) the Warrant Price in effect immediately prior to the date on which such change shall become effective shall be adjusted by multiplying such Warrant Price by a fraction, the numerator of which shall be the number of Shares outstanding immediately prior to such change and the denominator of which shall be the number of Shares outstanding immediately after giving effect to such change and (ii) the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted by multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to the date on which such change shall become effective by a fraction, the numerator of which is shall be the Warrant Price in effect immediately prior to the date on which such change shall become effective and the denominator of which shall be the Warrant Price in effect immediately after giving effect to such change, calculated in accordance with clause (i) above. Such adjustments shall be made successively whenever any event listed above shall occur. (b) If any capital reorganization or reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company's assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a amount of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions. 3 (c) In case the Company shall fix a payment date for the making of a distribution to all shareholders (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total Market Price (as defined below) of all of the issued Shares immediately prior to such payment date, less the fair market value (as determined by the Company's Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date. "MARKET PRICE" as of a particular date (the "VALUATION DATE") shall mean the following: (i) if the Shares are then listed on a national stock exchange, the closing sale price of the Shares on such exchange on the last trading day prior to the Valuation Date; (ii) if the Shares are then listed on The Nasdaq Stock Market, Inc. ("NASDAQ") or quoted on the OTC Bulletin Board (the "BULLETIN BOARD") or such similar quotation system or association, the closing sale price of the Shares on Nasdaq, the Bulletin Board or such other quotation system or association on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted thereon on the last trading day prior to the Valuation Date; or (iii) if the Shares are not then listed on a national stock exchange listed on Nasdaq, or quoted on the Bulletin Board or such other quotation system or association, the fair market value of the Shares as of the Valuation Date, as determined in good faith by the Board of Directors of the Company and the Warrantholder. If the Shares are not then listed on a national securities exchange, Nasdaq, the Bulletin Board or such other quotation system or association, the Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise hereunder as to the fair market value of the Shares as determined by the Board of Directors of the Company. In the event that the Board of Directors of the Company and the Warrantholder are unable to agree upon the fair market value in respect of subpart (iii) of this paragraph, the Company and the Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed. (d) An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment. (e) In the event that, as a result of an adjustment made pursuant to this Section 8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than Warrant Shares, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant. (f) Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment of the Warrant Price in the case of the issuance of (i) Shares, capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an equity compensation program approved by the Board of Directors of the Company or the compensation committee of the Board of Directors of the Company, (ii) Shares or securities issued upon the conversion or exercise of Options or Convertible Securities issued prior to the date hereof, provided such securities are not amended after the date hereof to increase the number of Shares issuable thereunder or to lower the exercise or conversion price thereof, (iii) securities issued pursuant to the Purchase Agreement and securities issued upon the exercise or conversion of those securities, and (iv) Shares issued or issuable by reason of a dividend, stock split or other distribution on the Shares (but only to the extent that such a dividend, split or distribution results in an adjustment in the Warrant Price pursuant to the other provisions of this Warrant) (collectively, "EXCLUDED ISSUANCES"). (g) To the extent permitted by applicable law and the listing requirements of any stock market or exchange on which the Shares are then listed, the Company from time to time may decrease the Warrant 4 Price by any amount for any period of time if the period is at least twenty (20) days, the decrease is irrevocable during the period and the Board of Directors shall have made a determination that such decrease would be in the best interests of the Company, which determination shall be conclusive. Whenever the Warrant Price is decreased pursuant to the preceding sentence, the Company shall provide written notice thereof to the Warrantholder at least five (5) days prior to the date the decreased Warrant Price takes effect, and such notice shall state the decreased Warrant Price and the period during which it will be in effect. Section 9. FRACTIONAL INTEREST. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder an amount in cash equal to the Market Price of such fractional share of Common Stock on the date of exercise. Section 10. [OMITTED.] Section 11. BENEFITS. Nothing in this Warrant shall be construed to give any person, entity, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. Section 12. NOTICES TO WARRANTHOLDER. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. Section 13. [OMITTED.] Section 14. NOTICES. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company's books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days' advance written notice to the other: If to the Company: New Era Marketing, Inc. 927 Lincoln Road, Suite 200 Miami, FL 33139 Attention: Jeffrey Binder, CEO Fax: (305) 674-1311 With a copy to (which shall not constitute notice): Hodgson Russ LLP 60 E. 42nd Street, 37th Floor New York, NY 10165 Attn: Jeffrey A. Rinde, Esq. Fax: (212) 972-1677 5 Section 15. REGISTRATION RIGHTS. The initial Warrantholder is entitled to the benefit of certain registration rights with respect to the Warrant Shares (or other securities) issuable upon the exercise of this Warrant as provided in the Registration Rights Agreement, and any subsequent Warrantholder may be entitled to such rights only upon due assignment of this Warrant and due execution of the Registration Rights Agreement. Section 16. SUCCESSORS. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. Section 17. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. Section 18. [OMITTED.] Section 19. CASHLESS EXERCISE. Notwithstanding any other provision contained herein to the contrary, from and after the first anniversary of the Closing Date if the Warrant Shares may not be freely sold to the public for any reason (including, but not limited to, the failure of the Company to have effected the registration of the Warrant Shares or to have a current prospectus available for delivery or otherwise, but excluding the period of any Allowed Delay (as defined in the Registration Rights Agreement), the Warrantholder may elect to receive, without the payment by the Warrantholder of the aggregate Warrant Price in respect of the shares of Common Stock to be acquired, shares of Common Stock of equal value to the value of this Warrant, or any specified portion hereof, by the surrender of this Warrant (or such portion of this Warrant being so exercised) together with a Net Issue Election Notice, in the form annexed hereto as APPENDIX B, each duly executed, to the Company. Thereupon, the Warrantholder shall become a shareholder and the Company shall issue to the Warrantholder such number of fully paid, validly issued Shares as is computed using the following formula: X = Y (A - B) --------- A where X = the number of Shares to which the Warrantholder is entitled upon such cashless exercise; Y = the total number of Shares covered by this Warrant for which the Warrantholder has surrendered purchase rights at such time for cashless exercise (including both shares to be issued to the Warrantholder and shares as to which the purchase rights are to be canceled as payment therefor); A = the "Market Price" of one Share as at the date the net issue election is made; and B = the Warrant Price in effect under this Warrant at the time the net issue election is made. 6 Section 20. NO RIGHTS AS STOCKHOLDER. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant. Section 21. AMENDMENT; WAIVER. This Warrant is one of a series of Warrants of like tenor issued by the Company. Any term of this Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) upon the written consent of the Company and the holders of Warrants representing at least 50% of the Shares then subject to such outstanding Warrants (the "MAJORITY HOLDERS"); PROVIDED, that (x) any such amendment or waiver must apply to all Warrants; and (y) the number of Warrant Shares subject to this Warrant, the Warrant Price and the Expiration Date may not be amended, and the right to exercise this Warrant may not be altered or waived in any manner adverse to the Warrantholder, without the written consent of the Warrantholder. Section 22. SECTION HEADINGS. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof. Section 23. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the ___ day of December, 2006. NEW ERA MARKETING, INC. By: -------------------------- Jeffrey Binder Chief Executive Officer 7 APPENDIX A NEW ERA MARKETING, INC. WARRANT EXERCISE FORM To New Era Marketing, Inc.: The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant ("WARRANT") for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, shares of common stock ("WARRANT SHARES") provided for therein, and requests that certificates for the Warrant Shares be issued as follows: _______________________________ Name ________________________________ Address ________________________________ ________________________________ Federal Tax ID or Social Security No. and delivered by (certified mail to the above address, or (electronically (provide DWAC Instructions: ___________________), or (other (specify): __________________________________________). and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned's Assignee as below indicated and delivered to the address stated below. Dated: ___________________, ____ Note: The signature must correspond with Signature:_________________________ the name of the Warrantholder as written on the first page of the Warrant in every _________________________ particular, without alteration or Name (please print) enlargement or any change whatever, unless the Warrant has been assigned. _________________________ _________________________ Address _________________________ Federal Identification or Social Security No. Assignee: _________________________ _________________________ _________________________ 8 APPENDIX B NEW ERA MARKETING, INC. NET ISSUE ELECTION NOTICE To: New Era Marketing, Inc.. Date:[_________________________] The undersigned hereby elects under SECTION 19 of this Warrant to surrender the right to purchase [____________] number of Shares pursuant to this Warrant and hereby requests the issuance of [_____________] of Shares. The certificate(s) for the shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below. _________________________________________ Signature _________________________________________ Name for Registration _________________________________________ Mailing Address 9 EX-4.4 5 c45896_ex4-4.txt EXHIBIT 4.4 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into as of this ___ day of April, 2006 by and among Fearless Yachts LLC, a Florida limited liability company (the "COMPANY"), and the "Holders" named on SCHEDULE A hereto. Capitalized terms used herein and not otherwise defined have the respective meanings ascribed thereto in that certain Securities Purchase Agreement, dated as of the date hereof (as may be amended from time to time, the "SECURITIES PURCHASE AGREEMENT"), by and among the Company, a Purchaser Designee and the Purchasers. The parties hereby agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: "INTERESTS" shall mean the Company's limited liability company membership interests, and any securities into which such shares may hereinafter be reclassified, or any securities of any successor entity to the Company issuable in exchange for the Interests. "INVESTORS" shall mean any holder of Registrable Securities who agrees in writing to be bound by the provisions of this Agreement. "PROSPECTUS" shall mean (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any "free writing prospectus" as defined in Rule 163 under the 1933 Act.. "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document. "REGISTRABLE SECURITIES" shall mean (i) the Interests issuable upon exercise of the Warrants issued pursuant to the Securities Purchase Agreement and (ii) any other securities issued or issuable in exchange for Registrable Securities; provided, that a security shall cease to be a Registrable Security upon (A) the sale of such security pursuant to a Registration Statement or Rule 144 or 144A under the 1933 Act, or (B) such security becoming eligible for sale by the Investor pursuant to Rule 144(k). "REGISTRATION STATEMENT" shall mean any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "REQUIRED INVESTORS" means the Investors holding a majority of the Registrable Securities. 2. REGISTRATION. (a) PIGGYBACK REGISTRATIONS. (i) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any time proposes to register its Interests under the 1993 Act (other than a registration on Form S-4 or S-8 or any successor or other forms promulgated for similar purposes), whether or not such registration shall be intended for sale for its own account, pursuant to a registration statement on which it is permissible to register Registrable Securities for sale to the public under the 1933 Act, it will give written notice of its intention to do so, and of such Investor's rights under this Section 2, to all Investor at least thirty (30) days prior to each such filing of any registration statement under the 1933 Act. Upon the written request of any such Investor made within twenty (20) days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder), the Company will use its commercially reasonable best efforts to effect the registration under the 1933 Act of all Registrable Securities which the Company has been so requested to register by the Investors; PROVIDED, THAT, (1) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Investor and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the registration expenses in connection therewith), and (2) if such registration involves an underwritten offering, all Investors requesting to be included in the Company's registration may be required by the Company to sell their Registrable Securities, as the case may be, to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings. If a registration requested pursuant to this Section 2(a)(i) involves an underwritten public offering, any Investor holding Registrable Securities requesting to be included in such registration shall have the right to withdraw its request by giving written notice thereof at least three (3) days prior to the filing of the registration statement. (ii) PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to this Section 2 involves an underwritten offering and the managing underwriter advised the Company in writing that, in its good faith opinion, the amount of securities requested to be included in such registration (the "REQUESTED REGISTRABLE SECURITIES") exceeds the amount which can be sole in such offering, so as to be likely to have a material adverse effect on such offering as contemplated by the Company (including the price at which the Company proposed to sell such securities), then the Company will include in such registration the following securities (the "ACTUAL REGISTRABLE SECURITIES"): FIRST, all securities proposed by the Company to be sold for the Company's own account; SECOND, the amount of Registrable Securities requested to be included in such registration by the Investors which, in the good faith opinion of such managing underwriter can be sold without causing a material adverse effect on the offering, with such amount of Registrable Securities to be equitably allocated on a percentage Pro Rata Basis (as defined below; THIRD, any amount of other securities ("OTHER SECURITIES") of the Company held by all other security holders ("OTHER HOLDERS") which the Company has agreed to register which, in the good faith opinion of such managing underwriter, can be sold without causing a material adverse effect on the offering, with such amount of Other Securities to be allocated PRO RATA among such Other Holders on the basis of the relative number of shares of Other Securities owned by such Other Holders. "PRO RATA BASIS" shall mean that in the event the underwriter causes a reduction in a particular series of Requested Registrable Securities, the number of such Registrable Securities included in the registration for each Purchaser shall be reduced by an equal percentage of their respective applicable Requested Registrable Securities. (b) EXPENSES. The Company will pay all reasonable expenses associated with each registration, including filing and printing fees, the Company's counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws and listing fees, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold. (c) EFFECTIVENESS. (i) The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within forty-eight (48) hours, after any Registration Statement registering such Investor's Registrable Securities is declared effective and shall simultaneously provide the said Investors with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. (ii) The Company may delay the disclosure of material non-public information concerning the Company, by suspending the use of any Prospectus included in any registration contemplated by this 2 Section containing such information, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company (an "ALLOWED DELAY"); provided, that the Company shall promptly (a) notify the Investors in writing of the existence of (but in no event, without the prior written consent of an Investor, shall the Company disclose to such Investor any of the facts or circumstances regarding) material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable. 3. COMPANY OBLIGATIONS. If and whenever the Company is required to use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof (and presuming that the Registration Statement is not withdrawn or terminated as provided herein), and pursuant thereto the Company will, as expeditiously as possible: (a) use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement would no longer be denied Registrable Securities, (the "EFFECTIVENESS PERIOD") and advise the Investors in writing when the Effectiveness Period has expired; (b) use commercially reasonable efforts to prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby; (c) provide copies to and permit counsel appointed by the Required Investors to review each Registration Statement and all amendments and supplements thereto no fewer than seven (7) days prior to their filing with the SEC and not file any document to which such counsel reasonably objects; (d) furnish to the Investors and their counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement; (e) use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment; (f) prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction; 3 (g) use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed or proposal to be listed pursuant to the Registration Statement; (h) immediately notify the Investor upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and (i) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), "Availability Date" means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter). (j) with a view to making available to the Investor the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investor to sell Interests to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company, if applicable, that it has complied with the reporting requirements of the 1934 Act, (B) a copy, if so required, of the Company's most recent Annual Report on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration. 4. DUE DILIGENCE REVIEW; INFORMATION. The Company shall make available, during normal business hours, for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), all financial and other records, all filings with the SEC made by the Company, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement. 4 The Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor (or representative of such Investor) wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto. 5. OBLIGATIONS OF THE INVESTORS. (a) Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents, questionnaires of certificates in connection with such registration as the Company may reasonably request. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have any of the Registrable Securities included in the Registration Statement. A Investor shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects to have any of the Registrable Securities included in the Registration Statement. (b) Each Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement. (c) Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made. 6. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold harmless each Investor and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a "BLUE SKY APPLICATION"); (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on a Investors behalf and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus. 5 (b) INDEMNIFICATION BY THE INVESTORS. Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and PROVIDED, FURTHER, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. (d) CONTRIBUTION. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation. 7. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. This Agreement may be amended only by a writing signed by the Company and the Required Investors, which amendment shall be binding upon all Investors. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Required 6 Investors. The addition of parties to this Agreement or replacement of any parties to this Agreement, in connection with the acquisition by such parties of any securities shall not require the consent of any Investor. (b) NOTICES. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be: If to the Company: Fearless Yachts, LLC 9 Gateway Drive Collinsville, Illinois 62234 Attention: Gary R. Fears Fax: 618-346-9022 With copy to: Hodgson Russ LLP 60 East 42nd St., 37th Floor New York, New York 10022 Attn.: Jeffrey A. Rinde, Esq. Tel.: 212-661-3535 Fax.: 212-972-1677 If to an Investor: To the address set forth beside such Investor's name on SCHEDULE A hereto. Each party shall provide notice to the other party of any change in address. (c) ASSIGNMENTS AND TRANSFERS BY INVESTORS. A Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that such Investor and assignee complies with all laws applicable thereto and provides written notice to the Company of assignment by the assigning party at the time of such assignment, which notice shall state the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; PROVIDED, HOWEVER, that any such assignee shall agree in writing to be bound by the terms of this agreement and shall receive such assigned rights subject to all the terms and conditions of this agreement. (d) ASSIGNMENTS AND TRANSFERS BY THE COMPANY. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors, provided, however, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company's assets to another corporation or other entity, without the prior written consent of the Required Investors, after notice duly given by the Company to each Investor. (e) BENEFITS OF THE AGREEMENT. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 7 (f) COUNTERPARTS; FAXES. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original. (g) TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (h) SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect. (i) FURTHER ASSURANCES. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained. (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (k) GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. 8 IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written. The Company: FEARLESS YACHTS, LLC By:___________________________________ Gary R. Fears, Manager The Investors: SIGNATURE OF ENTITY INVESTORS: ______________________________________ (Print Name) By:___________________________________ Name: Title: SIGNATURE OF INDIVIDUAL INVESTORS: ______________________________________ (Print Name) ______________________________________ (Signature) 9 SCHEDULE A 10 EX-4.5 6 c45896_ex4-5.txt EXHIBIT 4.5 SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "AGREEMENT"), is made as of December __, 2006, by and between New Era Marketing, Inc., a Nevada corporation, with its principal executive offices at 927 Lincoln Road, Suite 200, Miami, FL 33139 (the "COMPANY"), and Robert Kornstein (the "LENDER'S AGENT") as agent for the secured parties identified on SCHEDULE A hereto (each, a "SECURED PARTY" and collectively, the "SECURED PARTIES"). The Company, the Lender's Agent and the Secured Parties may hereinafter be referred to singularly as a "PARTY" and collectively as the "PARTIES". W I T N E S S E T H: WHEREAS, concurrently herewith, the Company is entering into a Contribution Agreement (the "CONTRIBUTION AGREEMENT") with Fearless Yachts, LLC and the members thereof (the "MEMBERS"), pursuant to which the Members are contributing their membership interests to the Company in exchange for shares of its common stock, subsequent to which Fearless will become the wholly owned subsidiary of the Company (the "ACQUISITION"); WHEREAS, Fearless entered into a Securities Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT") with the Secured Parties, pursuant to which Fearless sold to the Secured Parties its 10% Senior Secured Promissory Notes in the aggregate principal amount, including accrued interest as of December 4, 2006, of $1,257,620.87 (the "FEARLESS NOTES"); WHEREAS, the Secured Parties holding Fearless Notes in an aggregate principal amount of $________ (including accrued interest as of December 4, 2006) have agreed to exchange their Fearless Notes for substantially similar notes issued by the Company (the "NOTES"); WHEREAS, in order to induce the Secured Parties to exchange the Fearless Notes for the Notes, the Company has agreed to execute and deliver to the Lender's Agent this Agreement for the benefit of the Secured Parties, and to grant to it a security interest in all of the assets of the Company to secure the prompt payment, performance and discharge in full of all of the Company's obligations under the Notes. NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as "GENERAL INTANGIBLES" and "PROCEEDS") shall have the respective meanings given such terms in Article 9 of the UCC. (a) "COLLATERAL" means the collateral in which the Secured Parties are granted a first priority security interest Agreement and which shall include the following, whether presently owned or existing or hereafter acquired or coming into existence, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith: (i) all personal property and other assets of the Company, wherever located; and (ii) all goods of the Company, including, without limitation, all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with the Company's businesses and all improvements thereto (collectively, the "EQUIPMENT"); and (iii) All Inventory of the Company; and (iv) All of the Company's contract rights and general intangibles, including, without limitation, all partnership interests, stock or other securities, licenses, distribution and other agreements, computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, trademarks, service marks, trade styles, trade names, patents, patent applications, copyrights, deposit accounts, and income tax refunds (collectively, the "GENERAL INTANGIBLES"); and (v) All Receivables of the Company including all insurance proceeds, and rights to refunds or indemnification whatsoever owing, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each Receivable, including any right of stoppage in transit; and (vi) All accounts, deposit accounts or other bank accounts and all funds deposited therein; and (vii) All of the company's documents, instruments and chattel paper, files, records, books of account, business papers, computer programs and the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(vi) above. (b) "LENDER'S AGENT" shall be the Purchaser Designee, as defined in the Securities Purchase Agreement and as may be replaced from time to time in accordance therewith. Any notice to or by the Lenders or any actions, waiver, or enforcement rights that may be taken or asserted by Lender may only be taken by the then acting Purchaser Designee on such Lender's behalf. In the event that no Purchaser Designee is appointed, then all actions or consents that may be taken by the Lender's Agent may be taken upon consent of holders of a majority of outstanding amount of Notes. (c) "OBLIGATIONS" means all of the Company's obligations under this Agreement and the Note, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time. (d) "UCC" means the Uniform Commercial Code, as currently in effect in the State of Missouri. 2. GRANT OF SECURITY INTEREST. As an inducement for the Secured Parties to purchase the Notes, and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, except for Permitted Liens (as hereinafter defined), the Company hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the Secured Parties, a continuing first priority security interest in, a continuing lien upon, an unqualified right to possession and disposition of and a right of set-off against, in each case to the fullest extent permitted by law, all of the Company's right, title and interest of whatsoever kind and nature in and to the Collateral (the "SECURITY INTEREST"). (a) The Security Interest granted herein shall be PARI PASSU to the extent of the Obligations due to any Secured Party and the Obligations due to all other secured parties that are signatories hereto. Each Secured Party shall have the benefit of all forms of security granted in connection with the Securities Purchase Agreement, and all proceeds thereof, to the same extent of the Secured Party's PARI PASSU interest with all other secured parties that are signatories hereto. In the event that the Company materially breaches any of the terms and provisions of this Security Agreement, or should any Event of Default (as that term is defined herein) occur, the respective positions of each Secured Party with respect to the Collateral shall be in accordance with its respective participations therein. 2 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY. The Company represents and warrants to, and covenants and agrees with, the Secured Parties which shall hereinafter include the Lender's Agent unless otherwise stated as follows: (a) The Company has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Company of this Agreement and the filings contemplated herein have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally. (b) The Company represents and warrants that it has no place of business or offices where its respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants), except as set forth on SCHEDULE B attached hereto; (c) Except as to those liens existing as of the date hereof that were disclosed to the Secured Parties by the Company and are set forth on the attached SCHEDULE C (the "PERMITTED LIENS"), the Company is the sole owner of the Collateral (except for non-exclusive licenses granted by the Company in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims, and is fully authorized to grant the Security Interest in and to pledge the Collateral. Except as to the Permitted Liens, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have been filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as to the Permitted Liens, so long as this Agreement shall be in effect, the Company shall not execute and shall not knowingly permit to be on file in any such office or agency any such financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement). (d) No part of the Collateral has been judged invalid or unenforceable. No written claim has been received that any Collateral or the Company's use of any Collateral violates the rights of any third party. There has been no adverse decision to the Company's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Company's right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of the Company, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority. (e) The Company shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and may not relocate such books of account and records unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interest to create in favor of the Secured Parties valid, perfected and continuing liens in the Collateral. (f) This Agreement creates in favor of the Secured Parties a valid first priority security interest in the Collateral securing the payment and performance of the Obligations and, upon making the filings described in the immediately following sentence, a perfected first priority security interest in such Collateral. Except for the filing of financing statements on Form-1 under the UCC with the jurisdictions indicated on SCHEDULE B, attached hereto, no authorization or approval of or filing with or notice to any governmental authority or regulatory body is required either (i) for the grant by the Company of, or the effectiveness of, the Security Interest granted hereby or for the execution, delivery and performance of this Agreement by the Company or (ii) for the perfection of or exercise by the Secured Parties of its rights and remedies hereunder. (g) On the date of execution of this Agreement, the Company will deliver to the Lender's Agent one or more executed UCC financing statements on Form-1 with respect to the Security Interest for filing with the 3 jurisdictions indicated on SCHEDULE B, attached hereto and in such other jurisdictions as may be reasonably requested by the Lender's Agent. (h) The execution, delivery and performance of this Agreement does not conflict with or cause a breach or default, or an event that with or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Company is a party or by the Company is bound. No consent (including, without limitation, from stockholders or creditors of the Company) is required for the Company to enter into and perform its obligations hereunder. (i) The Company shall at all times maintain the liens and Security Interest provided for hereunder as valid and perfected liens and security interests in the Collateral in favor of the Lender's Agent on behalf of the Secured Parties until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 11. The Company hereby agrees to defend the same against any and all persons. The Company shall safeguard and protect all Collateral for the account of the Lender's Agent on behalf of the Secured Parties. At the request of the Lender's Agent, the Company will sign and deliver to the Lender's Agent at any time, or from time to time, one or more financing statements pursuant to the UCC (or any other applicable statute) in form reasonably satisfactory to the Lender's Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Lender's Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Company shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interest hereunder, and the Company shall obtain and furnish to the Secured Parties from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interest hereunder. (j) The Company will not transfer, pledge, hypothecate, encumber, license (except for non-exclusive licenses granted by the Company in the ordinary course of business), sell (except for sales of inventory in the ordinary course of business) or otherwise dispose of any of the Collateral without the prior written consent of the Lender's Agent. (k) The Company shall keep and preserve its Equipment, Inventory and other tangible Collateral in good condition subject to ordinary weir, repair and order and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage. (l) The Company shall, within ten (10) days of obtaining knowledge thereof, advise the Lender's Agent promptly, in sufficient detail, of any substantial change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral or on the Secured Parties' security interest therein. (m) The Company shall promptly execute and deliver to Lender's Agent on behalf of the Secured Parties such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Secured Parties may from time to time reasonably request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the Collateral. (n) The Company shall permit the Lender's Agent and its representatives and agents to inspect the Collateral at any time, and to make copies of records pertaining to the Collateral as may be requested by the Secured Parties from time to time. (o) The Company will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral. (p) The Company shall promptly notify the Lender's Agent in sufficient detail upon becoming aware of any attachment, garnishment, execution or other legal process levied against any Collateral and of any other information received by the Company that may materially affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder. 4 (q) All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Company with respect to the Collateral is accurate and complete in all material respects as of the date furnished. 4. DEFAULTS. The following events shall be "EVENTS OF DEFAULT": (a) Any Event of Default as defined in the Notes; (b) Any material misrepresentation or warranty of the Company in this Agreement shall prove to have been incorrect in any material respect when made; and (c) The failure by the Company to observe or perform any of its material obligations hereunder for ten (10) days after receipt by the Company of notice of such failure from the Lender's Agent. 5. DUTY TO HOLD IN TRUST. Upon the occurrence of any Event of Default and at any time thereafter, the Company shall, upon receipt by it of any revenue, income or other sums subject to the Security Interest, whether payable pursuant to the Notes or otherwise, or of any check, draft, debenture, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Lender's Agent on behalf of the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Lender's Agent for application to the satisfaction of the Obligations. Once such payments or transfers are made to Lender's Agent in trust for the Secured Parties, the Company shall be deemed to have made such payments directly to the Secured Parties. 6. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any Event of Default and at any time thereafter, the Lender's Agent on behalf of the Secured Parties shall have the right to exercise all of the remedies conferred hereunder and under the Notes and the Securities Purchase Agreement, and the Lender's Agent shall have all the rights and remedies of a secured party under the UCC and/or any other applicable law (including the Uniform Commercial Code of any jurisdiction in which any Collateral is then located). Without limitation, the Lender's Agent shall have the following rights and powers, each of which, when taken, shall be deemed taken on behalf of the Secured Parties: (a) The Lender's Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and the Company shall assemble the Collateral and make it available to the Lender's Agent at places which the Lender's Agent shall reasonably select, whether at the Company's premises or elsewhere, and make available to the Secured Parties, without rent, all of the Company's respective premises and facilities for the purpose of the Secured Parties taking possession of, removing or putting the Collateral in saleable or disposable form. (b) The Lenders Agent shall have the right to operate the business of the Company using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon such terms and conditions as the Secured Parties may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to the Company or right of redemption of the Company, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Lender's Agent may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of the Company, which are hereby waived and released. 7. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or other disposition of the Collateral hereunder shall be applied first, to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys' fees and expenses incurred by the Lender's Agent in enforcing its rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations, and to the payment of any other amounts required by applicable law, after which the Secured Parties and Lender's Agent shall 5 pay to the Company any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Company will be liable for the deficiency, together with interest thereon, at the Default rate set forth in the Note (the "DEFAULT RATE"), and the reasonable fees of any attorneys employed by the Lender's Agent to collect such deficiency. To the extent permitted by applicable law, the Company waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due to the gross negligence or willful misconduct of the Secured Parties. All ordinary and reasonable costs and expenses incurred by any Lender's Agent in collection of the Obligations shall be borne exclusively by the Company including, without limitation, any costs, expenses, fees or disbursements incurred by outside agencies or attorneys retained by the Lender's Agent to effect collections of the Obligations or any collateral securing the Obligations. In such event, any money paid, any expenses, costs and attorneys fees paid or incurred in connection therewith or in enforcing, maintaining or preserving the rights of all Secured Parties under this Agreement shall be shared by all Secured Parties PRO RATA in accordance with their respective percentage of the outstanding principal and interest on the Notes. The provisions of this paragraph shall not apply to any suits, actions, proceedings or claims of the nature referred to herein or otherwise which are based upon or related to the repayment of, or the taking of security for, any loans and/or advances made by any Secured Party to the Company that do not arise under the Securities Purchase Agreements or that are not participated in by all Secured Parties, and the party making such loans and/or advances shall be exclusively responsible for such suits, actions, proceedings or claims and the payment of all such expenses in connection therewith. 8. COSTS AND EXPENSES. The Company agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation, any financing statements, continuation statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Lender's Agent. The Company shall also pay all other claims and charges which in the reasonable opinion of the Lender's Agent might prejudice, imperil or otherwise affect the Collateral or the Security Interest therein. The Company will also, upon demand, pay to the Lender's Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Lender's Agent may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Securities Purchase Agreement and Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Convertible Debenture and shall bear interest at the Default Rate. 9. RESPONSIBILITY FOR COLLATERAL. The Company assumes all liabilities and responsibility in connection with all Collateral, and the obligations of the Company hereunder or under the Securities Purchase Agreement or Note shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason. 10. SECURITY INTEREST ABSOLUTE. All rights of the Secured Parties and all Obligations of the Company hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Securities Purchase Agreement, or any of the Notes, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Securities Purchase Agreement, or Notes; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guaranty, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in their sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Company, or a discharge of all or any part of the Security Interest granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. The Company expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable 6 preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, the Company's obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Company waives all right to require the Secured Parties to proceed against any other person or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. The Company waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby. 11. TERM OF AGREEMENT. This Agreement and the Security Interest shall terminate on the date on which all payments under the Notes have been made in full by the Company. Upon such termination, the Lender's Agent, at the request and at the expense of the Company, will join in executing any termination statement with respect to any financing statement executed and filed pursuant to this Agreement that is required to be executed by Lender's Agent. 12. POWER OF ATTORNEY; FURTHER ASSURANCES. (a) The Company authorizes the Lender's Agent upon five (5) business days prior notice, and does hereby make, constitute and appoint it, and its respective officers, agents, successors or assigns with full power of substitution, as its true and lawful attorney-in-fact, with power, in its own name or in the name of the Company, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any debentures, checks, drafts, money orders, or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come into possession of the Secured Parties; (ii) to sign and endorse any UCC financing statement or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; and (v) generally, to do, at the option of the Lender's Agent, and at the Company's expense, at any time, or from time to time, all acts and things which the Secured Parties deem reasonably necessary to protect, preserve and realize upon the Collateral and the Security Interest granted therein in order to effect the intent of this Agreement, the Securities Purchase Agreement, and any of the Notes, all as fully and effectually as the Company might or could do; and the Company hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. (b) On a continuing basis, the Company will make, execute, acknowledge, deliver, file and record, as the case may be, in the proper filing and recording places in any jurisdiction, including, without limitation, the jurisdictions indicated on SCHEDULE B, attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Lender's Agent, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Lender's Agent the grant or perfection of a security interest in all the Collateral. (c) The Company hereby irrevocably appoints the Lender's Agent as the Company's attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company, from time to time at the discretion of the Lender's Agent, to take any action and to execute any instrument which the Lender's Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in their sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of the Company where permitted by law. 13. NOTICES. Any notice or other communications required or permitted hereunder shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class certified mail, postage prepaid, by reputable overnight courier or such other address as may hereafter be designated in writing by the addressee to the other parties: 7 If to a Secured Party, to the address set forth beneath his or its name on SCHEDULE A hereto, as may be amended from time to time. with a copy to the Lender's Agent at: Robert Kornstein 15 W. 72nd Street, Apt. 15J New York, NY 10023 Fax: 212-580-5811 If to the Company, to: New Era Marketing, Inc. 927 Lincoln Road, Suite 200 Miami, Florida 33139 Attn.: Jeffrey Binder, Chief Executive Officer Fax: (305) 674-1311 with a copy to: Hodgson Russ LLP 60 E. 42nd Street, 37th Floor New York, New York 10169 Attn.: Jeffrey A. Rinde, Esq. Fax.: 212-972-1677 or, in any case, at such other address or addresses as shall have been furnished in writing by such party to the other parties hereto. All such notices, requests, consents and other communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of mailing, on the fifth business day following the date of such mailing and (c) in the case of overnight courier, on the second next business day. 14. OTHER SECURITY. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Secured Parties shall have the right, in their sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Party's rights and remedies hereunder. 15. MISCELLANEOUS. (a) No course of dealing between the Company and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. (b) All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes, or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently only by the Lender's Agent. The Lender's Agent's authority to act on behalf of and in the name of the Secured Parties shall be exclusive. Any actions taken by the Lender's Agent shall be conclusively deemed to have been taken on behalf of the Secured Parties. (c) This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede all prior negotiations, understandings and agreements with respect thereto. 8 Except as specifically set forth in this Agreement, no provision of this Agreement may be modified or amended except by a written agreement specifically referring to this Agreement and signed by the Company and the Lender's Agent. (d) In the event that any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction, this Agreement shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Agreement and without affecting the validity or enforceability of such provision or the other provisions of this Agreement in any other jurisdiction. (e) No waiver of any breach or default or any right under this Agreement shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default or right, whether of the same or similar nature or otherwise. Any waiver signed by the Lender's Agent shall be binding upon all Secured Parties. (f) This Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and assigns. (g) Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement. (h) This Agreement shall be construed in accordance with the laws of the State of New York, except to the extent the validity, perfection or enforcement of a security interest hereunder in respect of any particular Collateral which are governed by a jurisdiction other than the State of New York in which case such law shall govern. Each of the parties hereto irrevocably submit to the exclusive jurisdiction of any New York State or United States Federal court sitting in New York county over any action or proceeding arising out of or relating to this Agreement, and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the State of New York and any objection to an action or proceeding in the State of New York on the basis of forum non conveniens. (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 9 (j) This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. NEW ERA MARKETING, INC. By: _______________________________________ Jeffrey Binder, Chief Executive Officer LENDER'S AGENT ___________________________________________ Name: Robert Kornstein Lender's Agent on behalf of the Secured Parties listed on SCHEDULE A hereto: ___________________________________________ Name: Robert Kornstein 11 SCHEDULE A SECURED PARTIES -------------------------------------------- Names and Addresses -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- 12 SCHEDULE B PLACES OF BUSINESS AND JURISDICTIONS 13 SCHEDULE C PERMITTED LIENS None 14 EX-16.1 7 c45896_ex16-1.txt EXHIBIT 16.1 MOORE & ASSOCIATES, CHARTERED ACCOUNTANTS AND ADVISORS PCAOB REGISTERED December 20, 2006 Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Commissioners: We have read the statements made by New Era Marketing, Inc., which we understand was filed with the Securities and Exchange Commission, pursuant to Item 4.01 of Form 8-K, as part of the Form 8-K of New Era Marketing, Inc., filed on December 13, 2006. We agree with the statements concerning our firm in Item 4.01 of such Form 8-K. We have no basis to agree or disagree with other statements made under Item 4.01. Very truly yours, /s/ Moore & Associates, Chartered - --------------------------------- Moore & Associates, Chartered Las Vegas, Nevada 2675 S. Jones Blvd., Suite 109, Las Vegas, Nevada 89146 (702) 253-7511, Fax: (702) 253-7501 ----------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----