f8k071807ex10xx_redmile.htm


    Exhibit
      10.20

     

    AGENCY
      AGREEMENT

     

    June
      22,
      2007

     

    Red
      Mile Entertainment, Inc.

    4000
      Bridgeway, Suite 101

    Sausalito,
      California 95965

     

    Attention:                      Chester
      P. Aldridge

     

    Dear
      Sirs:

     

    Re:           Issue
      and Sale of Units

     

    J.F.
      Mackie & Company Ltd. (the “Agent”) understands that Red
      Mile Entertainment Inc. (the “Corporation”) proposes to sell
      and issue up to 4,000,000 units (the "Units") of the
      Corporation at a price of US$2.50 per Unit, each Unit being comprised of one
      common share (“Common Share”) of the Corporation and 0.2 of one
      warrant ("Warrant") of the Corporation (the
“Offering”).  Each whole Warrant shall entitle the
      holder thereof to acquire, for no additional consideration, one Common Share
      in
      the event that a Liquidity Transaction (as defined herein) is not
      unconditionally completed by the Corporation prior to the date that is eight
      months following the Closing Date.

     

    Subject
      to the terms and conditions hereof, the Agent agrees to act as, and the
      Corporation appoints the Agent as, the sole and exclusive agent of the
      Corporation to offer for sale on the Closing Date on a private placement basis
      the Units in the Provinces of Alberta, British Columbia, Saskatchewan, Ontario
      and Nova Scotia (the "Selling Jurisdictions") and to use its
      commercially reasonable best efforts to secure subscriptions therefor, provided
      that the Agent shall be under no obligation to purchase any of such Units as
      principal.  The Agent shall be entitled in connection with the
      offering and sale of the Units to retain as sub-agents other registered
      securities dealers and may receive (for delivery to the Corporation at the
      Closing Time) subscriptions for Units from other registered securities
      dealers.  The fee payable to such sub-agents shall be for the account
      of the Agent.

     

    In
      consideration for its services hereunder the Agent shall be entitled to the
      commission and expenses provided for in sections 8 and 9, which shall be payable
      or issued, as the case may be, at the Closing Time. For greater certainty,
      except as provided for in sections 8 and 9, the services provided by the Agent
      in connection herewith will not be subject to Goods and Services Tax provided
      for in the Excise Tax Act (Canada) and taxable supplies will be
      incidental to the exempt financial services provided.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      following are the terms and conditions of this Agreement:

     

    
      	
              1.  

            	
              Definitions:

            


    

     

    In
      this
      Agreement:

     

    
      	
              (a)  

            	
              “Agent”
                means J. F. Mackie & Company
                Ltd.;

            


    

     

    
      	
              (b)  

            	
              "Agent's
                Warrants" means warrants to be issued by the Corporation to the
                Agent and its nominees on the Closing Date substantially in the form
                attached as Schedule 1(b), each Agent's Warrant entitling the holder
                thereof to acquire one Common Share at a price of $3.00 for a period
                of 24
                months from the Closing Date;

            


    

     

    
      	
              (c)  

            	
              “Agent's
                counsel” means Heenan Blaikie LLP, or such other legal counsel as
                the Agent, with the consent of the Corporation, acting reasonably,
                may
                appoint;

            


    

     

    
      	
              (d)  

            	
              “Agreement”
                means this agency agreement dated effective June 22, 2007 between
                the
                Agent and the Corporation;

            


    

     

    
      	
              (e)  

            	
              “Applicable
                Securities Laws” includes, collectively, all securities laws,
                rules, regulations, notices, policies and similar instruments applicable
                to the Corporation and to the distribution of securities in accordance
                with this Agreement;

            


    

     

    
      	
              (f)  

            	
              “associates”
                has the meaning ascribed thereto in the Securities Act
                (Alberta);

            


    

     

    
      	
              (g)  

            	
              “business
                day” means a day which is not Saturday, Sunday or a legal holiday
                in the City of Calgary;

            


    

     

    
      	
              (h)  

            	
              “Closing
                Date” means July 18, 2007 or such other date or dates as the
                Agent and the Corporation may agree in
                writing;

            


    

     

    
      	
              (i)  

            	
              “Closing
                Time” means 9:00 a.m. (Calgary time), or such other time on the
                Closing Date as the Agent and the Corporation may agree in
                writing;

            


    

     

    
      	
              (j)  

            	
              “Common
                Shares” means common shares in the capital of the
                Corporation;

            


    

     

    
      	
              (k)  

            	
              "Convertible
                Debentures" means the convertible debentures issued by the
                Corporation pursuant to an indenture dated October 19, 2006 between
                the
                Corporation and Olympia Trust
                Company;

            


    

     

    
      	
              (l)  

            	
              "Convertible
                Promissory Notes" means convertible promissory notes of the
                Corporation dated June 25, 2007 and June 26, 2007, in the form attached
                as
                Schedule 1(l) hereto, having a combined principal amount of US$2,400,000
                and convertible into Units at a ratio of one Unit for each US$2.50
                of
                principal amount converted and also entitling the holder thereof
                to one
                half of one Convertible Promissory Note Warrant for every Common
                Share
                received upon conversion;

            


    

     

    
      	
              (m)  

            	
              "Convertible
                Promissory Note Warrants" means the warrants issuable upon
                conversion of the Convertible Promissory Notes, each whole warrant
                entitling the holder thereof to purchase one Common Share at an exercise
                price of US$2.75 for a period of two years from the date of
                issue;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (n)  

            	
              “Copyrights”
                shall mean all copyrights, and all right, title and interest in all
                copyrights, copyright registrations and applications for copyright
                registration, certificates of copyright and copyrightable subject
                matter
                throughout the world, all right, title and interest in related
                applications and registrations throughout the world, and all moral
                rights;

            


    

     

    
      	
              (o)  

            	
              “Corporation”
                means Red Mile Entertainment, Inc., a body corporate incorporated
                pursuant
                to the laws of Delaware;

            


    

     

    
      	
              (p)  

            	
              “Corporation
                Intellectual Property Rights” shall mean all Intellectual
                Property Rights and Corporation Technology used or proposed to be
                used in,
                or necessary to, the business of the Corporation as currently conducted
                or
                as currently reasonably contemplated by the Corporation, whether
                owned or
                controlled, licenced, or otherwise held by or for the benefit of
                the
                Corporation;

            


    

     

    
      	
              (q)  

            	
              “Corporation
                Technology” shall mean all Technology used or proposed to be used
                in, or necessary to, the business of the Corporation as currently
                conducted or as currently contemplated by the Corporation, whether
                owned
                or controlled, licenced or otherwise held by or for the benefit of
                the
                Corporation.

            


    

     

    
      	
              (r)  

            	
              “Corporation's
                counsel” means Bennett Jones LLP with respect to matters governed
                by the laws of Canada and Lehman and Eilen LLP with respect to matters
                governed by the laws of the United States, or such other legal counsel
                as
                the Corporation may appoint;

            


    

     

    
      	
              (s)  

            	
              “Documents”
                means all documents and other information filed by or on behalf of
                the Corporation in compliance with or intended compliance with Applicable
                Securities Laws or mailed to the securityholders of the
                Corporation;

            


    

     

    
      	
              (t)  

            	
              "Due
                Diligence Responses" means the written responses of the
                Corporation, as given by the directors and officers of the Corporation
                at
                the Due Diligence Sessions, excluding the portion of such responses
                which
                are forward-looking or relate to projections or
                forecasts;

            


    

     

    
      	
              (u)  

            	
              “Due
                Diligence Sessions” has the meaning set forth in subsection 2(c);

            


    

     

    
      	
              (v)  

            	
              “Financial
                Statements” means the audited financial statements of the
                Corporation for the years ended March 31, 2006 and
                2007;

            


    

     

    
      	
              (w)  

            	
              “Indemnified
                Persons” means each of: (i) the Agent; (ii) agents of
                the Agent; (iii) affiliates of the Agent; and (iv) the
                directors, officers, shareholders, partners and employees of the
                Agent,
                agents of the Agent and affiliates of the
                Agent;

            


    

     

    
      	
              (x)  

            	
              “Intellectual
                Property Rights” means (i) any trademarks, trade mark
                registrations, trade mark applications, trade dress and logos, trade
                names, domain names,  business names, corporate names, website
                names and world wide web addresses, business names, brand names,
                service
                marks, computer software, computer programs, Copyrights, including
                any
                performing, author or moral rights, designs, integrated circuit
                topographies, inventions, Patents, franchises, formulae, processes,
                know-how, technology and related goodwill, (ii) any applications,
                registrations, issued Patents, continuations in part, divisional
                applications or analogous rights or licence rights therefor, (iii)
                proprietary and non-public business information, including inventions
                (whether patentable or not), invention disclosures, improvements,
                discoveries, trade secrets, know-how, methods, processes, schematics
                and
                any documentation relating thereto, and (iv) other intellectual or
                industrial property;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (y)  

            	
              "Liquidity
                Transaction" means any of:

            


    

     

    
      	
              (i)  

            	
              the
                Common Shares being listed on the TSX Venture Exchange, the Toronto
                Stock
                Exchange, or any other exchange (a "Recognized Exchange") acceptable
                to
                the Agent and the Corporation becoming a "reporting issuer" (as defined
                in
                applicable securities legislation) in at least one of the Canadian
                Selling
                Jurisdictions;

            


    

     

    
      	
              (ii)  

            	
              all
                of the issued and outstanding Common Shares having been sold, transferred
                or exchanged pursuant to an amalgamation, plan of arrangement or
                other
                business combination, for cash or securities ("Free Trading Securities")
                that are listed on a Recognized Exchange and that are not subject
                to any
                restricted period or hold period under applicable securities laws
                in
                Canada (other than in respect of resales by control
                persons);

            


    

     

    
      	
              (iii)  

            	
              the
                sale by the Corporation of all or substantially all of its assets
                for cash
                or Free Trading Securities and the subsequent distribution of all
                of such
                consideration to all of the Corporation's shareholders (including
                the
                Investors), on a pro-rata basis;

            


    

     

    
      	
              (iv)  

            	
              the
                acceptance of a takeover bid or an issuer bid, made to all holders
                of
                Common Shares for proceeds consisting of cash or Free Trading Securities,
                by holders of Common Shares: (A) who hold not less than 662/3% of
                the
                outstanding Common Shares; and (B) who hold not less than 662/3%
                of the
                outstanding Warrants; or

            


    

     

    
      	
              (v)  

            	
              any
                combination of the events or circumstances described in Subsections
                (i),
                (ii), (iii) or (iv) above;

            


    

     

    
      	
              (z)  

            	
              “Offering”
                means the offering of a minimum of 1,800,000 and a maximum of 4,000,000
                Units;

            


    

     

    
      	
              (aa)  

            	
              “Patents”
                shall mean all patent rights and all right, title and interest in
                and to
                all letters patent or equivalent rights and applications including
                any
                reissue, extension, division, continuation, or continuation in part
                applications throughout the world and any patents issuing with respect
                to
                such applications;

            


    

     

    
      	
              (bb)  

            	
              “Person”
                means a natural person, partnership, limited liability partnership,
                corporation, joint stock company, trust, unincorporated association,
                joint
                venture or other entity;

            


    

     

    
      	
              (cc)  

            	
               “Securities
                Commissions” means the securities commissions or similar
                regulatory authorities in the Selling Jurisdictions and the United
                States
                Securities and Exchange Commission and regulatory authorities in
                the
                individual states of the United
                States;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (dd)  

            	
              “Subscriber”
                means any person who subscribes for Units and whose Subscription
                Agreement
                is accepted by the Corporation, and “Subscribers” means,
                collectively, all such persons;

            


    

     

    
      	
              (ee)  

            	
              “Subscription
                Agreement” means a subscription agreement to be entered into
                between the Corporation and Subscribers including any amendments
                or
                addendums thereto;

            


    

     

    
      	
              (ff)  

            	
              “Subscription
                Proceeds” means the aggregate gross proceeds received in respect
                of the sale of Units pursuant to the
                Offering;

            


    

     

    
      	
              (gg)  

            	
              “Subsidiary”
                means a subsidiary of the Corporation within the meaning of subsection
                2(4) of the Business Corporations Act (Alberta) and
                “Subsidiaries” means all of
                them;

            


    

     

    
      	
              (hh)  

            	
              “Technology”
                shall mean any algorithms, computer software (in source code and
                object
                code form), documentation, data and data bases, inventions and discoveries
                (whether or not patented or patentable), ideas, concepts, techniques,
                know-how, processes, methods, applications, know-how, content, technical
                information, engineering, production and other designs, drawings,
                schematics, specifications, formulas and all other technology or
                information existing anywhere in the
                world;

            


    

     

    
      	
              (ii)  

            	
              “Third
                Party Intellectual Property Rights” shall mean the Intellectual
                Property Rights and Technology of Persons other than the Corporation
                that
                are used in or necessary to the business of the Corporation as presently
                conducted or as contemplated to be
                conducted;

            


    

     

    
      	
              (jj)  

            	
              "Underlying
                Securities" means the Common Shares and Warrants underlying the
                Units;

            


    

     

    
      	
              (kk)  

            	
              "Units"
                means units of the Corporation, each comprised of one Common Share
                and 0.2
                of a Warrant;

            


    

     

    
      	
              (ll)  

            	
              "Warrant"
                means a warrant entitling the holder thereof to acquire one Common
                Share
                of the Corporation for no additional consideration in the event that
                a
                Liquidity Transaction is not unconditionally completed by the Corporation
                on or prior to the date that is eight months following the Closing
                Date;
                and

            


    

     

    
      	
              (mm)  

            	
              "Warrant
                Indenture" means the indenture dated July 18, 2007 between the
                Corporation and Olympia Trust Company pursuant to which the Warrants
                will
                be issued.

            


    

     

    In
      this
      agreement, “misrepresentation”, “material
      change” and “material fact” shall have the meanings
      ascribed thereto under the Applicable Securities Laws of the Province of
      Alberta; “distribution” means “distribution”
or “distribution to the public”, as the case may be,
      as defined
      under the Applicable Securities Laws of the Province of Alberta; and
“distribute” has a corresponding meaning.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    In
      this
      agreement, “to the best of the knowledge, information and belief
      of” or “to the best of its knowledge, information and
      belief” means, unless otherwise expressly stated, a statement of the
      declarant's knowledge of the facts or circumstances to which such phrase
      related, after having made due and applicable inquiries and investigations
      in
      connection with such facts and circumstances; and “to the best of the
      knowledge, information and belief of the Corporation” or “to
      the best of the Corporation's knowledge, information and belief” means,
      unless otherwise expressly stated, a statement as to the best knowledge of
      each
      of the directors and senior officers of the Corporation about the facts or
      circumstances to which such phrase related, after having made due and applicable
      inquiries and investigations in connection with such facts and
      circumstances.

     

    
      	
              2.  

            	
              Corporation's
                Covenants as to Creation and
                Qualification

            


    

     

    The
      Corporation covenants and agrees:

     

    
      	
              (a)  

            	
              that
                the Units and Underlying Securities will be duly and validly created,
                authorized and issued pursuant to the terms of the Subscription
                Agreements;

            


    

     

    
      	
              (b)  

            	
              that
                the Corporation will: (i) promptly perform all the obligations to be
                performed by it hereunder and under the Subscription Agreements;
                and
                (ii) as soon as reasonably possible, and in any event by the Closing
                Date, execute or procure the execution of all documents and to use
                its
                best efforts to take or cause to be taken all steps as may be necessary
                or
                desirable to fulfill, to the satisfaction of Agent's counsel and
                Corporation's counsel, all legal requirements to enable the Units
                to be
                offered for sale and sold on a private placement basis in the Selling
                Jurisdictions through the Agent by way of the exemptions under Applicable
                Securities Laws of the Selling Jurisdictions as contemplated
                hereby;

            


    

     

    
      	
              (c)  

            	
              that,
                prior to the Closing Time, the Corporation shall allow the Agent
                the
                opportunity to conduct required due diligence, including, without
                limiting
                the generality of the foregoing, due diligence in relation to the
                operations and affairs of the Corporation and provide and cause to
                be
                provided to the Agent and the Agent's counsel reasonable access to
                the
                properties, senior management personnel, and corporate, financial,
                property and other records of the Corporation for the purposes of
                conducting such due diligence reviews.  Without limiting the
                scope of the due diligence inquiries the Agent may conduct, the
                Corporation shall make available its directors and senior management
                to
                answer any questions which the Agent may have and to participate
                in one or
                more due diligence sessions to be held prior to Closing (collectively,
                the
                “Due Diligence Sessions”);
                and

            


    

     

    
      	
              (d)  

            	
              that,
                for the purposes of the Convertible Promissory Notes, all references
                therein to "capital stock of the Company issued in the next financing"
                shall refer to Units.

            


    

     

    
      	
              3.  

            	
              Corporation's
                Covenants as to Changes

            


    

     

    The
      Corporation covenants and agrees that:

     

    
      	
              (a)  

            	
              during
                the period commencing with the date hereof and ending on the Closing
                Date,
                the Corporation will promptly inform the Agent of the full particulars
                of
                (i) any material adverse change, (actual, anticipated or threatened)
                in the assets, liabilities (absolute, accrued, contingent or otherwise),
                business, operations, capital or condition (financial or otherwise)
                of the
                Corporation; and (ii) the occurrence of a material fact or event
                which, in any such case is, or may be, of such a nature to render
                any
                previous disclosure to the Agent untrue, false or misleading in any
                material respect; provided that if there is any reasonable doubt
                as to
                whether a material change, occurrence or event of the nature referred
                to
                in this subsection has occurred, the Corporation shall promptly inform
                the
                Agent of the full particulars of the occurrence giving rise to the
                uncertainty and shall consult with the Agent as to whether the occurrence
                is of such nature;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)  

            	
              during
                the period commencing with the date hereof and ending thirty days
                after
                the Closing Date, the Corporation will promptly inform the Agent
                of the
                full particulars of:  (i) any material request or inquiry
                of any Securities Commission for any information relating to the
                Offering,
                the distribution of the Common Shares, or the Corporation (or any
                of its
                directors or officers); (ii) the issuance by any Securities
                Commission or other securities commissions or similar regulatory
                authority
                or by any other competent authority of any order to cease or suspend
                trading or issuance of any securities of the Corporation or of the
                institution or threat of institution of any proceedings for that
                purpose
                and (iii) the receipt by the Corporation of any communication from
                any
                Securities Commission or any other securities commission, securities
                regulatory authority, stock exchange or other regulatory authority
                relating to the Offering; and

            


    

     

    
      	
              (c)  

            	
              during
                the period commencing on the date hereof and ending thirty days following
                the Closing Date, the Corporation will promptly provide to the Agent,
                for
                review by the Agent and the Agent's counsel, prior to filing, delivery
                or
                issuance:  (i) any proposed document to be delivered to the
                shareholders of the Corporation; and (ii) any press release relating
                to the Corporation or the Offering.

            


    

     

    
      	
              4.  

            	
              Corporation's
                Other Covenants

            


    

     

    The
      Corporation covenants and agrees:

     

    
      	
              (a)  

            	
              to
                use commercially reasonable efforts to complete a Liquidity Transaction
                on
                or prior to the date that is eight months following the Closing
                Date;

            


    

     

    
      	
              (b)  

            	
              to
                use commercially reasonable efforts to cause and allow the conversion
                of
                the Convertible Debentures into Common Shares at a conversion price
                of one
                Common Share for every $2.50 of principal and accrued interest on
                or prior
                to the date that is sixty days following the Closing
                Date;

            


    

     

    
      	
              (c)  

            	
              that,
                from the date hereof and ending on the date that is 90 days following
                the
                Closing Date, it will not offer, or announce the offering of, or
                make or
                announce any agreement to issue, sell, or exchange Common Shares,
                debt
                instruments, preferred shares or securities convertible or exchangeable
                into Common Shares without the prior consent of the Agent, not to
                be
                unreasonably withheld, provided that notwithstanding the foregoing,
                the
                Corporation may: (i) issue Common Shares on exercise of existing
                options
                and warrants outstanding on the date hereof and on conversion of
                outstanding Convertible Debentures, Convertible Promissory Notes
                and
                Convertible Promissory Note Warrants and may grant stock options
                and issue
                Common Shares on the exercise thereof in accordance with the Corporation’s
                existing option incentive programs, without such consent; and (ii)
                issue
                Common Shares in connection with a merger or acquisition without
                such
                consent. Nothwithstanding the foregoing, the Agent hereby grants
                its
                consent to the issue and sale of Units on the same terms and conditions
                as
                the Units issued pursuant to the Offering, up to a maximum of 800,000
                Units, for a period ending on the date that is sixty (60) days following
                the Closing Date pursuant to subscriptions secured by Jennings Capital
                Inc., as sub-agent to the Offering;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (d)  

            	
              that,
                in the event that the Corporation proposes to retain, in Canada,
                an agent,
                underwriter or financial advisor in respect of a merger, acquisition,
                disposition, take-over, reorganization, arrangement or other corporate
                transaction or the public offering or private placement of any securities
                of the Corporation on an agency or underwritten basis at any time
                prior to
                the date that is twelve months following the Closing Date (the
                "ROFR Expiry Date"), the Agent shall have the right to
                participate as lead agent, lead underwriter or financial advisor,
                as the
                case may be, in respect of such transaction or financing on the proposed
                terms.  If the Corporation proposes to effect any such
                transaction on or before the ROFR Expiry Date, it shall provide the
                Agent
                with written notice thereof setting forth the proposed terms thereof
                and
                the proposed terms of engagement of the Agent, including the proposed
                compensation of the Agent, and the Agent shall have three business
                days
                following the receipt of such notice during which to notify the
                Corporation of its election to accept the position of lead agent,
                lead
                underwriter, or financial advisor, as the case may be, on the terms
                presented.  If the Agent elects to exercise such right in
                connection with the transaction proposed to be undertaken, the Corporation
                will retain the Agent as lead agent, lead underwriter, or financial
                advisor, as the case may be.  If  the Agent elects not
                to exercise such right or the Corporation and the Agent are unable
                to
                agree to the terms of a proposed engagement within such three business
                day
                period, the Corporation may proceed to engage another lead agent,
                lead
                underwriter, or financial advisor, as the case may be, for purposes
                of
                such proposed transaction, provided that in the case where the Corporation
                and the Agent are unable to agree on the terms of the proposed engagement,
                the terms are no more favourable than those offered to the
                Agent.

            


    

     

    
      	
              5.  

            	
              Agent's
                Covenants

            


    

     

    The
      Agent
      covenants and agrees with the Corporation that it will:

     

    
      	
              (a)  

            	
              conduct
                activities in connection with the proposed offer and sale of the
                Units in
                compliance with all Applicable Securities Laws in the Selling
                Jurisdictions;

            


    

     

    
      	
              (b)  

            	
              not
                solicit subscriptions for Units, trade in Units or Underlying Securities
                or otherwise do any act in furtherance of a trade of Units or Underlying
                Securities outside of the Selling Jurisdictions, except in compliance
                with
                the applicable laws thereof in accordance with the terms and conditions
                of
                this Agreement and upon obtaining the prior written consent of the
                Corporation, not to be unreasonably
                withheld;

            


    

     

    
      	
              (c)  

            	
              obtain
                from each Subscriber an executed Subscription Agreement and all applicable
                undertakings, questionnaires and other forms required under Applicable
                Securities Laws and supplied to the Agent by the Corporation for
                completion in connection with the distribution of the Units;
                and

            


    

     

    
      	
              (d)  

            	
              not
                advertise the proposed offering or sale of the Common Shares in printed
                media of general and regular paid circulation, radio or
                television.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              6.  

            	
              Representations
                and Warranties of the
                Corporation

            


    

     

    The
      Corporation represents and warrants to the Agent, and acknowledges that the
      Agent is relying upon such representations and warranties, that:

     

    
      	
              (a)  

            	
              the
                Corporation and each of its Subsidiaries has been duly incorporated
                and is
                valid and subsisting under the laws of its jurisdiction of incorporation
                and has all requisite corporate authority and power to carry on its
                business, as now conducted and as presently proposed to be conducted
                by
                it, and to own, lease and operate its assets and
                properties;

            


    

     

    
      	
              (b)  

            	
              the
                Corporation and each of its Subsidiaries is qualified to carry on
                business
                and is validly existing under the laws of each jurisdiction in which
                it
                carries on a material portion of its
                business;

            


    

     

    
      	
              (c)  

            	
              other
                than 2WG Media, Inc., Roveractive Ltd. and Red Mile
                Entertainment, Pty, the Corporation has no
                Subsidiaries and the Corporation is not affiliated with nor is it
                a
                holding corporation of any other body
                corporate;

            


    

     

    
      	
              (d)  

            	
              the
                Corporation owns all of the outstanding securities of 2WG Media,
                Inc.,
                Roveractive Ltd. and Red Mile Entertainment, Pty, and Red Mile
                Entertainment, Pty does not carry on any active
                business;

            


    

     

    
      	
              (e)  

            	
              the
                Corporation and each of its Subsidiaries has conducted and is conducting
                its business in compliance in all material respects with all applicable
                laws, rules and regulations and, in particular, all applicable licensing
                and environmental legislation, regulations or by-laws or other lawful
                requirements of any governmental or regulatory bodies applicable
                to it in
                each jurisdiction in which it carries on business, and the Corporation
                and
                each of its Subsidiaries holds all material licences, registrations
                and
                qualifications in all jurisdictions in which it carries on its business
                which are necessary or desirable to carry on the business as now
                conducted
                and as presently proposed to be conducted, and all such licenses,
                registrations or qualifications are valid and existing and in good
                standing and none of such licenses, registrations or qualifications
                contains any burdensome term, provision, condition or limitation
                which has
                or is likely to have any material adverse effect on the business
                of the
                Corporation and its Subsidiaries (taken as a whole) as now conducted
                or as
                proposed to be conducted;

            


    

     

    
      	
              (f)  

            	
              the
                Corporation has full corporate power and authority to enter into
                this
                Agreement , the Indenture and the Subscription Agreements and to
                perform
                its obligations set out herein and therein (including, without limitation,
                to cause the issuance of the Units, the Underlying Securities, the
                Agent's
                Warrants and the Common Shares issuable on exercise of the Warrants
                and
                Agent's Warrants), and this Agreement has been, and the Subscription
                Agreements and the Warrant Indenture will on the Closing Date be,
                duly
                authorized, executed and delivered by the Corporation and this Agreement
                is, and the Subscription Agreements and the Warrant Indenture will
                on the
                Closing Date be, legal, valid and binding obligations of the Corporation,
                enforceable against the Corporation in accordance with their respective
                terms subject to applicable bankruptcy, insolvency, moratorium,
                reorganization and other laws and equitable principles affecting
                creditors' rights generally, the statutory and equitable powers of
                the
                courts in Canada and the United States to stay proceedings before
                them and
                the execution of judgments and the fact that specific performance
                and
                injunctive relief are equitable remedies which may be ordered by
                a court
                in its discretion and, accordingly, may not be available as a remedy
                in an
                action to enforce a covenant and subject to the fact that the rights
                to
                indemnity, contribution and waiver set forth herein may be limited
                by
                applicable laws or the public policy underlying such
                laws;;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (g)  

            	
              the
                Common Shares and Warrants comprising the Units have been reserved
                and
                allotted for issuance and when issued on the Closing Date the Common
                Shares issued pursuant to the Offering will be validly issued, fully
                paid
                and non-assessable Common Shares;

            


    

     

    
      	
              (h)  

            	
              the
                Common Shares issuable on exercise of the Warrants and Agent's Warrants
                have been reserved for issuance and, upon exercise of the Warrants
                or
                Agent's Warrants, as the case may be, will be validly issued, fully
                paid
                and non-assessable Common Shares;

            


    

     

    
      	
              (i)  

            	
              the
                definitive forms of certificates representing the Common Shares are
                in due
                and proper form under the laws governing the
                Corporation;

            


    

     

    
      	
              (j)  

            	
              the
                authorized capital of the Corporation consists solely of 100,000,000
                Common Shares and 20,000,000 Preferred Shares of which, as at the
                Closing
                Date (prior to the issuance of Common Shares on the Closing Date),
                9,661,810 Common Shares and nil Preferred Shares shall be issued
                and
                outstanding, which shares shall be validly issued, fully paid and
                non-assessable;

            


    

     

    
      	
              (k)  

            	
              neither
                the Corporation nor its Subsidiaries is a party to or bound by any
                agreement of guarantee, indemnification (other than an indemnification
                of
                directors and officers in accordance with the by-laws of the Corporation
                or its Subsidiaries and applicable laws, indemnities in favour of
                the
                Agent pursuant to this Agreement, indemnities in favour of purchasers
                of
                securities or assets in purchase and sale agreements and indemnities
                and
                guarantees in favour of the bankers of the Corporation, including
                the
                Agent) or any other like commitment of the obligations, liabilities
                (contingent or otherwise) of indebtedness of any other
                person;

            


    

     

    
      	
              (l)  

            	
              other
                than this Agreement and the agreements set forth in Schedule 6(l) hereto, there are no material contracts
                or
                agreements which have or which might have or create any material
                obligation to the Corporation or from which they derive or could
                derive
                any material benefit or which are required by the Corporation to
                carry on
                its business as now conducted by it or as is now proposed to be carried
                on
                by it.  For the purposes of this representation and warranty,
                contracts shall be deemed to give rise to a material obligation where
                such
                contract provides for expenditures by the Corporation for an aggregate
                of
                more than $100,000 during any 12 month
                period;

            


    

     

    
      	
              (m)  

            	
              other
                than promissory notes owing to one of the Corporation's directors
                having
                an aggregate principal amount of $100,000, the Corporation has no
                loans or
                other indebtedness outstanding which have been made to or from any
                of its
                shareholders, officers, directors or employees or any other person
                not
                dealing at arm's length with the
                Corporation;

            


    

     

    
      	
              (n)  

            	
              except
                for transactions contemplated herein and except as otherwise disclosed
                in
                the Documents, the Corporation has not entered into any transaction
                which
                is or may reasonably be expected to be material to the Corporation
                and
                which is not in the ordinary course of
                business;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (o)  

            	
              the
                Corporation is not in default or breach of, and the execution and
                delivery
                of, and the performance of and compliance with the terms of, this
                Agreement and the Subscription Agreements by the Corporation or any
                of the
                transactions contemplated hereby or thereby, does not and will not
                result
                in any breach of, or constitute a default under, and does not and
                will not
                create a state of facts which, after notice or lapse of time or both,
                would result in a breach of or constitute a default under, any term
                or
                provision of the articles, by-laws or resolutions of shareholders
                or
                directors of the Corporation, or any indenture, mortgage, note, contract,
                agreement (written or oral), instrument, lease or other document
                to which
                the Corporation is a party or by which it is bound, or any judgment,
                decree, order, statute, rule or regulation applicable to the Corporation,
                which default or breach might reasonably be expected to materially
                adversely affect the business, operations, capital or condition (financial
                or otherwise) of the Corporation, or its
                assets;

            


    

     

    
      	
              (p)  

            	
              the
                Corporation has provided to the Agent true and correct copies of
                the
                constating documents of the Corporation and minutes of all meetings
                and
                all the resolutions of the directors, shareholders and committees
                of the
                Corporation;

            


    

     

    
      	
              (q)  

            	
              there
                has not been any material adverse change in the consolidated capital,
                assets, or liabilities (absolute, accrued, contingent or otherwise)
                of the
                Corporation from the position set forth in the Financial
                Statements;

            


    

     

    
      	
              (r)  

            	
              the
                books of account and other records of the Corporation, whether of
                a
                financial or accounting nature or otherwise, have been maintained
                in all
                material respects in accordance with prudent business
                practices;

            


    

     

    
      	
              (s)  

            	
              there
                has not been any material adverse change in the business, operations,
                capital or condition (financial or otherwise) or results of the operations
                of the Corporation since the date of the Financial Statements that
                has not
                been disclosed in the Documents and since that date there have been
                no
                material facts, transactions, events or occurrences which, to the
                knowledge of the Corporation could materially adversely affect the
                consolidated capital, assets, liabilities (absolute, accrued, contingent
                or otherwise), business, operations or condition (financial or otherwise)
                or results of the operations of the
                Corporation;

            


    

     

    
      	
              (t)  

            	
              the
                Financial Statements fairly present, in all material respects and
                in
                accordance with generally accepted accounting principles in the United
                States consistently applied, the financial position and condition
                of the
                Corporation as at the dates thereof and reflect all liabilities (absolute,
                accrued, contingent or otherwise) of the Corporation as at the dates
                thereof;

            


    

     

    
      	
              (u)  

            	
              to
                the knowledge of the Corporation, after due inquiry, there have not
                occurred any material spills, emissions or pollution on any property
                of
                the Corporation or for which the Corporation may be responsible,
                nor is
                the Corporation the subject of any outstanding stop orders, control
                orders, clean-up orders or reclamation orders under applicable
                environmental laws and regulations;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (v)  

            	
              to
                the best of the knowledge of the Corporation, no other party is in
                default
                in the observance or performance of any term or obligation to be
                performed
                by it under any contract to which the Corporation is a party or by
                which
                they are bound which is material to the business of the Corporation,
                no
                event has occurred which with notice or lapse of time or both would
                directly or indirectly constitute such a default, in any such case
                which
                default or event would reasonably be expected to have a material
                adverse
                effect on the assets or properties, business, results of operations,
                prospects or condition (financial or otherwise) of the
                Corporation;

            


    

     

    
      	
              (w)  

            	
              there
                are no judgments against the Corporation which are unsatisfied, nor
                are
                there any consent decrees or injunctions to which the Corporation
                is
                subject;

            


    

     

    
      	
              (x)  

            	
              the
                information and statements set forth in the Documents as at the date
                hereof, as they relate to the Corporation, are true, correct, and
                complete
                and did not contain any misrepresentation as of the respective dates
                of
                such information or statements, and no material change (as defined
                in
                Applicable Securities Laws of the Selling Jurisdictions) has occurred
                in
                relation to such information and statements since the respective
                dates of
                such information and statements;

            


    

     

    
      	
              (y)  

            	
              other
                than the securities issued or to be issued pursuant to the Offering,
                no
                person, firm, corporation or other entity holds any securities convertible
                or exchangeable into shares of the Corporation or now has any agreement,
                warrant, option, right or privilege (whether contractual or pre-emptive)
                being or capable of becoming an agreement, warrant, option or right
                for
                the purchase or other acquisition of any unissued shares, securities
                (including convertible securities) or warrants of the Corporation
                except
                for outstanding warrants, options, Convertible Debentures, Convertible
                Promissory Notes and Convertible Promissory Note Warrants to purchase
                an
                aggregate of not more than 6,353,305 Common
                Shares;

            


    

     

    
      	
              (z)  

            	
              the
                Corporation has duly and on a timely basis filed all tax returns
                required
                to be filed by it, has paid all taxes due and payable by it and has
                paid
                all assessments and re-assessments and all other taxes, governmental
                charges, penalties, interest and other fines due and payable by it
                and
                which are claimed by any governmental authority to be due and owing
                and
                adequate provision has been made for taxes payable for any completed
                fiscal period for which tax returns are not yet required and there
                are no
                agreements, waivers, or other arrangements providing for an extension
                of
                time with respect to the filing of any tax return or payment of any
                tax,
                governmental charge or deficiency by the Corporation and, to the
                best of
                the Corporation's knowledge, information and belief, after due inquiry,
                there are no actions, suits, proceedings, investigations or claims
                threatened or pending against the Corporation in respect of taxes,
                governmental charges or assessments or any matters under discussion
                with
                any governmental authority relating to taxes, governmental charges
                or
                assessments asserted by any such
                authority;

            


    

     

    
      	
              (aa)  

            	
              except
                as disclosed in the Financial Statements (i) the Corporation has no
                outstanding liabilities in excess of $10,000 other than those set
                forth in
                Schedule 6(aa), and (ii) there are no
                actions, suits, proceedings or inquiries in existence or, to the
                Corporation's knowledge, after due inquiry, pending or threatened
                against
                or affecting the Corporation at law or in equity or before or by
                any
                federal, provincial, state, municipal or other governmental department,
                commission, board, bureau, agency or instrumentality which in any
                way
                materially adversely affects, or could reasonably be expected in
                any way
                to materially adversely affect, the business, operations, capital
                or
                condition (financial or otherwise) of the Corporation, or any of
                its
                assets or which affects or may affect the distribution of the Units
                or
                Underlying Securities and the Corporation is not aware of any existing
                ground on which such action, suit, proceeding or inquiry might be
                commenced with any reasonable likelihood of
                success;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (bb)  

            	
              other
                than the Agent, there is no person, firm or corporation acting or
                purporting to act for the Corporation entitled to any brokerage or
                finder's fee or other fee or commission in connection with the Offering,
                this Agreement or any of the transactions contemplated
                hereby;

            


    

     

    
      	
              (cc)  

            	
              no
                Securities Commission or any other securities commission or similar
                regulatory authority has issued any order which is currently outstanding
                ceasing, halting, suspending or preventing other trading in any securities
                of the Corporation, no such proceeding is, to the knowledge of the
                Corporation, pending, contemplated or threatened, the Corporation
                is not
                in default of any requirement of Applicable Securities Laws and the
                Corporation is entitled to avail itself of the applicable prospectus
                exemptions available under the Applicable Securities Laws in respect
                of
                the trades in its securities to Subscribers as contemplated by this
                Agreement;

            


    

     

    
      	
              (dd)  

            	
              the
                Corporation is not a “reporting issuer” or the equivalent in any
                jurisdiction in Canada;

            


    

     

    
      	
              (ee)  

            	
              the
                Common Shares are listed and posted for trading on the Over-the-Counter
                Bulletin Board;

            


    

     

    
      	
              (ff)  

            	
              to
                the knowledge of the Corporation, other than as previously disclosed
                to
                the Agent in writing, no insider of the Corporation has any present
                intention to sell any securities of the
                Corporation;

            


    

     

    
      	
              (gg)  

            	
              except
                as have been provided to the Agent as at the date hereof, the Corporation
                is not a party to any contracts of employment which may not be terminated
                on one month's notice or which provide for payments occurring on
                a change
                of control of the Corporation;

            


    

     

    
      	
              (hh)  

            	
              other
                than leases of the Corporation with respect to its office premises,
                the
                Corporation does not own or lease nor has it agreed to acquire or
                lease,
                any interest in real property;

            


    

     

    
      	
              (ii)  

            	
              to
                the knowledge of the Corporation, no officer, director or securityholder
                of the Corporation is subject to any limitations or restrictions
                on their
                activities or investments, including any non-competition provisions,
                that
                would in any way restrict or limit their involvement with the Corporation
                or the business and affairs of the
                Corporation;

            


    

     

    
      	
              (jj)  

            	
              all
                filings by the Corporation pursuant to which the Corporation has
                received
                or is entitled to receive government incentives, have been made in
                accordance, in all material respects, with all applicable legislation
                and
                contain no misrepresentations of material fact or omit to state any
                material fact which could cause any amount previously paid to the
                Corporation or previously accrued on the accounts thereof to be recovered
                or disallowed;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (kk)  

            	
              to
                its knowledge, neither the Corporation nor any of its shareholders
                is a
                party to any unanimous shareholders agreement, pooling agreement,
                voting
                trust or other similar type of arrangements in respect of outstanding
                securities of the Corporation;

            


    

     

    
      	
              (ll)  

            	
              the
                representations and warranties made by the Corporation in the Subscription
                Agreements are, or will at the Closing Date be, true and correct
                as of the
                date at which they are made;

            


    

     

    
      	
              (mm)  

            	
              the
                Corporation either exclusively owns or has the valid right to use
                all
                Corporation Intellectual Property Rights, Corporation Technology
                and all
                Third Party Intellectual Property Rights (and, to the knowledge of
                the
                Corporation, no third party, including any past or present employee
                or
                contractor of the Corporation, owns or has any ownership interest
                in any
                Corporation Intellectual Property Rights or Corporation Technology
                that
                are not Third Party Intellectual Property Rights of the
                Corporation);

            


    

     

    
      	
              (nn)  

            	
              to
                the knowledge of the Corporation, neither the Corporation Intellectual
                Property Rights nor the conduct of the business of the Corporation
                as
                presently conducted or reasonably currently contemplated to be conducted
                uses or discloses in an unauthorized manner, infringes, or constitutes
                a
                misappropriation of any Intellectual Property Right or Technology
                of any
                Person;

            


    

     

    
      	
              (oo)  

            	
              to
                the knowledge of the Corporation, none of the Corporation Intellectual
                Property Rights or Corporation Technology are the subject of any
                interference, re-examination, cancellation, or opposition proceeding,
                or
                any currently pending or to the knowledge of the Corporation threatened,
                suit, action, or proceeding arising out of an alleged right of any
                Person
                with respect to any Intellectual Property Right or
                Technology;

            


    

     

    
      	
              (pp)  

            	
              the
                Corporation Intellectual Property Rights are in full force and effect
                and
                have not been used or enforced or failed to be used or enforced in
                a
                manner that would result in the abandonment, cancellation or
                unenforceability of any of the Corporation Intellectual Property
                Rights.
                All registrations and filings necessary to preserve the rights of
                the
                Corporation in and to the Corporation Intellectual Property Rights
                have
                been made;

            


    

     

    
      	
              (qq)  

            	
              the
                Corporation has not received any oral, written, or other communication
                that the Corporation is using or disclosing in an unauthorized manner,
                infringing, or misappropriating the alleged right of any Person with
                respect to any Intellectual Property Right, other than as set forth
                in
                Schedule 6(qq);

            


    

     

    
      	
              (rr)  

            	
              to
                the knowledge of the Corporation, there is
                no:

            


    

     

    
      	
              (i)  

            	
              claim
                of adverse ownership or invalidity or other opposition to or conflict
                with
                any of the Corporation Intellectual Property Rights or Corporation
                Technology nor of any pending or threatened suit, proceeding, claim,
                demand, action or investigation of any nature or kind against the
                Corporation relating to the Corporation Intellectual Property Rights
                or
                Corporation Technology; or

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (ii)  

            	
              claim
                that any products manufactured, produced, used or sold by the Corporation
                or any process, method, packaging, advertising, or material that
                the
                Corporation employs in the manufacture, marketing, or sale of any
                such
                product, or the use of any of the Corporation Intellectual Property
                Rights
                or Corporation Technology breaches, violates, infringes or interferes
                with
                any rights of any Person or requires payment for the use of any
                Intellectual Property Right, know-how or Technology of another
                Person;

            


    

     

    
      	
              (ss)  

            	
              other
                than as set forth in Schedule 6(ss), none of
                the Corporation Intellectual Property Rights or Corporation Technology
                are
                subject to any proceeding that restricts in any manner the use, transfer
                or licensing thereof by the Corporation or that may affect the validity,
                use or enforceability of the Corporation Intellectual Property Rights
                or
                Corporation Technology; provided that nothing herein applies to the
                prosecution (except for any interference or opposition proceeding)
                of any
                Corporation Intellectual Property Rights in the U.S. Patent and Trademark
                Office or any other government office;
                and

            


    

     

    
      	
              (tt)  

            	
              the
                Corporation has maintained and continues to maintain a system to
                safeguard
                and maintain the secrecy and confidentiality of and its proprietary
                rights
                in all of the material Corporation Intellectual Property Rights and
                Corporation Technology not otherwise protected by patents, patent
                applications, or copyright or trademark law.  Without limitation
                on the generality of the foregoing, (i) any disclosures to third
                parties of trade secrets that are material to the operation of the
                Corporation business have been pursuant to executed written
                confidentiality agreements, (ii) the Corporation has obtained
                confidentiality and inventions assignment agreements, in one or more
                forms, that have protections and conditions, from all of the past
                and
                present employees and independent contractors of the Corporation
                involved
                in the creation or development of the Corporation Intellectual Property
                Rights and Corporation Technology that are material to the operation
                of
                the business of the Corporation, (iii) to the knowledge of the
                Corporation, there has been no breach or violation of any secrecy
                or
                confidentiality commitments of any person in respect of any material
                confidential information of the Corporation, and (iv) the measures
                taken by the Corporation to protect the proprietary and non-public
                aspects
                of the Corporation’s processes and methodology are reasonably designed to
                adequately prevent third parties from using any such aspects of such
                products, without the approval of the Corporation.  No Person
                who has performed services related to the Corporation business has
                any
                right, title or interest in any Corporation Intellectual Property
                Rights
                or Corporation Technology.

            


    

     

    
      	
              (uu)  

            	
              the
                Subscription Proceeds will be used to fund marketing efforts and
                final
                development expenditures for Jackass, the GameTM, game development for
                Heroes over EuropeTM, initial game development for Sin CityTM and for
                general corporate purposes, including ongoing working capital requirements
                as determined by management and the Corporation’s board of
                directors.

            


    

     

    
      	
              7.  

            	
              Conditions

            


    

     

    The
      obligations of the Agent hereunder shall be conditional upon the Agent
      receiving, and the Agent shall have the right on the Closing Date on behalf
      of
      Subscribers to withdraw all Subscription Agreements delivered and not previously
      withdrawn, unless the Agent receives, on or prior to the Closing
      Date:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)  

            	
              legal
                opinions of the Corporation's counsel addressed to the Agent, the
                Agent's
                counsel and the Subscribers in form and substance reasonably satisfactory
                to the Agent, with respect to such matters as the Agent may reasonably
                request relating to the offering, issuance and sale of the Units,
                including, without limitation, that as at the Closing
                Date:

            


    

     

    
      	
              (i)  

            	
              the
                Corporation and each of its Subsidiaries is valid and subsisting
                under the
                laws of its jurisdiction of incorporation and has all requisite corporate
                power and authority to carry on its business as now conducted by
                it and to
                own its assets and is qualified to carry on business under the laws
                of
                each jurisdiction in which it carries on a material portion of its
                business;

            


    

     

    
      	
              (ii)  

            	
              the
                Corporation has full corporate power and authority to enter into
                this
                Agreement and the Subscription Agreements and to perform its obligations
                set out herein and therein, and this Agreement has been and the
                Subscription Agreements will, on the Closing Date, be duly authorized,
                executed and delivered by the Corporation and constitute legal, valid
                and
                binding obligations of the Corporation enforceable against the Corporation
                in accordance with their respective terms, subject to applicable
                bankruptcy, insolvency, moratorium, reorganization and other laws
                and
                equitable principles affecting creditors' rights generally, the statutory
                and equitable powers of the courts in Canada or the United States
                to stay
                proceedings before them and the execution of judgments and the fact
                that
                specific performance and injunctive relief are equitable remedies
                which
                may be ordered by a court in its discretion and, accordingly, may
                not be
                available as a remedy in an action to enforce a covenant and subject
                to
                the fact that the rights to indemnity, contribution and waiver set
                forth
                herein may be limited by applicable laws or the public policy underlying
                such laws;

            


    

     

    
      	
              (iii)  

            	
              the
                execution and delivery of this Agreement and the Subscription Agreements
                and the fulfillment of the terms hereof or thereof by the Corporation
                and
                the performance of and compliance with the terms of this Agreement
                and the
                Subscription Agreements by the Corporation do not and will not result
                in a
                breach of, or constitute a default under, and do not and will not
                create a
                state of facts which, after notice or lapse of time or both, will
                result
                in a breach of or constitute a default
                under:

            


    

     

    
      	
              A.  

            	
              any
                applicable federal laws of the United States applicable to the
                Corporation;

            


    

     

    
      	
              B.  

            	
              any
                term or provision of the articles, by-laws or resolutions of the
                directors
                or shareholders of the Corporation;

            


    

     

    
      	
              C.  

            	
              of
                which the Corporation's counsel is aware, any of the terms or provisions
                of any mortgage, note, indenture, contract, agreement (written or
                oral),
                instrument, lease or other document to which the Corporation is a
                party or
                by which it is bound on the Closing Date;
                or

            


    

     

    
      	
              D.  

            	
              of
                which Corporation’s counsel is aware, any judgment, decree or order
                applicable to the Corporation, which
                default or breach might reasonably be expected to materially adversely
                affect the business, operations, capital or condition (financial
                or
                otherwise) of the Corporation or its properties or
                assets.

            


    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (iv)  

            	
              the
                form and terms of the certificates representing the Common
                Shares  have been approved and adopted by the board of directors
                of the Corporation and confirm with applicable law and the constating
                documents of the Corporation;

            


    

     

    
      	
              (v)  

            	
              the
                Common Shares and Warrants comprising the Units have been reserved
                and
                allotted for issuance and, when issued in accordance with the terms
                of the
                Subscription Agreements, the Common Shares issued pursuant to the
                Offering
                will be validly issued, fully paid and non-assessable Common Shares
                of the
                Corporation;

            


    

     

    
      	
              (vi)  

            	
              the
                Common Shares to be issued upon exercise of the Warrants and Agent's
                Warrants have been reserved and allotted for issuance and, when issued
                upon exercise of the Warrants or Agent's Warrants, as the case may
                be,
                will be validly issued as fully paid and non-assessable Common Shares
                of
                the Corporation;

            


    

     

    
      	
              (vii)  

            	
              all
                Applicable Securities Laws of the Selling Jurisdictions and the United
                States of America in connection with the creation, offering, issuance
                and
                sale of the Units, Underlying Securities and Agent's Warrants have
                been
                complied with by the Corporation assuming distribution by the Agent
                in
                compliance with the relevant provisions of such Applicable Securities
                Laws;

            


    

     

    and
      additionally relating to:

     

    
      	
              (i)  

            	
              the
                distribution of the Common Shares issuable on exercise of the Warrants
                and
                the Agent's Warrants; and

            


    

     

    
      	
              (ii)  

            	
              the
                first trade in Canada of the Common Shares and Warrants and the Common
                Shares issuable on exercise of the Warrants and Agent's
                Warrants;

            


    

     

    and
      as to
      all other legal matters, in any way connected with the Offering and issuance,
      sale and delivery of the Units as the Agent may reasonably request.

     

    It
      is
      understood that the Corporation's counsel may rely on the opinions of local
      counsel acceptable to it as to matters governed by the laws of jurisdictions
      other than the jurisdiction of residence of such counsel and on certificates
      of
      officers of the Corporation and public officials as to relevant matters of
      fact.

     

    
      	
              (b)  

            	
              a
                certificate of the Corporation dated the Closing Date, addressed
                to the
                Agent and signed on the Corporation's behalf by its President or
                such
                other officer or director of the Corporation satisfactory to the
                Agent,
                acting reasonably, certifying that:

            


    

     

    
      	
              (i)  

            	
              the
                Corporation has complied with and satisfied in all material respects
                all
                covenants and conditions of this Agreement on its part to be complied
                with
                or satisfied at or prior to the Closing Time except to the extent
                same
                have been waived by the Agent;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (ii)  

            	
              the
                representations and warranties of the Corporation set forth in this
                Agreement and, where applicable, in the Subscription Agreements are
                true
                and correct in all material respects at the Closing Time, as if made
                at
                such time;

            


    

     

    
      	
              (iii)  

            	
              no
                event of a nature referred to in subsection 12(b)(i), (iii), (vi) or (ix) has occurred since
                the date of this Agreement or to the knowledge of such officer is
                pending,
                contemplated or threatened;

            


    

     

    
      	
              (iv)  

            	
              the
                Corporation has made and/or obtained, at or prior to the Closing
                Time, all
                necessary filings, approvals, consents and acceptances under Applicable
                Securities Laws, and under any applicable agreement or document to
                which
                the Corporation is a party or by which it is bound in respect of
                the
                execution and delivery of this Agreement and the offering and sale
                of the
                Units and the consummation of the transactions contemplated hereby;
                and

            


    

     

    
      	
              (v)  

            	
              no
                order suspending the sale or ceasing the trading of Common Shares
                has been
                issued and no proceedings for that purpose have been instituted or
                are
                pending or to the knowledge of such officer are threatened under
                Applicable Securities Laws;

            


    

     

    
      	
              (c)  

            	
              definitive
                certificates for the Common Shares and Warrants comprising the Units
                subscribed for pursuant to the Offering, registered in such name
                or names
                as the Agent shall notify the Corporation in writing not less than
                48 hours prior to the Closing Time, provided such certificates
                registered in such names may, subject to receipt by the Corporation,
                be
                delivered in advance of the Closing Date to the Agent or such other
                parties in such locations as the Agent may direct and the Agent and
                the
                Corporation may agree upon;

            


    

     

    
      	
              (d)  

            	
              definitive
                certificates for the Common Shares, Warrants and Convertible Promissory
                Note Warrants issuable on conversion of the Convertible Promissory
                Notes
                held by persons with accounts established with the Agent, registered
                in
                such name or names as the Agent shall notify the Corporation in writing
                not less than 48 hours prior to the Closing
                Time;

            


    

     

    
      	
              (e)  

            	
              definitive
                certificates for the Agent's Warrants issuable hereunder registered
                in
                such name or names as the Agent shall notify the Corporation in writing
                not less than 48 hours prior to the Closing
                Time;

            


    

     

    
      	
              (f)  

            	
              executed
                copies of the Subscription Agreements in form and substance reasonably
                satisfactory to the Agent and the Agent's
                counsel;

            


    

     

    
      	
              (g)  

            	
              payment
                of all commissions payable by the Corporation to the Agent pursuant
                to
                section 8 and all expenses payable by the Corporation pursuant to
                section 9; and

            


    

     

    
      	
              (h)  

            	
              such
                other matters as may be reasonably requested by the
                Agent.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      foregoing conditions are for the sole benefit of the Agent and may be waived
      in
      whole or in  part by the Agent at any time and without limitation, and
      the Agent shall have the right, if any of the foregoing conditions are not
      met,
      on behalf of potential Subscribers, to withdraw all Subscription Agreements
      delivered and not previously accepted by the Corporation or withdrawn or
      rescinded by such persons.  If any of the foregoing conditions are not
      met on or before the Closing Date, the Agent may terminate its obligations
      under
      this Agreement without prejudice to any other remedies it may have.

     

    
      	
              8.  

            	
              Agent’s
                Commission

            


    

     

    In
      consideration for the services performed by the Agent hereunder, the Corporation
      agrees to, at the Closing Time:

     

    
      	
              (a)  

            	
              pay
                to the Agent a commission equal to 6.0% of the gross proceeds raised
                from
                the sale of the Units plus 6% of the principal amount of the Convertible
                Promissory Notes held by persons with accounts established with the
                Agent;
                and

            


    

     

    
      	
              (b)  

            	
              issue
                to the Agent and/or its nominees an aggregate number of Agent's Warrants
                equal to 8% of the aggregate of (i) the number of Units issued pursuant
                to
                the Offering and (ii) the number of Common Shares issuable pursuant
                to the
                Convertible Promissory Notes held by persons with accounts established
                with the Agent, which Agent's Warrants shall be substantially in
                the form
                set forth in Schedule 1(b) hereto.

            


    

     

    
      	
              9.  

            	
              Expenses

            


    

     

    Whether
      or not the transactions contemplated herein shall be completed, the Corporation
      agrees to pay all reasonable costs and expenses of or incidental to the
      Offering, including, without limitation, all reasonable costs and expenses
      related to the preparation, filing and reproduction of documents and the
      out-of-pocket expenses of the Agent including the reasonable fees, disbursements
      and expenses incurred by the Agent's counsel (to a maximum of US$40,000)
      relating to the transactions contemplated herein.

     

    
      	
              10.  

            	
              Closing

            


    

     

    The
      issue
      and sale of the Units shall be completed at the Closing Time at the offices
      of
      the Corporation's counsel or at such other place as the Corporation and the
      Agent may agree. Subject to the conditions set forth in section 7, the Agent, on the Closing Date, shall deliver
      to the
      Corporation:

     

    
      	
              (a)  

            	
              all
                executed Subscription Agreements;

            


    

     

    
      	
              (b)  

            	
              via
                wire transfer, United States funds in an amount equal to the aggregate
                gross subscription price of all subscriptions delivered to and accepted
                by
                the Corporation (other than in respect of the Agent Units) less the
                fees
                and expenses set forth in sections 8 and 9 hereof;
                and

            


    

     

    
      	
              (c)  

            	
              all
                Convertible Promissory Notes held by persons with accounts established
                with the Agent tendered to the Corporation for cancellation, 
                against
                  delivery by the Corporation to the Agent of the certificates, opinions
                  and
                  documents set forth in section 7
                  hereof.

              

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      Corporation may not reject any properly completed Subscription Agreement, unless
      (i) the issuance of Units would breach Applicable Securities Laws or (ii) the
      aggregate of the number of Units subscribed for pursuant to all Subscription
      Agreements tendered by the Agent exceeds the maximum number of Units to be
      issued pursuant to the Offering.

     

    
      	
              11.  

            	
              Waiver

            


    

     

    The
      Agent
      may waive in whole or in part any breach of, default under or non-compliance
      with any representation, warranty, covenant, term or condition hereof, or extend
      the time for compliance therewith, without prejudice to any of its rights in
      respect of any other representation, warranty, covenant, term or condition
      hereof or any other breach of, default under or non-compliance with any other
      representation, warranty, covenant, term or condition hereof, provided that
      any
      such waiver or extension shall be binding on the Agent only if the same is
      in
      writing.

     

    
      	
              12.  

            	
              Termination
                Events

            


    

     

    
      	
              (a)  

            	
              All
                representations, warranties, covenants, terms and conditions of this
                Agreement shall be construed as conditions, and any material breach
                or
                failure to comply with any such representation, warranty, covenant,
                term
                or condition shall entitle the Agent or the Corporation, as applicable,
                to
                terminate its obligation to distribute the Units by written notice
                to that
                effect given to the Corporation or the Agent, as applicable, prior
                to the
                Closing Date.

            


    

     

    
      	
              (b)  

            	
              In
                addition to any other remedies which may be available to the Agent,
                the
                Agent shall be entitled, at its option, to terminate and cancel its
                obligations under this Agreement if, prior to the Closing Time on
                the
                Closing Date:

            


    

     

    
      	
              (i)  

            	
              any
                inquiry, investigation (whether formal or informal) or other proceeding
                is
                announced or commenced by any Securities Commission or similar regulatory
                authority, or any order is issued in relation to the Corporation,
                any of
                its Subsidiaries, or any of its directors or officers or any of the
                Corporation's securities or any order is issued under or pursuant
                to any
                statute of Canada or the United States or of any of the provinces
                of
                Canada or states of the United States, or any other applicable law
                or
                regulatory authority (unless based on the activities or alleged activities
                of the Agent or its sub-agents); or

            


    

     

    
      	
              (ii)  

            	
              there
                is any change of law, regulation or policy or the interpretation
                or
                administration thereof, which, in the reasonable opinion of the Agent,
                prevents or materially restricts trading in or the distribution of
                the
                Common Shares or has or would be expected to have a material adverse
                effect on the market price or value of or the investment quality
                or
                marketability of the Common Shares;
                or

            


    

     

    
      	
              (iii)  

            	
              there
                shall occur an event, fact or circumstance, (actual, contemplated
                or
                threatened), which constitutes a material change or any change in
                a
                material fact or a development that could result in a material change
                or
                change in a material fact in respect of the business, operations,
                capital,
                condition (financial or otherwise), properties, assets, liabilities,
                obligations or affairs of the Corporation which, in the reasonable
                opinion
                of the Agent, could reasonably be expected to prevent or materially
                restrict trading in or the distribution of the Common Shares or has
                or
                would reasonably be expected to have a material adverse effect on
                the
                market price or value of or the investment quality or marketability
                of the
                Common Shares; or

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (iv)  

            	
              the
                state of the financial markets or the market for video games or any
                aspects thereof including federal, provincial or state tax laws applying
                thereto become such that in the opinion of the Agent (A) the Common
                Shares cannot be profitably marketed; or (B) the advantages or risk
                of investing in the Common Shares has been materially adversely altered;
                or

            


    

     

    
      	
              (v)  

            	
              there
                should develop, occur or come into effect or existence any event,
                action,
                state, condition or major financial occurrence of national or
                international consequence, acts of hostility or escalation thereof
                or any
                other calamity or crisis or any change or development involving a
                prospective change in national or international political, financial
                or
                economic conditions, or any law or regulation (including federal,
                provincial or state taxation laws) is enacted or changed which, in
                the
                sole opinion of the Agent, acting reasonably, materially adversely
                affects, or involves, or could reasonably be expected to materially
                adversely affect or involve, the business, operations, affairs, assets,
                liabilities (contingent or otherwise), capital or control of the
                Corporation or the market price or value of the Common Shares;
                or

            


    

     

    
      	
              (vi)  

            	
              the
                Corporation shall be in breach of, default under or non-compliance
                with
                any material representation, warranty, term or condition of this
                Agreement
                or the Subscription Agreements; or

            


    

     

    
      	
              (vii)  

            	
              the
                Agent discovers any facts or matters with respect to the Corporation
                or
                the insiders of the Corporation pursuant to the Agent's due diligence
                review or otherwise that are not satisfactory to the Agent, acting
                reasonably; or

            


    

     

    
      	
              (viii)  

            	
              the
                Agent shall determine that the responses provided by the Corporation
                at
                the Due Diligence Sessions contained information which would have,
                in the
                sole opinion of the Agent, acting reasonably, a material adverse
                effect on
                the market price or value of the Common Shares;
                or

            


    

     

    
      	
              (ix)  

            	
              any
                order to cease or suspend trading in any securities of the Corporation,
                or
                prohibiting or restricting the distribution of the Common Shares
                is made,
                or proceedings are announced or commenced for the making of, any
                such
                order, by any Securities Commission, any other securities commissions
                or
                similar regulatory authority, and has not been rescinded, revoked
                or
                withdrawn within two business days;

            


    

     

    in
      any of
      which cases the Agent shall be entitled, at its option, to terminate and cancel
      its obligations to the Corporation under this Agreement and the obligations
      of
      any purchaser under any Subscription Agreement by written notice to that effect
      given to the Corporation prior to the Closing.  In the event of any
      such termination, the Corporation's liabilities to the Agent shall be at an
      end
      except for any liability of the Corporation provided for in this Agreement
      which
      by its terms survives termination.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (c)  

            	
              The
                Agent may exercise any or all of the rights provided for in section
                7 or
                subsections 12(a) or 12(b) notwithstanding any material change, change,
                event or state of facts and notwithstanding any act or thing taken
                or done
                by the Agent or any inaction by the Agent, whether before or after
                the
                occurrence of any material change, including, without limitation,
                any act
                of the Agent related to the Offering or continued offering of the
                Units
                for sale other than any unlawful act relating solely to the Agent
                and the
                Agent shall only be considered to have waived or be estopped from
                expressing or relying upon any of their rights under or pursuant
                to
                section 7 or subsections 12(a) or 12(b) if such waiver or estoppel
                is in
                writing and specifically waives or estops such exercise or
                reliance.

            


    

     

    
      	
              (d)  

            	
              Any
                termination pursuant to the terms of this Agreement shall be effected
                by
                notice in writing delivered by the Agent to the Corporation; provided
                that
                no termination shall discharge or otherwise affect any obligation
                of the
                Corporation under section  9, provided that the termination does
                not result from a breach by the Agent of its representations, warranties
                and covenants hereunder, and sections 14 through 22.  The rights
                of the Agent to terminate its obligations hereunder are in addition
                to,
                and without prejudice to, any other remedies it may
                have.

            


    

     

    
      	
              13.  

            	
              Survival

            


    

     

    All
      representations, warranties, terms and conditions herein or contained in
      certificates or documents submitted pursuant to or in connection with the
      transactions contemplated herein shall not merge on the completion of the
      transactions contemplated hereby or the termination of this Agreement, but
      shall
      survive and continue in full force and effect for the benefit of the Agent
      and
      the Subscribers for a period of two years from the Closing Date regardless
      of
      any investigation by or on behalf of the Agent with respect
      thereto.

     

    
      	
              14.  

            	
              Indemnity

            


    

     

    
      	
              (a)  

            	
              The
                Corporation shall indemnify and save each of the Indemnified Persons
                harmless from and against any and all losses (other than loss of
                profits
                or commissions), claims, damages, liabilities, demands, expenses
                (including reasonable fees and disbursements of counsel) or costs
                (collectively “Claims”) which any of the Indemnified Persons may suffer or
                incur, whether under the provisions of any statute or otherwise,
                in any
                way caused by, or arising directly or indirectly from or in consequence
                of:

            


    

     

    
      	
              (i)  

            	
              any
                information or statement contained in the Subscription Agreements
                or the
                Documents which is untrue or misleading or which omits to provide
                any
                information or state any fact the omission of which makes the statement
                untrue or misleading in light of the circumstances in which it was
                made;
                or

            


    

     

    
      	
              (ii)  

            	
              any
                misrepresentation or alleged misrepresentation contained in the
                Subscription Agreements or the Documents;
                or

            


    

     

    
      	
              (iii)  

            	
              any
                order, inquiry or investigation of the type referred to in
                subsection 12(b)(i); or

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (iv)  

            	
              any
                prohibition or restriction in trading in the securities of the Corporation
                or any prohibition or restriction affecting the distribution of the
                Units
                or the Underlying Securities imposed by any competent authority if
                such
                prohibition or restriction is based on any misrepresentation or alleged
                misrepresentation of a kind referred to in subsection 14(a)(ii);
                or

            


    

     

    
      	
              (v)  

            	
              any
                breach of, default under or non-compliance by the Corporation with
                any
                representation, warranty, term or condition of this Agreement or
                any
                requirement of Applicable Securities
                Laws.

            


    

     

    
      	
              (b)  

            	
              The
                rights of indemnity contained in this section 14 shall not apply
                to any
                Claim to the extent that a court of competent jurisdiction in a final
                judgment from which no appeal can be made or regulatory authority
                in a
                final ruling from which no appeal can be made shall determine that
                such
                Claim resulted from the gross negligence, fraud or wilful misconduct
                of
                the person claiming indemnity.

            


    

     

    
      	
              (c)  

            	
              The
                Corporation hereby waives its rights to recover contribution from
                the
                Agent and any Indemnified Persons with respect to any liability of
                the
                Corporation by reason of or arising out of any misrepresentation
                contained
                in any of the documents referred to in subsection 14(a) provided,
                however,
                that such waiver shall not apply to misrepresentations relating to
                the
                Agent contained in any of the documents referred to in subsection
                14(a)
                and furnished to the Corporation by the Agent expressly for inclusion
                in
                such document or to any Claim to the extent that a court of competent
                jurisdiction in a final judgment from which no appeal can be made
                or
                regulatory authority in a final ruling from which no appeal can be
                made
                shall determine that such Claim resulted from the gross negligence,
                fraud
                or willful misconduct of the person claiming
                indemnity.

            


    

     

    
      	
              (d)  

            	
              The
                Corporation agrees that in case any legal proceedings or investigation
                shall be brought against or initiated against the Corporation by
                any
                governmental commission, regulatory authority, exchange, court or
                other
                authority and an Indemnified Person or other representative of the
                Agent
                shall be required to testify or respond to procedures designed to
                discover
                information regarding, in connection with or relating to the performance
                of professional services rendered to the Corporation by the Agent,
                the
                Corporation shall be responsible to pay the Agent the reasonable
                costs
                (including an amount to reimburse the Indemnified Person for the
                time
                spent by its personnel in connection therewith on a per diem basis
                and out
                of pocket expenses) in connection
                therewith.

            


    

     

    
      	
              (e)  

            	
              Promptly
                after receipt of notice of the commencement or threatened commencement
                of
                any legal proceeding of the type described or referred to above against
                an
                Indemnified Person, such Indemnified Person shall notify the Corporation
                in writing of the commencement thereof and, throughout the course
                thereof,
                shall provide copies of all relevant documentation to the Corporation,
                will keep the Corporation advised of the progress thereof and will
                discuss
                with the Corporation all significant actions proposed.  The
                omission so to notify the Corporation shall not relieve the Corporation
                of
                any liability which the Corporation may have to the Indemnified Person
                provided that any such delay in or failure to give notice as herein
                required does not materially prejudice the defence of the legal
                proceedings or investigation and does not result in any material
                increase
                in the liability which the Corporation would otherwise have under
                this
                indemnity had the Indemnified Person not so delayed in or failed
                to give
                the notice herein required.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (f)  

            	
              The
                Corporation shall have the right to assume the carriage of the defence
                of
                any such legal proceeding or investigation on behalf of the Indemnified
                Person unless:

            


    

     

    
      	
              (i)  

            	
              the
                Indemnified Person has been advised in writing by its counsel that
                by so
                doing there is a substantial risk of a conflict of interest between
                the
                position of the Indemnified Person and the Corporation's position
                as to
                the conduct of the defence thereof;
                or

            


    

     

    
      	
              (ii)  

            	
              the
                Corporation has failed to undertake a defence of such legal proceeding
                or
                investigation or appoint counsel reasonably acceptable to the Indemnified
                Person within seven days from the date that notice of the action
                has been
                first received by the Corporation.

            


    

     

    The
      reasonable fees and expenses of counsel for the Indemnified Person in either
      of
      the circumstances described in subsection 14(f)(i) or subsection 14(f)(ii)
      above
      shall be for the account of and shall be paid by the Corporation; it being
      understood, however, that the Corporation shall not, in connection with any
      one
      such action or separate but substantially similar or related actions in the
      same
      jurisdiction arising out of the same general allegations or circumstances,
      be
      liable for the reasonable fees and expenses of more than one separate law firm
      (in addition to any local counsel) for all such Indemnified
      Persons.  Neither the Corporation nor the Indemnified Person may
      effect settlement of the action without the other's prior written
      consent.

     

    
      	
              (g)  

            	
              It
                is the intention of the Corporation to constitute the Agent as trustee
                for
                the Indemnified Persons for the purposes of this section 14 and the
                Agent
                agrees to accept such trust and to hold and enforce such covenants
                on
                behalf of such persons.

            


    

     

    
      	
              (h)  

            	
              No
                admission of liability and no settlement of any proceeding shall
                be made
                without the consent of the Indemnified Persons affected, such consent
                not
                to be unreasonably withheld.

            


    

     

    
      	
              15.  

            	
              Right
                of Contribution

            


    

     

    In
      order
      to provide for just and equitable contribution in circumstances in which the
      indemnification provided for in this Agreement is due in accordance with its
      terms but is (in whole or in part), for any reason, held by a court to be
      unavailable from the Corporation on grounds of policy or otherwise, each of
      the
      Corporation and the party or parties seeking indemnification shall contribute
      to
      the aggregate liabilities, claims, demands, losses (other than losses of profit
      in connection with the distribution of the Units or Underlying Securities),
      costs, damages and expenses (or claims, actions, suits or proceedings in respect
      thereof) to which they may be subject or which they may suffer or
      incur:

     

    
      	
              (a)  

            	
              in
                such proportion as is appropriate to reflect the relative benefit
                received
                by the Corporation on the one hand and by the Agent on the other
                hand from
                the offering of the Units; or

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)  

            	
              if
                the allocation provided by subsection 15(a) above is not permitted
                by
                applicable law, in such proportion as is appropriate to reflect not
                only
                the relative benefits referred to in subsection 15(a) above but also
                to
                reflect the relative fault of the party or parties seeking indemnity,
                on
                the one hand, and the parties from whom indemnity is sought, on the
                other
                hand, in connection with the statement, omission, misrepresentation
                or
                alleged misrepresentation, order, inquiry, investigation or other
                matter
                or thing which resulted in such Claims, as well as any other relevant
                equitable considerations.

            


    

     

    The
      relative benefits received by the Corporation, on the one hand, and the Agent,
      on the other hand, shall be deemed to be in the same proportion that the total
      proceeds of the Offering received by the Corporation (net of fees but before
      deducting expenses) bear to the commission and fees received by the
      Agent.

     

    The
      amount paid or payable by an Indemnified Person as a result of Claims referred
      to above shall, without limitation, include any legal or other expenses
      reasonably incurred by the Indemnified Person in connection with investigating
      or defending such Claims, whether or not resulting in any action, suit,
      proceeding or claim.

     

    The
      Corporation agrees that it would not be just and equitable if contributions
      pursuant to this Agreement were determined by pro rata allocation or by any
      other method of allocation which does not take into account the equitable
      considerations referred to in the immediately preceding sections.  The
      rights to contribution provided in this section 15 shall be in addition to,
      and
      without prejudice to, any other right to contribution which the Agent may
      have.

     

    Any
      liability of the Agent under this section 15 shall be limited to the commissions
      payable to the Agent pursuant to section 8 hereof.

     

    
      	
              16.  

            	
              Notices

            


    

     

    Any
      notice or other communication to be given hereunder shall, in the case of notice
      to be given to the Corporation, be addressed to:

     

    Red
      Mile
      Entertainment, Inc.

    4000
      Bridgeway, Suite 101

    Sausalito,
      California 95965

     

    Attention:                      Mr.
      Ben Zadik, Chief Financial Officer

    Facsimile
      No.:                (415)
      339-4249

     

    with
      copies to:

     

    Bennett
      Jones LLP

    4500
      Bankers Hall East

    855-2nd
      Street
      S.W.

    Calgary,
      Alberta T2P 4K7

     

    Attention:                      Bruce
      Hibbard

    Facsimile
      No.:                (403)265-7219

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    and
      in
      the case of notice to be given to the Agent, addressed to:

     

    J.
      F.
      Mackie & Company Ltd.

    Suite
      1550, 335-8th Avenue S.W.

    Calgary,
      Alberta T2P 1C9

     

    Attention:                      Phil
      Hodge

    Facsimile
      No.:                (403)
      218-6377

     

    with
      a
      copy to:

     

    Heenan
      Blaikie LLP

    Barristers
      and Solicitors

    1200,
      425-1st Street
      S.W.

    Calgary,
      Alberta  T2P 3L8

     

    Attention:                      Tim  Sweeney

    Facsimile
      No.:                (403)
      234-7987

     

    or
      to
      such other address as the party may designate by notice given to the others.
      Each communication shall be personally delivered to the addressee or sent by
      facsimile transmission to the addressee, and:

     

    
      	
              (a)  

            	
              a
                communication which is personally delivered shall, if delivered before
                4:30 p.m. (local time) on a business day, be deemed to be given and
                received on that day and, in any other case be deemed to be given
                and
                received on the first business day following the day on which it
                is
                delivered; and

            


    

     

    
      	
              (b)  

            	
              a
                communication which is sent by facsimile transmission shall, if sent
                on a
                business day before 4:30 p.m. (local time), be deemed to be given
                and
                received on that day and, in any other case be deemed to be given
                and
                received on the first business day following the day on which it
                is
                sent.

            


    

     

    
      	
              17.  

            	
              Trust

            


    

     

    The
      Corporation hereby constitutes the Agent as trustee for the Subscribers in
      respect of the benefit to the representations, warranties and covenants of
      the
      Corporation set forth in this Agreement and the Subscription
      Agreements.

     

    
      	
              18.  

            	
              Severance

            


    

     

    If
      one or
      more of the provisions contained herein shall, for any reason, be held to be
      invalid, illegal or unenforceable in any respect, such invalidity, illegality
      or
      unenforceability shall not affect any other provision of this Agreement, but
      this Agreement shall be construed as if such invalid, illegal or unenforceable
      provision or provisions had never been contained herein.

     

    
      	
              19.  

            	
              Governing
                Law

            


    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Alberta and the laws of Canada applicable therein, with the
      exception of those principles relating to conflict of laws.  Each of
      the parties hereto irrevocably attorns to the jurisdiction of the courts of
      the
      Province of Alberta.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              20.  

            	
              Currency

            


    

     

    Unless
      otherwise indicated, all references to dollar amounts contained herein shall
      refer to lawful money of the United States of America.

     

    
      	
              21.  

            	
              Time
                of the Essence

            


    

     

    Time
      shall be of the essence of this Agreement.

     

    
      	
              22.  

            	
              Counterpart
                Execution

            


    

     

    This
      Agreement may be executed in one or more counterparts each of which so executed
      shall constitute an original and all of which together shall constitute one
      and
      the same agreement. The parties hereto shall be entitled to rely on delivery
      of
      a facsimile or other electronic copy of this executed agreement and such
      facsimile or other electronic copy shall be legally effective to create a valid
      and binding agreement.

     

    
      	
              23.  

            	
              Entire
                Agreement

            


    

     

    It
      is
      understood that the terms and conditions of this Agreement supersede any
      previous verbal or written agreement between the Agent and the Corporation
      with
      respect to the issuance of Units by the Corporation.

     

    [Remainder
      of page intentionally left blank]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    If
      the
      foregoing is in accordance with your understanding and is agreed to by you,
      please confirm your acceptance by signing the enclosed copies of this letter
      at
      the place indicated and by returning the same to the Agent's
      counsel.

     

    


     

    
      	
              RED
                MILE ENTERTAINMENT, INC.

            
	 	 
	
              Per:

            	/s/ 
              Ben Zadik
	 	
              Ben
                Zadik

            
	 	 
	 
	
              J.
                F. MACKIE & COMPANY LTD.

            
	 	 
	
              Per:

            	/s/ 
              Phil Hodge
	 	
              Phil
                Hodge

            
	 	 


    

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      1(b) – Form of Agent's Warrant

     

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR (4) MONTHS AND A DAY AFTER
      THE
      LATER OF JULY 18, 2007 AND THE DATE THE CORPORATION BECAME A REPORTING ISSUER
      IN
      ANY PROVINCE OR TERRITORY OF CANADA.

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE SECURITIES
      LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
      OF RED MILE ENTERTAINMENT, INC. THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
      OTHERWISE TRANSFERRED ONLY (A) TO RED MILE ENTERTAINMENT, INC., (B) OUTSIDE
      THE
      UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
      ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE
      SECURITIES ACT, OR (D) INSIDE THE UNITED STATES, PURSUANT TO AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
      AFTER
      PROVIDING A LEGAL OPINION REASONABLY SATISFACTORY TO RED MILE ENTERTAINMENT,
      INC.

     

    THIS
      WARRANT AND THE SECURITIES TO BE ISSUED UPON THE EXERCISE THEREOF HAVE NOT
      BEEN
      REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “1933
      SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND THE WARRANTS MAY NOT BE
      EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A PERSON
      IN THE UNITED STATES OR A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE
      1933
      SECURITIES ACT) WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
      UNITED STATES FEDERAL AND STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
      EXEMPTION THEREFROM AND THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF
      COUNSEL TO SUCH EFFECT SATISFACTORY TO IT.

     

    THIS
      AGREEMENT made as of the 18th day of
      July,
      2007

     

    BETWEEN:

     

    RED
      MILE ENTERTAINMENT, INC., a corporation incorporated under the laws of
      the State of Delaware and having an office in the City of Sausalito, California
      (the “Corporation”)

     

    -
      and -

     

    l,
      (the “Warrantholder”)

     

    WHEREAS
      the Corporation has agreed pursuant to an Agency Agreement made
      effective the 22nd day of
      June, 2007
      between the Corporation and the Agent (the “Agency Agreement”)
      to grant the Agent and its nominees, warrants to purchase that number of Common
      Shares equal to the aggregate of 8% of the Common Shares sold by the Agent
      pursuant to the Offering and 8% of the Common Shares issuable pursuant to
      Convertible Promissory Notes issued by the Corporation to persons with accounts
      established with the Agent.

     

    NOW
      THEREFORE in consideration of the premises, mutual covenants and
      agreements herein contained, this agreement witnesses and it is understood
      and
      agreed by and between the parties hereto as follows:

     

    1.           Interpretation

     

    All
      capitalized terms herein and not defined herein shall have the meaning given
      to
      such terms in the Agency Agreement.

     

    2.           Grant
      of Agent's Warrants

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Subject
      to the provisions hereinafter contained, the Corporation hereby grants to the
      Warrantholder an aggregate of l share purchase
      warrants
      (the “Agent’s Warrants”), each Agent's Warrant entitling the Warrantholder to
      purchase ● Common Shares (the “Optioned Securities”).

     

    3.           Exercise
      of Agent's Warrants

     

    The
      Agent
      may exercise the Agent’s Warrants at any time on or before 4:30 p.m. Calgary
      time (the “Expiry Time”) on or before July 18, 2009 at an exercise price of US
      $3.00, subject to adjustment as set forth herein.

     

    4.           Manner
      of Exercise

     

    The
      Warrantholder may exercise the Agent's Warrants represented by this certificate
      in whole or in part, at any time and from time to time, on or prior to the
      Expiry Time, by notice in writing given by the Warrantholder to the Corporation
      at its address for notice set out in the Agency Agreement, specifying the number
      of Agent's Warrants to be exercised and accompanied by payment in cash or
      certified cheque for the purchase price of all of the Common Shares issuable
      by
      the Corporation, calculated in accordance with Articles 3 and 9
      hereof.

     

    5.           Certificates

     

    Upon
      exercise of the Agent's Warrants, the Corporation shall cause the transfer
      agent
      and registrar of the Corporation to deliver to the Warrantholder, or as the
      Warrantholder may otherwise in writing direct in the notice of exercise of
      the
      Agent's Warrants, within seven (7) days following the receipt by the Corporation
      of payment in accordance with Article 4 hereof, certificates representing in
      the
      aggregate the number of Common Shares for which payment has been received by
      the
      Corporation.

     

    6.           No
      Rights of Shareholder Until Exercise

     

    The
      Warrantholder shall have no rights whatsoever as a shareholder (including any
      rights to receive dividends or other distributions to shareholders or to vote
      at
      a general meeting of shareholders of the Corporation, except as provided in
      Article 10 hereof) other than in respect to Common Shares in respect of which
      the Warrantholder shall have exercised its right to purchase hereunder and
      which
      the Warrantholder shall have actually taken up and paid for.

     

    7.           Non-Transferable

     

    The
      rights conferred upon the Warrantholder hereunder shall be non-transferable
      and
      non-tradable.

     

    8.           No
      Fractional Common Shares

     

    No
      fractional Optioned Securities will be issued on exercise of the Agent's
      Warrants.

     

    9.           Adjustments
      in Event of Change in Common Shares

     

    Definitions. For
      the purposes of this section 9, unless there is something in the subject matter
      or context inconsistent therewith, the words and terms defined below will have
      the respective meanings specified therefor in this subsection:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (a)           "Adjustment
      Period" means the period commencing on July 18, 2007 and ending at the
      Time of Expiry;

     

    (b)           "Current
      Market Price" of the Common Shares at any date means the price per
      share equal to the weighted average price at which the Shares have traded on
      the
      Over-the-Counter Bulletin Board, on such other stock exchange as may be selected
      by the directors of the Corporation for such purpose, during the period of
      any
      twenty consecutive trading days ending not more than three trading days before
      such date; provided that the weighted average price will be determined by
      dividing the aggregate sale price of all Common Shares sold on the said exchange
      or market, as the case may be, during the said twenty consecutive trading days
      by the total number of Common Shares so sold; and provided further that if
      the
      Common Shares are not then listed on any stock exchange or traded in the
      over-the-counter market, then the Current Market Price will be determined by
      such firm of independent chartered accountants as may be selected by the
      directors of the Corporation;

     

    (c)           "director"
      means a director of the Corporation for the time being and, unless otherwise
      specified herein, a reference to action "by the directors" means action by
      the
      directors of the Corporation as a board or, whenever empowered, action by the
      executive committee of such board; and

     

    (d)           "trading
      day" with respect to a stock exchange or over-the-counter market means
      a day on which such stock exchange or market is open for business.

     

    Adjustments.  The
      number of Common Shares which the holder shall be entitled to receive pursuant
      to the Warrants represented by this certificate (the "Share Rate") and the
      exercise price for such Common Shares (the "Exercise Price") shall be subject
      to
      adjustment from time to time in the events and in the manner provided as
      follows.

     

    (1)           If
      at any time during the Adjustment Period the Corporation:

     

    
      	
              (a)  

            	
              fixes
                a record date for the issue of, or issues, Common Shares to the holders
                of
                all or substantially all of the outstanding Shares by way of a stock
                dividend;

            


    

     

    
      	
              (b)  

            	
              fixes
                a record date for the distribution to, or makes a distribution to,
                the
                holders of all or substantially all of the Common Shares payable
                in Common
                Shares or securities exchangeable for or convertible into
                Shares;

            


    

     

    
      	
              (c)  

            	
              subdivides
                the outstanding Common Shares into a greater number of Common Shares;
                or

            


    

     

    
      	
              (d)  

            	
              consolidates
                the outstanding Common Shares into a lesser number of Common
                Shares;

            


    

     

    (any
      of
      such events in subclauses (i), (ii), (iii) and (iv) above being herein called
      a
      "Common Share Reorganization"),

     

    
      	
              (i)  

            	
              the
                Share Rate shall be adjusted on the earlier of the record date on
                which
                holders of Common Shares are determined for the purposes of the Common
                Share Reorganization and the effective date of the Common Share
                Reorganization to the amount determined by multiplying the Share
                Rate in
                effect immediately prior to such record date or effective date, as
                the
                case may be, by a fraction:

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              A.  

            	
              the
                denominator of which will be the number of Common Shares outstanding
                on
                such record date or effective date before giving effect to such Common
                Share Reorganization; and

            


    

     

    
      	
              B.  

            	
              the
                numerator of which will be the number of Common Shares which will
                be
                outstanding immediately after giving effect to such Common Share
                Reorganization (including in the case of a distribution of securities
                exchangeable for or convertible into Common Shares the number of
                Common
                Shares that would be outstanding had such securities all been exchanged
                for or converted into Common Shares on such date);
                and

            


    

     

    
      	
              (ii)  

            	
              the
                Exercise Price shall be concurrently adjusted by multiplying the
                Exercise
                Price in effect immediately prior to such record date or effective
                date,
                as the case may be, by a fraction which shall be the reciprocal of
                the
                fraction used in the adjustment of the Share Rate in the paragraph
                above;

            


    

     

    To
      the
      extent that any adjustment in the Share Rate or Exercise Price occurs pursuant
      to this clause as a result of the fixing by the Corporation of a record date
      for
      the distribution of securities exchangeable for or convertible into Common
      Shares, such Share Rate and Exercise Price will be readjusted immediately after
      the expiry of any relevant exchange or conversion right to the Share Rate and
      Exercise Price which would then be in effect based upon the number of Common
      Shares actually issued and remaining issuable after such expiry and will be
      further readjusted in such manner upon the expiry of any further such
      right.

     

    
      	
              (2)

            	
              If
                at any time during the Adjustment Period the Corporation fixes a
                record
                date for the issue or distribution to the holders of all or substantially
                all of the outstanding Common Shares of rights, options or warrants
                pursuant to which such holders are entitled, during a period expiring
                not
                more than 45 days after the record date for such issue (such period
                being
                the "Rights Period"), to subscribe for or purchase Common Shares
                or
                securities exchangeable for or convertible into Common Shares at
                a price
                per share (or in the case of securities exchangeable for or convertible
                into Shares at an exchange or conversion price per share at the date
                of
                issue of such securities) of less than 85% of the Current Market
                Price of
                the Common Shares on such record date (any of such events being herein
                called a "Rights Offering"),

            


    

     

    
      	
              (a)  

            	
              the
                Share Rate will be adjusted effective immediately after the record
                date
                for the Rights Offering to the amount determined by multiplying the
                Share
                Rate in effect on such record date by a
                fraction:

            


    

     

    
      	
              (i)  

            	
              the
                denominator of which will be the aggregate
                of

            


    

     

    
      	
              A.  

            	
              the
                number of Common Shares outstanding on the record date for the Rights
                Offering; and

            


    

     

    
      	
              B.  

            	
              the
                quotient determined by dividing

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              a)  

            	
              either
                (a) the product of the number of Common Shares offered during the
                Rights
                Period pursuant to the Rights Offering and the price at which such
                Common
                Shares are offered, or, (b) the product of the exchange or conversion
                price of the securities so offered and the number of Common Shares
                for or
                into which the securities offered pursuant to the Rights Offering
                may be
                exchanged or converted, as the case may be,
                by

            


    

     

    
      	
              b)  

            	
              the
                Current Market Price of the Common Shares as of the record date for
                the
                Rights Offering; and

            


    

     

    
      	
              (ii)  

            	
              the
                numerator of which will be the aggregate of the number of Common
                Shares
                outstanding on such record date and the number of Common Shares offered
                pursuant to the Rights Offering (including in the case of the issue
                or
                distribution of securities exchangeable for or convertible into Common
                Shares the number of Common Shares for or into which such securities
                may
                be exchanged or converted); and

            


    

     

    
      	
              (b)  

            	
              the
                Exercise Price shall be concurrently adjusted by multiplying the
                Exercise
                Price in effect immediately prior to such record date or effective
                date,
                as the case may be, by a fraction which shall be the reciprocal of
                the
                fraction used in the adjustment of the Share Rate in the paragraph
                above;

            


    

     

    If
      by the
      terms of the rights, options, or warrants referred to in this clause, there
      is
      more than one purchase, conversion or exchange price per Common Share, the
      aggregate price of the total number of additional Common Shares offered for
      subscription or purchase, or the aggregate conversion or exchange price of
      the
      convertible or exchangeable securities so offered, will be calculated for
      purposes of the adjustment on the basis of the weighted average purchase,
      conversion or exchange price per Common Share, as the case may
      be.  Any Common Shares owned by or held for the account of the
      Corporation will be deemed not to be outstanding for the purpose of any such
      calculation.  To the extent that any adjustment in the Share Rate and
      Exercise Price occurs pursuant to this clause as a result of the fixing by
      the
      Corporation of a record date for the issue or distribution of rights, options
      or
      warrants referred to in this clause, the Share Rate and Exercise Price will
      be
      readjusted immediately after the expiry of any relevant exchange, conversion
      or
      exercise right to the Share Rate which would then be in effect based upon the
      number of Common Shares actually issued and remaining issuable after such expiry
      and will be further readjusted in such manner upon the expiry of any further
      such right.

     

    
      	
              (3)

            	
              If
                at any time during the Adjustment Period the Corporation fixes a
                record
                date for the issue or distribution to the holders of all or substantially
                all of the Common Shares of:

            


    

     

    
      	
              (a)  

            	
              shares
                of the Corporation of any class other than Common
                Shares;

            


    

     

    
      	
              (b)  

            	
              rights,
                options or warrants to acquire Common Shares or securities exchangeable
                for or convertible into Common Shares (other than rights, options
                or
                warrants pursuant to which holders of Common Shares are entitled,
                during a
                period expiring not more than 45 days after the record date for such
                issue, to subscribe for or purchase Common Shares at a price per
                share (or
                in the case of securities exchangeable for or convertible into Common
                Shares at an exchange or conversion price per share at the date of
                issue
                of such securities) of at least 85% of the Current Market Price of
                the
                Common Shares on such record date);

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)  

            	
              evidences
                of indebtedness of the Corporation;
                or

            


    

     

    
      	
              (d)  

            	
              any
                property or assets of the
                Corporation;

            


    

     

    and
      if
      such issue or distribution does not constitute a Common Share Reorganization
      or
      a Rights Offering (any of such non-excluded events being herein called a
      "Special Distribution"):

     

    
      	
              (i)  

            	
              the
                Share Rate will be adjusted effective immediately after the record
                date
                for the Special Distribution to the amount determined by multiplying
                the
                Share Rate in effect on the record date for the Special Distribution
                by a
                fraction:

            


    

     

    
      	
              A.  

            	
              the
                numerator of which will be the aggregate
                of

            


    

     

    
      	
              a)  

            	
              the
                product of the number of Common Shares outstanding on such record
                date and
                the Current Market Price of the Common Shares on such record date,
                and

            


    

     

    
      	
              b)  

            	
              the
                aggregate fair value, as determined by the directors of the Corporation,
                to the holders of the Common Shares of the shares, rights, options,
                warrants, evidences of indebtedness or property or assets to be issued
                or
                distributed in the Special Distribution,
                and

            


    

     

    
      	
              B.  

            	
              the
                denominator of which will be the product obtained by multiplying
                the
                number of Common Shares outstanding on such record date by the Current
                Market Price of the Common Shares on such record date;
                and

            


    

     

    
      	
              (ii)  

            	
              the
                Exercise Price shall be concurrently adjusted by multiplying the
                Exercise
                Price in effect immediately prior to such record date or effective
                date,
                as the case may be, by a fraction which shall be the reciprocal of
                the
                fraction used in the adjustment of the Share Rate in the paragraph
                above;

            


    

     

    Any
      Common Shares owned by or held for the account of the Corporation will be deemed
      not to be outstanding for the purpose of such calculation.  To the
      extent that any adjustment in the Share Rate occurs pursuant to this clause
      as a
      result of the fixing by the Corporation of a record date for the issue or
      distribution of rights, options or warrants to acquire Shares or securities
      exchangeable for or convertible into Shares referred to in this clause, the
      Share Rate will be readjusted immediately after the expiry of any relevant
      exercise, exchange or conversion right to the amount which would then be in
      effect if the fair market value had been determined on the basis of the number
      of Shares issued and remaining issuable immediately after such expiry, and
      will
      be further readjusted in such manner upon the expiry of any further such
      right.

     

    (4)           If
      at any time during the Adjustment Period there occurs:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)  

            	
              a
                reclassification or redesignation of the Common Shares, any change
                of the
                Common Shares into other shares or securities or any other capital
                reorganization involving the Common Shares other than a Common Share
                Reorganization;

            


    

     

    
      	
              (i)  

            	
              a
                consolidation, amalgamation, arrangement or merger of the Corporation
                with
                or into any other body corporate which results in a reclassification
                or
                redesignation of the Common Shares or a change or exchange of the
                Common
                Shares into other shares or securities;
                or

            


    

     

    
      	
              (ii)  

            	
              the
                transfer of the undertaking or assets of the Corporation as an entirety
                or
                substantially as an entirety to another corporation or
                entity;

            


    

     

    (any
      of
      such events being herein called a "Capital Reorganization"), after the effective
      date of the Capital Reorganization the Warrantholder will be entitled to
      receive, and shall accept, upon exercise of the Agent's Warrants, in lieu of
      the
      number of Common Shares which the Warrantholder shall be entitled to receive
      pursuant to the Agent's Warrants, the kind and aggregate number of shares and
      other securities or property resulting from the Capital Reorganization which
      the
      Warrantholder would have been entitled to receive as a result of the Capital
      Reorganization if, on the effective date thereof, the Warrantholder had been
      the
      registered holder of the number of Common Shares which the Warrantholder would
      have been entitled to receive pursuant to the Agent's Warrants represented
      by
      this certificate if exercised immediately prior to such Capital Reorganization.
      If necessary, as a result of any Capital Reorganization, appropriate adjustments
      will be made in the application of the provisions of this certificate with
      respect to the rights and interest thereafter of the Holder to the end that
      the
      provisions of this certificate will thereafter correspondingly be made
      applicable as nearly as may reasonably be possible in relation to any shares
      or
      other securities or property thereafter deliverable upon the exercise of the
      Agent's Warrants.

     

    Rules.  The
      following rules and procedures will be applicable to adjustments made pursuant
      to this Article 9.

     

    
      	
              (a)  

            	
              Subject
                to the following provisions hereof, any adjustment made pursuant
                to
                Article 9 above will be made successively whenever an event referred
                to
                therein occurs.

            


    

     

    
      	
              (b)  

            	
              No
                adjustment will be made in the Share Rate unless it would result
                in a
                change of at least three percent in the prevailing Share Rate; provided,
                however, that any adjustments which except for the provisions of
                this
                Article 9 would otherwise have been required to be made will be carried
                forward and taken into account in any subsequent
                adjustment.

            


    

     

    
      	
              (c)  

            	
              If
                at any time during the Adjustment Period the Corporation will take
                any
                action affecting the Common Shares, other than an action or an event
                described above, which in the opinion of the directors would have
                a
                material adverse effect upon the rights of the Warrantholder under
                this
                certificate, the Exercise Price and/or the number of Common Shares
                purchasable hereunder will be adjusted in such manner and at such
                time as
                the directors may determine to be equitable in the
                circumstances.  Failure of the taking of action by the directors
                so as to provide for an adjustment prior to the effective date of
                any
                action by the Corporation affecting the Common Shares will be deemed
                to be
                conclusive evidence that the directors have determined that it is
                equitable to make no adjustment in the
                circumstances.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (d)  

            	
              No
                adjustment in the number or kind of securities purchasable on the
                exercise
                of the Agent's Warrant's will be made in respect of any event described
                herein if the Warrantolder is entitled to participate in such event
                on the
                same terms mutatis mutandis as if the Warrantholder had exercised
                the
                Agent's Warrants prior to or on the record date or effective date,
                as the
                case may be, of such event.

            


    

     

    
      	
              (e)  

            	
              If
                the Corporation sets a record date to determine holders of Common
                Shares
                for the purpose of entitling such holders to receive any dividend
                or
                distribution or any subscription or purchase rights and will thereafter
                and before the distribution to such holders of any such dividend,
                distribution or subscription or purchase rights legally abandon its
                plan
                to pay or deliver such dividend, distribution or subscription or
                purchase
                rights, no adjustment in the Share Rate will be required by reason
                of the
                setting of such record date.

            


    

     

    
      	
              (f)  

            	
              If
                a dispute arises at any time with respect to any adjustment of the
                Exercise Price, Share Rate or the number of Common Shares purchasable
                hereunder, such dispute will be conclusively determined by the auditors
                of
                the Corporation or if they are unable or unwilling to act by such
                other
                firm of independent chartered accountants as may be selected by the
                directors of the Corporation.

            


    

     

    Taking
      of Actions.  As a condition precedent to the taking of
      any action which would require an adjustment hereunder, the Corporation will
      take any action which may, in the opinion of the Corporation's legal counsel,
      be
      necessary in order that the Corporation may validly and legally issue as fully
      paid and non-assessable shares all of the Common Shares which the Warrantholder
      is entitled to receive.

     

    Notice.  At
      least ten days prior to any record date or effective date, as the case may
      be,
      for any event which requires or might require an adjustment in any of the rights
      of the Warrantholder hereunder, including the Exercise Price and the number
      of
      Common Shares which are purchasable hereunder, the Corporation will deliver
      to
      the Warrantholder, at the Warrantholder's registered address, a certificate
      of
      the Corporation specifying the particulars of such event and, if determinable,
      the required adjustment and the calculation of such adjustment.  In
      case any adjustment for which a notice has been given is not then determinable,
      the Corporation will promptly after such adjustment is determinable deliver
      to
      the Warrantholder, at the Warrantholders registered address, a certificate
      providing the calculation of such adjustment.  The Corporation hereby
      covenants and agrees that the register of transfers and share transfer books
      for
      the Common Shares will be open, and that the Corporation will not take any
      action which might deprive the Warrantholder of the opportunity of exercising
      the rights of subscription contained herein, during such period.

     

    10.           Intentionally
      Deleted

     

    11.           Reservation
      of Securities

     

    The
      Corporation shall at all times, during the term of this Agreement, reserve
      and
      keep available a sufficient number of unissued Common Shares to satisfy the
      requirements hereof.

     

    12.           Entire
      Agreement

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Agreement supersedes all other agreements, documents, writings and verbal
      understandings among the parties relating to the subject matter hereof and
      represents the entire agreement between the parties relating to the subject
      matter hereof.  This Agreement may be executed by facsimile in any
      number of counterparts all of which when taken together shall be deemed to
      be
      one and the same document and notwithstanding the actual date of execution
      of
      each counterpart, this Agreement shall be deemed to be dated as of the date
      first above written.

     

    13           Enurement

     

    Except
      as
      otherwise set forth herein, this Agreement shall be binding upon and enure
      to
      the benefit of the successors and assigns of the Agent and of the Corporation,
      respectively.

     

    14.           Time

     

    Time
      shall be of the essence of this Agreement.

     

    


     

    IN
      WITNESS WHEREOF the Corporation has caused this warrant certificate to
      be executed by its duly authorized officer.

     

    RED
      MILE ENTERTAINMENT, INC.

     

    


     

    Per:  _______________________________

     

    Ben
      Zadik

     

    Chief
      Financial Officer

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


     

    Schedule
      1(l) – Form of Convertible Promissory Note

     

    THIS
      NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
      THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO
      RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
      EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS
      PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    OF

     

    RED
      MILE ENTERTAINMENT, INC.

     

      Sausalito,
      CA

    $•
      US                                                                                       Made
      as of June __, 2007

     

    


     

    For
      value
      received, RED MILE ENTERTAINMENT, INC., a Delaware corporation, on behalf of
      itself and its successors and assigns (collectively, the
“Company”), with principal offices at 4000 Bridgeway,
      Suite 101, Sausalito, CA 94965, hereby promises to pay to __________________.
      or
      its registered assigns (“Holder”),  $• US
      (the “Principal Amount”) on the Maturity Date, together
      with simple interest on the unpaid principal and interest at a rate equal to
      ten
      percent (10%) per annum, computed on the basis of the actual number of days
      elapsed and a year of 365 days (the “Rate”) from the
      date of this Note until the Maturity Date.  All accrued interest
      hereunder shall be payable in cash by the Company to the Holder on the Maturity
      Date.

     

    Unless
      earlier accelerated or converted pursuant to the terms hereof, the unpaid
      Principal Amount, shall be due and payable immediately on the Maturity
      Date.  Unless earlier accelerated or converted pursuant to the terms
      hereof, any unpaid interest as of the Maturity Date, as applicable, shall become
      immediately due and payable.  Any amounts owed hereunder shall be sent
      by wire transfer in accordance with instructions included in such notice or
      by
      check sent by mail to the address of the registered holder of this Note in
      lawful money of the United States.

     

    Unless
      agreed to by both parties, Company will issue no more than USD $2,400,000 in
      principal amount.

     

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              1.  

            	
              Definitions.  Unless
                otherwise defined herein, the following definitions shall apply for
                all
                purposes of this Note:

            


    

     

    1.1  “Maturity
      Date” means the earlier to occur of a Sale Event or the one year
      anniversary of the date hereof.

     

    1.2  “Next
      Financing” means the contemplated equity financing in which J.F.
      Mackie & Company Ltd. (“J.F. Mackie”) will act as placement agent for the
      Company in an approximately $10 million equity private placement (or such lesser
      amount as J.F. Mackie and the Company may agree to in writing).

     

    1.3  “Next
      Financing Stock” means the capital stock of the Company issued in
      the Next Financing.

     

    1.4  “Note”
      means this Convertible Promissory Note.

     

    1.5  “Person”
      means an individual, a corporation, an association, a joint venture, a
      partnership, a limited liability company, an estate, a trust, an unincorporated
      organization and any other entity or organization, governmental or
      otherwise.

     

    1.6  “Sale
      Event” means a bona fide, negotiated transaction or integrated
      series of transactions pursuant to which either (i) the Company merges or
      consolidates with any other non-affiliated entity or sells, exchanges or
      otherwise disposes of all or substantially all of its assets to a non-affiliated
      third party or (ii) in which in excess of 50% of the Company’s voting power is
      transferred in a private placement to one Person.

     

    
      	
              2.  

            	
              Conversion.  Concurrent
                with the consummation of a Next Financing prior to the Maturity Date,
                the
                outstanding Principal Amount hereunder shall be automatically converted,
                without any action by the Holder, into the Next Financing Stock at
                price
                equal to the lowest price per share of the Next Financing Stock in
                such
                Next Financing.  Anything in this Note to the contrary
                notwithstanding, in the event of such a conversion this Note shall
                not
                bear any interest and no interest shall be due with respect thereto
                following such conversion. Immediately upon conversion of the Note,
                the
                holder shall also be offered one half of one warrant (“Warrant”), for
                every share received from the conversion of the Note. The Warrant
                shall be
                exercisable at $2.75 per share for a period 2 years from the Closing
                Date
                of such Next
                Financing. 

            


    

     

    
      	
              3.  

            	
              Termination
                of Rights.  All rights with
                respect to the Note shall terminate on Conversion or on the Maturity
                Date,
                whether or not this Note has been surrendered.  Notwithstanding
                the foregoing, Holder agrees to surrender this Note to the Company
                for
                cancellation as soon as is possible following conversion or maturity
                of
                this Note.  The Holder shall not be entitled to receive the Next
                Financing Stock and half Warrants to be issued upon conversion of
                this
                Note until the original of this Note (or an executed affidavit of
                loss,
                damage or mutilation and agreement to indemnify the Company therefrom,
                in
                form reasonably requested by the Company) is surrendered (or delivered
                in
                the case of such affidavit and agreement) to the Company and the
                agreements referenced in this Section 3 have been executed and delivered
                to the Company.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              4.  

            	
              Defaults
                and Remedies.

            


    

     

    4.1           Events
      of Default

     

    .  Upon
      written notice to the Company by the Holder of its desire to deem any of the
      following events an Event of Default, the following events shall be deemed
      “Events of Default” hereunder:

     

    (a)  the
      Company fails to pay any amounts due under the Note when due;

     

    (b)  the
      Company is or becomes insolvent or is involved in any financial difficulty
      as
      evidenced by:

     

    (i)  an
      assignment, composition or similar device for the benefit of creditors,
      or

     

    (ii)  general
      failure to pay debts when due that results in a material action against the
      Company taken by a third party other than the Holder, or

     

    (iii)  an
      attachment or receivership of assets not dissolved within thirty (30) days,
      or

     

    (iv)  the
      appointment of a custodian, trustee or receiver for a substantial portion of
      the
      Company’s property, or

     

    (v)  the
      filing by the Company or any guarantor of a petition under any chapter of the
      United States Bankruptcy Code or the institution of any other proceeding under
      any law relating to bankruptcy, bankruptcy reorganization, insolvency or relief
      of the Company, or

     

    (vi)  the
      filing against the Company or any guarantor of an involuntary petition under
      any
      chapter of the United States Bankruptcy Code or the institution of any other
      proceeding under any law relating to bankruptcy, bankruptcy reorganization,
      insolvency or relief of the Company where such petition or proceeding is not
      dismissed within thirty (30) days from the date on which it is filed or
      instituted; or

     

    (c)  the
      Company materially breaches, which breach remains uncured for at least five
      (5)
      business days after receipt of notice from the Holder relating thereto, any
      of
      the provisions of this Note.

     

    4.2       Rights
      and Remedies on Default

     

    .  Upon
      the occurrence of an Event of Default, the Holder shall have, by way of example
      and not of limitation of the rights and remedies granted to the Holder in law,
      equity or otherwise, the following rights:

     

    (a)  the
      Holder may declare this Note to be immediately due and payable without
      presentment, demand, protest or notice of any kind, all of which are hereby
      expressly waived.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              4.3  

            	
                  Waiver

            


    

     

    .  No
      course of dealing or delay in accelerating this Note or in taking or failing
      to
      take any other action with respect to any Event of Default shall affect the
      Holder’s right to take such action at a later time.  No waiver as to
      any one Event of Default shall affect the Holder’s rights upon any other Event
      of Default.

     

    
      	
              4.4  

            	
                  Remedies
                Cumulative

            


    

     

    .  The
      Holder may exercise any or all of their rights and remedies upon an Event of
      Default concurrently with or independently of and without regard to the
      provisions of any other document which secures any obligation of the
      Company.

     

    
      	
              5.  

            	
              Prepayment.  This
                Note may be prepaid at any time in whole or in part without premium
                or
                penalty.  While the Note is outstanding and prior to conversion
                thereof, the Company shall not pay any dividends or distributions
                and
                shall not repurchase any shares of
                stock.

            


    

     

    
      	
              6.  

            	
              No
                Rights or Liabilities as
                Stockholder.  This Note does not
                by itself entitle the Holder to any voting rights or other rights
                as a
                stockholder of the Company.  No provisions of this Note, and no
                enumeration herein of the rights or privileges of the Holder, shall
                cause
                the Holder to be a stockholder of the Company for any
                purpose.

            


    

     

    
      	
              7.  

            	
              No
                Impairment.  The Company will not
                willfully avoid or seek to avoid the observance or performance of
                any of
                the terms of this Note, but will at all times in good faith assist
                in the
                carrying out of all such terms and in the taking of all such action
                as may
                be necessary or appropriate in order to protect the rights of the
                Holder
                under this Note against wrongful impairment.  Without limiting
                the generality of the foregoing, the Company will take all such action
                as
                may be necessary or appropriate in order that the Company may duly
                and
                validly issue the Next Financing Stock upon a conversion of this
                Note.

            


    

     

    
      	
              8.  

            	
              Waivers. The
                Company and all endorsers of this Note hereby waive notice, presentment,
                protest, notice of dishonor and all other demands in connection with
                the
                delivery, acceptance, performance and enforcement of this
                Note.

            


    

     

    
      	
              9.  

            	
              Attorneys’
                Fees.  In the event any party is
                required to engage the services of any attorneys for the purpose
                of
                enforcing this Note, or any provision thereof, the prevailing party
                shall
                be entitled to recover its reasonable expenses and costs in enforcing
                this
                Note, including reasonable attorneys’
fees.

            


    

     

    
      	
              10.  

            	
              Transfer.  This
                Note and any rights hereunder may not be assigned, conveyed or
                transferred, in whole or in part, by the Company, on the one hand,
                or the
                Holder, on the other hand, without the prior written consent of the
                Holder
                or the Company,
                respectively. 

            


    

     

    
      	
              11.  

            	
              Governing
                Law.  This Note shall be governed
                by and construed under the internal laws of the State of California,
                without reference to principles of conflict of laws or choice of
                laws. 

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              12.  

            	
              Headings.  The
                headings and captions used in this Note are used only for convenience
                and
                are not to be considered in construing or interpreting this
                Note. 

            


    

     

    
      	
              13.  

            	
              Notices.  Unless
                otherwise provided, any notice required or permitted under this Note
                shall
                be given in writing and shall be deemed effectively given (a) at
                the time
                of personal delivery, if delivery is in person; (b) one (1) business
                day
                after deposit with an express overnight courier for United States
                deliveries, or two (2) business days after such deposit for deliveries
                outside of the United States, with proof of delivery from the courier
                requested; or (c) three (3) business days after deposit in the United
                States mail by certified mail (return receipt requested) for United
                States
                deliveries when addressed to the party to be notified at the address
                indicated for such party on the signature pages hereto or, in the
                case of
                the Company, to the address on the first page of this Note, or at
                such
                other address as any party or the Company may designate by giving
                ten (10)
                days’ advance written notice to all other
                parties.

            


    

     

    
      	
              14.  

            	
              Amendments
                and Waivers.  This Note may only
                be amended in writing and if the amendment is signed by both the
                Company
                and the Holder.

            


    

     

    
      	
              15.  

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

            


    

     

                  IN
      WITNESS WHEREOF, the Company has caused this Note to be signed in its
      name as of the date first above written.

    


    


    THE  COMPANY:

    


    RED
      MILE
      ENTERTAINMENT, INC.

    


    


    


    By:     ________________________________

               Name:  __________________________

               Title:  ____________________________

    


    


    


    


    AGREED
      AND ACKNOWLEDGED:

    


    THE
      HOLDER:

    


    By:          ________________________________

    Name:  __________________________

    Title:  ____________________________

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Schedule
      6(l) – Material Contracts

     

    
      	
              1.  

            	
              Agreement
                with MTVN for a license to the intellectual property known as Jackass
                for
                video games on various hardware
                platforms.

            


    

     

    
      	
              2.  

            	
              Agreement
                with Fleshwound Films for a license to the intellectual property
                known as
                Crusty Demons of dirt for video games on various hardware
                platforms.

            


    

     

    
      	
              3.  

            	
              Limited
                use license from Disney interactive for a license to the intellectual
                property known as Disney’s Aladdin for use on a P.C. based video game
                (Disney’s Aladdin Chess
                Adventures).

            


    

     

    
      	
              4.  

            	
              License
                from IR Gurus for a license to the intellectual property known as
                "Heroes
                Of The Pacific" on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

     

    
      	
              5.  

            	
              License
                from Prodigy Design Ltd. for a license to the intellectual property
                known
                as "GripShift" on the Sony PSP.

            


    

     

    
      	
              6.  

            	
              Development
                Agreement with Prodigy Design Ltd. For the development of the video
                game
                known as "Jackass" on the Sony PS2 and
                PSP.

            


    

     

    
      	
              7.  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Heroes Of The Pacific" on the Sony
                PSP.

            


    

     

    
      	
              8.  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Heroes Over Europe" on the Sony PS3 and Microsoft Xbox
                360.

            


    

     

    
      	
              9.  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Equestriad" on the Sony PS2 and
                P.C’s.

            


    

     

    
      	
              10.  

            	
              Development
                agreement with Climax Action Limited for development of a video game
                known
                as "Crusty Demons" for the Sony PS2 and Microsoft
                Xbox.

            


    

     

    
      	
              11.  

            	
              Licensing
                Agreement with Sony Online Entertainment for the worldwide publishing
                rights to GripShift on the Sony
                PSP.

            


    

     

    
      	
              12.  

            	
              Co-publishing
                Agreement with Codemasters for the European publishing rights to
                Heroes Of
                The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

     

    
      	
              13.  

            	
              Publishing
                Agreement with Ubisoft for the North American publishing rights to
                Heroes
                Of The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

     

    
      	
              14.  

            	
              Publishing
                Agreement with Strategy First Corp. for the worldwide publishing
                rights to
                Disney’s Aladdin Chess Adventures.

            


    

     

    
      	
              15.  

            	
              Co-publishing
                Agreement with Evolved Games for the North American publishing rights
                to
                the Crusty Demons video game.

            


    

     

    
      	
              16.  

            	
              Co-publishing
                Agreement with Koch Media GmbH for the European publishing rights
                to the
                Crusty Demons video game.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              17.  

            	
              Letter
                of Intent with the other owners of IR Gurus for the option to purchase
                their ownership position in IR
                Gurus.

            


    

     

    
      	
              18.  

            	
              License
                Agreement with Marshmallowville Media, L.L.C. for a license to the
                intellectual properties known as Marshmallow Shooter or Johnny Blaster’s
                M-Force for video games on various hardware
                platforms.

            


    

     

    
      	
              19.  

            	
              License
                Agreement with Frank Miller Inc., Ground Zero Productions, Inc. and
                Union
                Entertainment, LLC for a license to the intellectual property known
                as
                "Sin City" or Frank Miller’s Sin City for video games on various hardware
                platforms.

            


    

     

    
      	
              20.  

            	
              Distribution
                Agreement with Navarre Corporation for distribution of products in
                North
                America.

            


    

     

    
      	
              21.  

            	
              Marketing
                Support Agreement with MTVN whereby MTVN will provide marketing support
                services in exchange for a royalty on each game sold in North
                America.

            


    

     

    
      	
              22.  

            	
              Development
                Agreement with MTVN for Jackass on the Nintendo DS
                Platform.

            


    

     

    
      	
              23.  

            	
              Investment
                Banking Services Agreement with Merriman Curhan Ford and Company
                for
                services in the United States.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      6(aa) – Material Liabilities

     

    Liabilities
      greater than $10,000 as of July 18, 2007

    


    
      	
              1.  

            	
              Commitments
                to pay IR Gurus for two months at approximately $50,000/month for
                Sin City
                preproduction services.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    Schedule
      6(qq) – Summary of Communications regarding Intellectual Property
      claims

     

    
      	
              1.  

            	
              On
                September 9, 2005, Vivendi Universal Games, Inc. (VUG) notified the
                Company that they believed the trademark "Heroes of the Pacific"
                infringed
                on a trademark of theirs "Aces of the
                Pacific".

            


    

     

    After
      thorough review of our intellectual property counsel, they informed us the
      VUG
      game was published in 1992 and appeared to be last used in 1997 or 1998 by
      VUG
      was long out of commercial use. Our council responded that their mark appeared
      to be abandoned.  There were two subsequent letters from VUG (the last
      in December 2005) where they disagreed with our assessment and tried to start
      a
      dialog toward our ceasing to use the mark or settlement (that is, pay them
      some
      sort of royalty).  We last responded on December 13, 2005 telling them
      that we found their claim baseless and were not interested in negotiating with
      them. They never responded to this last letter and we believe they have dropped
      the issue. We believe that there is no significant liability to VUG regarding
      this issue.

    


    
      	
              2.  

            	
              In
                February 2006, we were contacted by phone and later by email by Equity
                management, Inc. on behalf of Lockheed Martin Corporation.  In
                the 1940’s Lockheed manufactured an aircraft known as the P-38J
                Lightning.  They still have a trademark for model planes. Our
                counsel did not think this mark was strong or would carryover to
                video
                games.  We told Equity verbally that we did not believe the
                claim was valid and have not heard from them since. We believe that
                there
                is no significant liability to Lockheed Martin regarding this
                issue.

            


    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Schedule
      6(ss) – Restrictions on Intellectual Property Rights

     

    The
      software code for the following games (either completed or under development)
      is
      subject to a license which is fully transferable to purchasers of the
      business.  It is also transferable to others, but only with prior
      approval of developer, such approval not to be unreasonably
      withheld.

     

    
      	
              ·  

            	
              Development
                agreement with Climax Action Limited for development of a video game
                known
                as "Crusty Demons" for the Sony PS2 and Microsoft
                Xbox.

            


    

    
      	
              ·  

            	
              Development
                Agreement with Prodigy Design Ltd. For the development of the video
                game
                known as "Jackass" on the Sony PS2 and
                PSP.

            


    

    
      	
              ·  

            	
              There
                are restrictions on transfer of the code for "Jackass" in relation
                to the
                DS sku version, whereby the Corporation may only transfer the portion
                of
                the code for which it has paid the developer and not the unpaid work
                in
                progress.

            


    

    


    The
      software code and license for the intellectual property included within the
      game
      for the following games (either completed or under development) is subject
      to a
      license which is fully transferable to purchasers of the business.  It
      is also transferable to others, but only with prior approval of developer,
      such
      approval not to be unreasonably withheld.

     

    
      	
              ·  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Heroes Of The Pacific" on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

    
      	
              ·  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Heroes Of The Pacific" on the Sony
                PSP.

            


    

    
      	
              ·  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Heroes Over Europe" on the Sony PS3 and Microsoft Xbox
                360.

            


    

    
      	
              ·  

            	
              Development
                and Licensing Agreement with Prodigy Design Ltd. for the development
                of a
                game known as "GripShift" on the Sony
                PSP.

            


    

    
      	
              ·  

            	
              Development
                and Licensing Agreement with IR Gurus for the development of a game
                known
                as "Equestrian Challenge" on the Sony PS2 and
                P.C’s.

            


    

    


    The
      Publishing and Development Agreement with Buena Vista Games is only transferable
      to a controlled or controlling entity. The Company may request a transfer to
      a
      different entity, but approval is at Disney’s sole discretion and they may
      charge a transfer fee of up to $25,000.

     

    The
      license for Crusty Demons is only transferable as part of the direct or indirect
      merger, consolidation, corporate restructuring or sale or transfer of all or
      substantially all of our assets or a controlling interest of 51% or more of
      the
      voting securities of the company.

     

    The
      MTVN
      Merchandising and License Agreement is transferable as part of the direct or
      indirect merger, consolidation, corporate restructuring or sale or transfer
      of
      all or substantially all of our assets or a controlling interest of 51% or
      more
      of the voting securities of the company, so long as this entity is not a
      "Restricted Entity".  A Restricted Entity means a competitor to MTVN
      or an entity that’s capitalization and funding sources are less than those of
      Red Mile or the combined resources, post-merger will be less than Red Mile’s at
      the time of merger.  Other assignments, however, including a pledge,
      require MTVN’s consent.

     

    The
      Sin
      City License Agreement is transferable upon a change of control, but only upon
      approval from Frank Miller Inc.

     

    Licensing
      agreement with Marshmallowville Media, L.L.C. for a license to the intellectual
      properties known as Marshmallow Shooter or Johnny Blaster’s M-Force has no
      limitations.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      following agreements are exclusive licenses, which allows our licensee to sell
      a
      game in a specific territory and which therefore precludes the Company from
      directly selling or licensing that game in that territory.

     

    
      	
              ·  

            	
              Licensing
                Agreement with Sony Online Entertainment for the worldwide publishing
                rights to GripShift on the Sony
                PSP.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Codemasters for the European publishing rights to
                Heroes Of
                The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

    
      	
              ·  

            	
              Publishing
                Agreement with Ubisoft for the North American publishing rights to
                Heroes
                Of The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

    
      	
              ·  

            	
              Publishing
                Agreement with Strategy First Corp. for the worldwide publishing
                rights to
                Disney’s Aladdin Chess Adventures.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Evolved Games for the North American publishing rights
                to
                the Crusty Demons video game.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Koch Media GmbH for the European publishing rights
                to
                Crusty Demons.

            


    

    


    The
      following agreements are exclusive licenses, which allows our licensee to sell
      a
      game in a specific territory and which therefore precludes the Company from
      directly selling or licensing that game in that territory.

     

    
      	
              ·  

            	
              Licensing
                Agreement with Sony Online Entertainment for the worldwide publishing
                rights to GripShift on the Sony
                PSP.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Codemasters for the European publishing rights to
                Heroes Of
                The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

    
      	
              ·  

            	
              Publishing
                Agreement with Ubisoft for the North American publishing rights to
                Heroes
                Of The Pacific on the Sony PS2, Microsoft Xbox and
                PC’s.

            


    

    
      	
              ·  

            	
              Publishing
                Agreement with Strategy First Corp. for the worldwide publishing
                rights to
                Disney’s Aladdin Chess Adventures.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Evolved Games for the North American publishing rights
                to
                the Crusty Demons video game.

            


    

    
      	
              ·  

            	
              Co-publishing
                Agreement with Koch Media GmbH for the European publishing rights
                to
                Crusty Demons.