Exhibit 10.63
AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT
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This Amendment No. 1 to Subscription Agreement and additional documents
("Transaction Documents") dated among Diamond Entertainment Corporation (the
"Company"), Longview Fund, L.P., and Alpha Capital Anstalt (each a "Subscriber",
and collectively, "Subscribers").
WHEREAS, the Company and Subscribers are parties to the Subscription
Agreement dated November 30, 2006 relating to an aggregate investment by
Subscribers in Promissory Notes of the Company convertible into shares of the
Company's no par value Common Stock and Class A Warrants; and
WHEREAS, the Company and Subscribers desire to amend a term of the
Subscription Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Subscribers hereby
agree as follows:
1. All the capitalized terms employed herein shall have the meanings
attributed to them in the Transaction Documents.
2. Alpha Capital Anstalt's investment in the second tranche shall be
increased to $250,000 and in the aggregate, the Subscribers shall purchase up to
TWO MILLION FOUR HUNDRED THOUSAND DOLLARS ($2,400,000) (the "PURCHASE PRICE") of
principal amount of 12% secured promissory notes of the Company.
3. Section 1(c) is changed as follows: SECOND CLOSING. The closing date
in relation to up to ONE MILLION ONE HUNDRED AND FIFTY THOUSAND DOLLARS
($1,250,000) (the "SECOND CLOSING PURCHASE PRICE") shall be on or before the
fifth business day after the compliance with the Second Closing Condition as
defined in Section 1(d) (the "SECOND CLOSING DATE").
4. Section 1(d) is changed as follows : (d) CONDITIONS TO SECOND
CLOSING. The occurrence of the Second Closing is expressly contingent on (i)
compliance with the Second Closing Condition, (ii) the truth and accuracy, on
the Second Closing Date of the representations and warranties of the Company and
Subscriber contained in this Agreement except for changes that do not constitute
a Material Adverse Event [as defined in Section 5(a)], (iii) continued
compliance with the covenants of the Company set forth in this Agreement, (iv)
the non-occurrence of any Event of Default (as defined in the Note and this
Agreement) or an event that with the passage of time or the giving of notice
could become an Event of Default, or other default by the Company of its
obligations and undertakings contained in this Agreement. "SECOND CLOSING
CONDITION" shall mean the first to occur of (i) the actual effectiveness of the
Registration Statement as defined in Section 11.1(iv) hereunder, or (ii) THE
DELIVERY BY COMPANY WITHIN FIVE DAYS OF THE "SECOND CLOSING" OF CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY AND ALL ENTITIES WHICH ARE OR WILL BE DIRECT
or indirect subsidiaries of the Company after the closing of the transaction
described in the Letter of Intent ("ACQUISITION"), all in order to satisfy the
requirements of Form 8-K after giving effect to the Acquisition, pursuant to
General Accepted Accounting Principals in the United States, including a balance
sheet, results of operations, cash flows and supporting schedules and
consolidated financial statements for the FISCAL YEAR ENDED MARCH 31, 2006 AND
the latest interim period, and all in form and substance reasonably acceptable
to Subscriber.
5. Section 3 is changed to: 3. SECURITY INTEREST. The Subscribers have
been granted a security interest in all assets of the Company including
ownership of the Subsidiaries memorialized in a "SECURITY AGREEMENT" dated June
30, 2006 and filed in the States of New Jersey and California under file numbers
2368529-1 and 06-7077741180, respectively. THE SUBSCRIBERS WILL BE GRANTED A
SECURITY INTEREST IN ALL ASSETS IN DIAMOND ENTERTAINMENT CORPORATION, A NEW
JERSEY CORPORATION ("PARENT"), DMEC ACQUISITION INC., A DELAWARE CORPORATION,
JEWEL PRODUCTS INTERNATIONAL, INC., A CALIFORNIA CORPORATION AND DMECA
ACQUISITION, INC., A NEW JERSEY CORPORATION, To be memorialized in a "SECURITY
AGREEMENT, a form of which is annexed hereto as EXHIBIT C. Each Subsidiary will
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execute and deliver to the Subscribers a form of "GUARANTY" annexed hereto as
EXHIBIT D. The Company will execute such other agreements, documents and
financing statements reasonably requested by Subscribers, which will be filed at
the Company's expense with such jurisdictions, states and counties designated by
the Subscribers. The Company will also execute all such documents reasonably
necessary in the opinion of Subscribers to memorialize and further protect the
security interest described herein. The Subscribers will appoint a Collateral
Agent to represent them collectively in connection with the security interest to
be granted to the Subscribers. The appointment will be pursuant to a "COLLATERAL
AGENT AGREEMENT", a form of which is annexed hereto as EXHIBIT E.
6. Section 11.1(iv) is changed to: (iv) The Company shall file with the
Commission a Form SB-2 registration statement (the "REGISTRATION STATEMENT") (or
such other form that it is eligible to use) in order to register the Registrable
Securities for resale and distribution under the 1933 Act ON OR BEFORE MAY 31,
2007 (THE "FILING DATE"), AND CAUSE THE REGISTRATION STATEMENT TO BE DECLARED
EFFECTIVE NOT LATER THAN AUGUST 31, 2007 (the "EFFECTIVE DATE").
7. Section 11.1(v) is changed to: The amount of Registrable Securities
required to be included in the Registration Statement as described in Section
11.1(iv) ("INITIAL REGISTRABLE SECURITIES") shall be limited to not less than
100% of the maximum amount ("RULE 415 AMOUNT") of Common Stock which may be
included in a single Registration Statement without exceeding registration
limitations imposed by the Commission pursuant to Rule 415 of the 1933 Act but
in no event not less than 130% of the Shares OUTSTANDING AT THE TIME THE
REGISTRATION STATEMENT IS FILED (POST REVERSE SPLIT SHARES).
8. All other terms and conditions of the Transaction Documents as
amended by this Agreement and herein shall remain in full force and effect.
9. Each of the undersigned states that he has read the foregoing
Agreement and understands and agrees to it and by the terms set forth herein
represents the entire agreement between the parties.
DIAMOND ENTERTAINMENT CORPORTION
the "Company"
/s/ James Lu
By:_____________________________________
James Lu
________________________________________
ALPHA CAPITAL ANSTALT
________________________________________
LONGVIEW FUND, L.P.
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