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BRIDGE LOAN AND REPRESENTATION AGREEMENT
THIS
AGREEMENT made as of the 14th day of March, 2007.
AMONG:
FIRST CAPITAL INVEST CORP. , a company incorporated under
the laws of Switzerland and having its head office located at
Florastrasse 14, Zurich, CH-8008, Switzerland
(hereinafter
called “ FCIC
”)
AND:
MEGA MEDIA GROUP, INC. , a company incorporated under the
laws of United States of America and having its head office located
at 3rd Floor, 598 Broadway, New York, New York USA
10012
(hereinafter
called “ MMG
”)
AND:
ALEKSANDR SHVARTS and ERIC SCHWARTZ, all of New York, New
York, USA
(hereinafter
called the “ Principal
Shareholders ”)
WHEREAS :
A.
MMG
requires operating capital.
B.
MMG
carries on the business of:
(1)
Mainstream
Entertainment and Media
Investing
in and developing a broad range of entertainment properties,
balancing acquisitions of existing media properties, such as
purchasing existing recordings and publishing catalogues with
an earnings history, with the development and acquisition of
newer media ventures, such as mobile and new technology media
projects, and signing and developing emerging musical artists.
In addition to acquiring and developing both established and
emerging media properties, MMG has also developed a management
division to serve the needs of artists.
(2)
Russian
Ethnic Media
Delivering
media products that are contemporary, entertaining, fun and
relevant to the ethnic Russian community in North America.
Working with cutting-edge news networks and contributing staff
in the entertainment and fashion industries both in the United
States and the Former Soviet Union, MMG is able to deliver a
unique blend of content that resonates with the “second
generation” Russian mentality: distinctly American with
a European flair.
-2-
C.
MMG
wishes to go public via a reverse takeover (a
“RTO”) of an existing public company ("Pubco")
trading on the over-the-counter bulletin board.
D.
FCIC is
an investment firm and wishes to provide corporate finance
advice and assist MMG in going public.
E.
The
Principal Shareholders are the controlling shareholders of MMG
and have represented and warranted that they have agreed to
tender their shares pursuant to an RTO with a Pubco introduced
by FCIC, provided that Pubco's share structure on completion
of the RTO approximates the pro forma structure set out in
Schedule L attached hereto.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the sum of ONE ($1.00) DOLLAR paid by each party to the other
and of the mutual covenants and agreements hereinafter contained,
the parties hereto agree each with the other as
follows:
1. INTERPRETATION
1.1
Where
used herein or in any amendments or Schedules hereto, the
following terms shall have the following
meanings:
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(a)
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“
Accountants
” means Kempisty and Company, a firm of Chartered Accountants
or Certified Public Accountants, independent of MMG and the
Principal Shareholders satisfactory to the United States Securities
and Exchange Commission;
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(b)
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“
Assets
” means all of the properties, assets, and undertaking of MMG
(including technology, intellectual property, and goodwill) for the
time being, present and future, real and personal, legal or
equitable, tangible or intangible and of whatsoever nature and
kind;
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(c)
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“
Bridge Loan
” means the loans in the approximate aggregate amount of TWO
HUNDRED AND FIFTY THOUSAND (US$250,000) DOLLARS, which may be made
to MMG by FCIC or arranged by FCIC pursuant to the terms of this
Agreement;
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(d)
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“
Business
” means the business in which MMG is engaged,
namely:
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(i)
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acquiring and
developing both established and emerging media properties, serving
the needs of artists, and delivering media products that are
contemporary, entertaining, fun and relevant to the ethnic Russian
community in North America, as described in the business plan
attached as Schedule A (the “Business Plan“);
and
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(ii)
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any other
enterprise that is directly related to the foregoing;
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(e)
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“
Event of
Default ” means any event set forth in section
13;
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(f)
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“
FCIC Shares
” means those fully paid and non assessable common shares of
MMG that may be issued to FCIC and/or FCIC’s clients by MMG
pursuant to this Agreement;
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(g)
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“
Intellectual
Property ” means all intellectual property owned by
MMG relating to the Business, including all patents, patent
applications, trade marks, service marks, trade dress, trade names,
copyrights, registrations or applications to register any of the
foregoing and any trade secrets;
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-3-
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(h)
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“
Lenders
” means lenders of the Bridge Loan, including
FCIC;
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(i)
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“
Maturity
Date ” means the date that is the earlier of six (6)
months from the date of any advance under the Bridge Loan or the
date that MMG or the Resulting Company (as hereinafter
defined) from the merger of MMG and Pubco, completes an equity
financing of not less than US $1,500,000;
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(j)
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“
MMG Financial
Statements ” means those audited financial statements
of MMG to be prepared by the Accountants as at January 31,
2007;
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(k)
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“
MMG
Shareholders ” means each of the shareholders of MMG
set out in the attached Schedule B;
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(l)
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“
MMG Shares
” means the five million two hundred seventy seven thousand
four hundred forty six (5,277,446) voting common shares US $0.001
par value and the fourteen million four hundred and seventeen
thousand (14,417,000) preferred shares US $0.001 par value in the
capital of MMG, held by the MMG Shareholders in the amounts set
opposite their names in the attached Schedule B, being all of the
currently issued and outstanding shares of MMG;
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(m)
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“
Principal
Sum ” means the sum of TWO HUNDRED AND FIFTY THOUSAND
(US$250,000) DOLLARS to be advanced in instalments under the Bridge
Loan;
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(n)
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“
Promissory
Note ” means the promissory note or notes to be
delivered by MMG to FCIC or the Lenders in substantially the form
attached as Schedule C;
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(o)
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“
Property
” means all of the properties, assets and undertaking of MMG,
for the time being, present and future, real and personal, legal or
equitable, tangible or intangible, and of whatsoever nature and
kind and wheresoever situate; and
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(p)
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" Pubco " means an
existing public company whose shares are quoted for trading on the
U.S.
over-the-counter bulletin board;
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(q)
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"
Resulting
Company " means the company resulting from the
merger/acquisition or other business combination between MMG and
Pubco; and
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(r)
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“
RTO ”
means reverse takeover.
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1.2
Wherever
the singular or the masculine are used herein the same shall
be deemed to include the plural or the feminine or the body
politic or corporate where the context or the parties so
require.
1.3
The
headings to the sections, paragraphs, subparagraphs or clauses
of this Agreement are inserted for convenience only and shall
not affect the construction hereof.
1.4
Unless
otherwise stated a reference herein to a numbered or lettered
section, paragraph, subparagraph or clause refers to the
section, paragraph, subparagraph or clause bearing that number
or letter in this Agreement. A reference to this Agreement or
herein means this Bridge Loan and Representation Agreement,
including the Schedules hereto, together with any amendments
thereof.
1.5
All
dollar amounts expressed herein refer to lawful currency of
the United States of America.
1.6
The
following schedules are attached to and form part of this
Agreement:
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Schedule A
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The Business
Plan, including description of subsidiaries |
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Schedule B
– |
MMG Capital
Structure |
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Schedule C
– |
Management
Prepared Financial Statements |
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Schedule D
– |
Form of
Promissory Note |
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Schedule E
– |
Employment,
Service & Pension Agreements of MMG |
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Schedule F
– |
Real Property
& Leases of MMG |
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Schedule G
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Encumbrances
on MMG’s Assets |
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Schedule H
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MMG
Litigation |
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Schedule I
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Options or
Rights to Purchase Securities of MMG |
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Schedule J
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Registered
Trademarks, Trade Names & Patents of MMG |
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Schedule L
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Resulting
Company Share Structure |
2.
ENGAGEMENT
2.1
MMG
hereby engages FCIC in the capacity of an independent
consultant and as its non exclusive fiscal agent for the
services described hereafter and FCIC accepts such
engagement.
2.2
MMG and
the Principal Shareholders agree that MMG shall have until one
(1) month from the date MMG delivers the MMG Financial
Statements to FCIC (the “ Due Diligence
Period ”) within which to complete its due
diligence investigations. Upon being fully satisfied with its
due diligence investigations of MMG and of the corporate
opportunities available to MMG, FCIC shall notify MMG in
writing of its satisfaction or non-satisfaction with its due
diligence investigations.
2.3
FCIC
acknowledges that MMG requires working capital for its
operations and agrees that it may advance monies to MMG under
the terms of the Bridge Loan during and after the Due
Diligence Period. The advances shall be made in United States
(“ US ”)
currency and each instalment shall be repaid by MMG on the
Maturity Date of the advance of each instalment or as
otherwise provided under this Agreement. The advances under
the Bridge Loan shall be subject to and in accordance with the
provisions of paragraphs 12.1
and hereof.
2.4
MMG and
the Principal Shareholders agree that upon FCIC advancing an
aggregate of TWO HUNDRED FIFTY THOUSAND (US$250,000) to MMG
under the Bridge Loan, they shall cause a nominee of FCIC to
be appointed to MMG’s board of directors.
2.5
MMG and
the Principal Shareholders acknowledge and agree that FCIC has
identified a suitable Pubco and that they will use their best
efforts to complete an RTO on the basis set out in section 14
hereof . MMG and the Principal Shareholders further agree
should MMG fail to complete the RTO, FCIC shall be entitled to
terminate its obligations under this Agreement and in addition
to any compensation due to it hereunder, MMG and the Principal
Shareholders will pay a break-up fee calculated on the basis
of one hundred (100%) percent of the amount of the Principal
Sum that has been advanced under the Bridge Loan to such
date.
3.
TERM
3.1
The term
of FCIC’s engagement shall commence effective March 1,
2007 (the “ Commencement Date
”) and shall run until the earlier of two (2) years from
the Commencement Date and the date on which MMG becomes a
public company, provided however, that in the event FCIC does
not fund the operations of MMG in the amount of at least TWO
HUNDRED AND FIFTY THOUSAND (US$250,000)
DOLLARS within one (1) month of the Commencement Date, then
the engagement of FCIC as the fiscal agent of MMG shall
terminate and FCIC shall be entitled to the repayment or at
its sole election, conversion of all or any part of the Bridge
Loan advanced to that date.
3.2
It is
understood and agreed that upon MMG becoming a public company
(the “ Resulting Company
”), a fresh agreement will be entered into by the
Resulting Company and FCIC and that FCIC will continue to
provide similar services to the Resulting Company as herein
provided.
4. SERVICES
4.1
FCIC
agrees to provide the following services to MMG:
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(a)
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use
reasonable efforts to arrange financings totalling TWO MILLION
(US$2,000,000) DOLLARS, on terms reasonably acceptable to MMG,
whether debt or equity or debt convertible into
equity;
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(b)
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provide
management advice, including assisting in the selection of
personnel;
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(c)
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provide
cash-flow analysis and recommend strategies for improving
same;
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(d)
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provide
cash-flow analysis and recommend strategies for improving
same;
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(e)
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search
for, identify and perform or direct all necessary due diligence on
Pubco;
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(f)
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introduce
MMG to professional advisors, including business valuators and
auditors;
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(g)
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assist
MMG in any valuation issues which may arise in connection with an
RTO;
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(h)
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introduce
MMG to a prospective market maker, and use reasonable efforts to
assist MMG in securing such market maker;
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(i)
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negotiate
the transaction terms with Pubco and the financing terms with any
underwriter, and assist in the “going public”
transaction, including assisting Pubco’s professional
advisors in dealing with the stock exchange or bulletin board on
which Pubco is listed; and
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(j)
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use
reasonable efforts to assist any sponsor in completing a major
financing, it being understood that the success of such financing
is not guaranteed.
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5. COMPENSATION
5.1
As
compensation for services hereunder, MMG agrees that it shall
pay FCIC during the term of this Agreement the sum of TEN
THOUSAND (US$10,000) DOLLARS per month and in the event FCIC
arranges any financing during the term of this Agreement,
which closes during or after such term on terms which are
substantially the same as the terms on which such financing
was commenced, MMG or the Resulting Company, as the case may
be, shall pay a fee to FCIC in the amount of ten (10%) percent
of the amount or amounts so arranged and issue warrants to
FCIC entitling it to purchase on the same terms and conditions
of any financing it arranges securities equivalent to ten
(10%) percent of such securities sold on the financing. FCIC
acknowledges that in the event a financing is arranged through
a public company, the fee shall be the responsibility of such
public company.
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5.2
In
addition, notwithstanding anything to the contrary contained
herein, in the event MMG goes public by any manner including
an RTO or initial public offering (“ IPO ”), MMG
shall issue FCIC such number of common shares without par
value in the capital of MMG as fully paid and non-assessable
(the “ Finder's Shares
”), such that on completion of the RTO or IPO, FCIC will
hold approximately three (3%) percent of the shares issued by
the Resulting Company in exchange for all the issued and
outstanding shares of MMG.
6. COVENANTS,
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS AND
MMG
The
Principal Shareholders and MMG jointly and severally covenant
with and represent and warrant to FCIC as follows, and
acknowledge that FCIC is relying upon such covenants,
representations and warranties in connection with the advance
of the Bridge Loan by FCIC and its clients and its retention
as MMG’s fiscal agent that:
6.1
MMG has
been duly incorporated and organized, is validly existing and
is in good standing under the laws of United States of
America; it has the corporate power to own or lease its
property and to carry on the Business; it is duly qualified as
a corporation to do business and is in good standing with
respect thereto in each jurisdiction in which the nature of
the Business or the property owned or leased by it makes such
qualification necessary; and it has all necessary licenses,
permits, authorizations and consents to operate its Business
in accordance with the terms of its Business
Plan.
6.2
The
authorized capital of MMG consists of twenty million
(20,000,000) voting common shares, par value US$0.001 of which
five million two hundred seventy seven thousand four hundred
and forty six (5,277,446) voting common shares have been duly
issued and are outstanding as fully paid and
nonassessable and seventy million (70,000,000) preferred
shares par value US$0.001 of which fourteen million four
hundred and seventeen thousand (14,417,000) preferred shares
have been duly issued and are outstanding as fully paid and
non-assessable.
6.3
The MMG
Shares owned by the MMG Shareholders are owned by them as the
beneficial and recorded owners with a good and marketable
title thereto, free and clear of all mortgages, liens,
charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever as more particularly set
out in Schedule B hereof.
6.4
No
person, firm or corporation has any agreement or option or any
right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for
the purchase from the MMG Shareholders of any of the MMG
Shares held by any of them.
6.5
No
person, firm or corporation has any agreement or option,
including convertible securities, warrants or convertible
obligations of any nature, or any right or privilege (whether
by law, pre-emptive or contractual) capable of becoming an
agreement or option for the purchase, subscription, allotment
or issuance of any of the unissued shares in the capital of
MMG or of any securities of MMG, except as set out in Schedule
H attached hereto. MMG and the Principal
Shareholders covenant and agree that the outstanding loans set
out in Schedule H shall be converted into that number of
common shares set out opposite each lender's name in Schedule
H prior to the RTO, such that MMG will have issued a maximum
of four million four hundred fifty four thousand one hundred
eighty three (4,454,183) additional common shares in
satisfaction of loans in the aggregate amount of ONE MILLION
TWO HUNDRED EIGHTY ONE THOUSAND FOUR HUNDRED FIFTY FIVE
(US$1,281,455) DOLLARS.
6.6
FCIC
understands that approximately $400,000 of convertible loans
may still be outstanding as at the time of the
RTO.
6.7
Other
than as disclosed in Schedule A attached hereto, MMG does not
have any subsidiaries or agreements of any nature to acquire
any subsidiary or to acquire or lease any other business
operations and will not acquire, or agree to acquire, any
subsidiary or business without the prior written consent of
FCIC, which consent shall not unreasonably be
withheld.
6.8
Notwithstanding anything to the contrary contained
herein and any further share, option, warrant, or rights being
issued, the relative percentages as between the existing
shareholders of the Pubco, FCIC and MMG Shareholders at the
time of the RTO shall remain as set out in Schedule
L.
6.9
Except
as described in Schedule I and article 6.5 hereof, MMG will
not, without the prior written consent of FCIC, issue any
additional shares from and after the date hereof or create any
options, warrants or rights for any person to subscribe for or
acquire any unissued shares in the capital of MMG, without the
prior written consent of FCIC. The failure of MMG to
renegotiate the NIR Funding, as described in Schedule I, prior
to the RTO on terms that are acceptable to FCIC, shall be
considered an Event of Default under section
13.1.
6.10
MMG is not a
party to or bound by any agreement or guarantee, warranty,
indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or
otherwise) or indebtedness of any other person, firm or
corporation, or of any products related to the
Business.
6.11
The books and
records of MMG fairly and correctly set out and disclose in
all material respects, in accordance with generally accepted
accounting principles, the financial position of MMG as at the
date hereof, and all material financial transactions of MMG
relating to the Business have been accurately recorded in such
books and records.
6.12
MMG shall
immediately cause the Accountants to commence the preparation
of the MMG Financial Statements and represent that the MMG
Financial Statements will present fairly the assets,
liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of MMG as at the date
thereof and there will not be any material increase in such
liabilities other than in the ordinary course of Business and
the MMG Financial Statements will not show any material
differences from the management prepared and reviewed
financial statements (the “ Management
Statements ”) attached as Schedule C
hereto.
6.13
The entering
into of this Agreement and the consummation of the
transactions contemplated hereby will not:
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(a)
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result
in the violation of any of the terms and provisions of the
constating documents or bylaws of MMG or of any indenture,
instrument or agreement, written or oral, to which MMG or the
Principal Shareholders may be a party; or
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(b)
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to
the best of the knowledge of MMG and the Principal Shareholders,
result in the violation of any law, regulation, municipal bylaw or
ordinance.
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6.14
This agreement
has been duly authorized, validly executed and delivered by
MMG and the Principal Shareholders.
6.15
The Business
has been carried on in the ordinary and normal course by and
will be carried on by MMG in the ordinary and normal course
after the date hereof other than by mutual agreement of MMG
and FCIC.
6.16
Except as
disclosed in the Schedules hereto:
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(a)
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MMG
is not a party to any written or oral employment, service or
pension agreement;
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(b)
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MMG
does not have outstanding any bonds, debentures, mortgages, notes
or other indebtedness, and MMG is not under any agreement to create
or issue any bonds, debentures, mortgages, notes or other
indebtedness;
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(c)
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MMG
is not the owner, lessee or under any agreement to own or lease any
real property;
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(d)
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MMG
owns, possesses and has good and marketable title to its
undertaking, property and Assets, and without restricting the
generality of the foregoing, all those assets described in the
balance sheet included in the Management Statements, free and clear
of any and all mortgages, liens, pledges, charges, security
interests, encumbrances, actions, claims or demands of any nature
whatsoever or howsoever arising.
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(e)
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MMG
does not have any outstanding material agreements (including
employment agreements) contracts or commitment, whether written or
oral, of any nature or kind whatsoever, except:
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(i)
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agreements,
contracts and commitments in the ordinary course of
business;
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(ii)
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service contracts
on office equipment; and
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(iii)
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the employment,
services and pension agreements described in the Schedules
hereto;
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(f)
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there
are no actions, suits or proceedings (whether or not purportedly on
behalf of MMG), pending or threatened against or affecting MMG or
affecting the Business, at law or in equity, or before or by any
federal, provincial, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign and neither MMG nor the Principal Shareholders
are aware of any existing ground on which any such action, suit or
proceeding might be commenced with any reasonable likelihood of
success.
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6.17
MMG has its
property insured against loss or damage by all insurable
hazards or risks on a replacement cost basis and such
insurance coverage will be continued in full force and effect;
to the best of the knowledge of MMG and the Principal
Shareholders, MMG is not in default with respect to any of the
provisions contained in any such insurance policy and has not
failed to give any notice or present any claim under any such
insurance policy in due and timely fashion.
6.18
MMG is not in
material default or breach of any contracts, agreements,
written or oral, indentures or other instruments to which it
is a party and there exists no state of facts which after
notice or lapse of time or both which would constitute such a
default or breach, and all such contracts, agreements,
indentures or other instruments are now in good standing and
MMG is entitled to all benefits thereunder.
6.19
To the best of
the knowledge of MMG and the Principal Shareholders, MMG is
conducting and will conduct the Business in compliance with
all applicable laws, rules and regulations of each
jurisdiction in which the Business is or will be carried on,
MMG is not in material breach of any such laws, rules or
regulations and is fully licensed, registered or qualified in
each jurisdiction in which MMG owns or leases property or
carries on or proposes to carry on the Business to enable the
Business to be carried on as now conducted and its property
and assets to be owned, leased and operated, and all such
licenses, registrations and qualifications are valid and
subsisting and in good standing and that none of the
same
contains or will contain any provision, condition or
limitation which has or may have a materially adverse effect
on the operation of the Business.
6.20
All facilities
and equipment owned or used by MMG in connection with the
Business are in good operating condition and are in a state of
good repair and maintenance.
6.21
Except as
disclosed in the Management Statements, MMG has no loans or
indebtedness outstanding which have been made to directors,
former directors, officers, shareholders and employees of MMG
or to any person or corporation not dealing at arm’s
length with any of the foregoing.
6.22
MMG has made
full disclosure to FCIC of all aspects of the Business and has
made all of its books and records available to the
representatives of FCIC in order to assist FCIC in the
performance of its due diligence searches and no material
facts in relation to the Business have been concealed by MMG
or the Principal Shareholders.
6.23
To the best of
their knowledge, information and belief, all due diligence
material provided to FCIC and its counsel is accurate in all
respects.
6.24
There are no
material liabilities of MMG of any kind whatsoever, whether or
not accrued and whether or not determined or determinable, in
respect of which MMG or FCIC may become liable on or after the
consummation of the transaction contemplated by this
Agreement, other than liabilities which may be reflected on
the MMG Financial Statements, liabilities disclosed or
referred to in this Agreement or in the Schedules attached
hereto, or liabilities incurred in the ordinary course or
business and attributable to the period since the date of the
MMG Financial Statements, none of which has been materially
adverse to the nature of the Business, results of operations,
assets, financial condition or manner of conducting the
Business.
6.25
The Articles,
bylaws and other constating documents of MMG in effect with
the appropriate corporate authorities as at the date of this
Agreement will remain in full force and effect without any
changes thereto unless such changes are expressly agreed to by
FCIC.
6.26
The directors
and officers of MMG are as follows:
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Name |
Position |
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Aleksandr
Shvarts |
Chief Executive
Officer |
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David
Kokakis |
Chief Operating
Officer |
| |
Gennady
Pomeranets |
Chief Financial
Officer |
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Eric
Schwartz |
Executive Vice
President |
6.27
MMG is not a
party to any collective bargaining agreement or other
agreement made with a trade union and there is no union which
has been certified as the bargaining agent for the employees
of MMG.
6.28
No claim shall
be made by FCIC against MMG or the Principal Shareholders as a
result of any misrepresentation or as a result of the breach
of any covenant or warranty herein contained unless the
aggregate loss or damage to FCIC exceeds FIVE THOUSAND
(US$5,000) DOLLARS.
7.
REPRESENTATIONS AND WARRANTIES REGARDING MMG’S
TECHNOLOGIES/INTELLECTUAL PROPERTY
7.1
MMG and
the Principal Shareholders hereby represent and warrant to
FCIC that:
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(a)
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with
respect to the Intellectual Property referred in Schedule
A:
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(i)
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MMG is the sole and
exclusive owner and has the sole and exclusive right to use,
license and convey the item in the conduct of its
Business;
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(ii)
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to the best of the
knowledge of MMG and the Principal Shareholders, no proceedings are
pending or threatened against MMG or against any other persons
which challenge the validity, enforceability, use or ownership of
the item, except as described in Schedule H attached
hereto;
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(iii)
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to the best of the
knowledge of MMG and the Principal Shareholders (without having
made independent searches or investigation in connection
therewith), the Intellectual Property does not infringe upon or
otherwise violate the intellectual property including, but without
restricting the generality thereof, patents, trademarks, service
marks, or copyrights, domestic or foreign, of others and, to the
knowledge of MMG and the Principal Shareholders, is not being
infringed upon by others and is not subject to any outstanding
order, decree, judgment, stipulation or charge;
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(iv)
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MMG has not
received any charge of interference or infringement with respect to
any item;
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(v)
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to the best of the
knowledge of MMG and the Principal Shareholders (without having
made independent searches or investigation in connection
therewith), there is no invention or application therefor or
similar property which infringes upon the item;
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(vi)
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MMG shall have
taken all steps reasonable and duly necessary to protect the
Intellectual Property;
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(vii)
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MMG has supplied
(or made available to) FCIC true and complete copies of all written
documentation evidencing its ownership of each item and all
licenses and other contracts relating thereto, or to which a
reference is made in Schedule A; and
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(viii)
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MMG has the right
to use all of the registered trade marks, trade names and patents,
both domestic and foreign, in relation to the Business as set out
in the Schedules hereto;
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(b)
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to
the best of the knowledge of MMG and the Principal Shareholders
(without having made independent searches or investigation in
connection therewith), MMG has not infringed, misappropriated or
otherwise violated any intellectual property rights of any third
party, nor will any infringement, misappropriation, or violation
occur as a result of the continued operation of the business by MMG
as now conducted.
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8. COVENANTS,
REPRESENTATIONS AND WARRANTIES OF FCIC
8.1
FCIC
covenants with and represents and warrants to MMG and the
Principal Shareholders as follows and acknowledges that they
are relying upon such covenants, representations and
warranties in entering into this Agreement:
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(a)
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the
entering into of this Agreement and the consummation of the
transactions contemplated hereby will not result in the violation
of any of the terms and provisions of the constating documents or
bylaws of FCIC or of any indenture, instrument or agreement,
written or oral, to which FCIC may be a party;
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(b)
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this
Agreement has been duly authorized, validly executed and delivered
by FCIC; and
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(c)
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no
claims shall be made by MMG or the Principal Shareholders against
FCIC as a result of any misrepresentation or as a result of the
breach of any covenant or warranty herein contained unless the
aggregate loss or damage to MMG or the Principal Shareholders
exceeds FIVE THOUSAND (US$5,000) DOLLARS.
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9. SURVIVAL
9.1
All
representation, warranties, covenants and agreements made
hereunder shall survive the payment of the Bridge Loan and
shall continue in full force and effect until the repayment or
conversion of the Bridge Loan.
10. SECURITY
10.1
To secure the
repayment of the Bridge Loan and the payment of all other
monies due hereunder, MMG agrees to execute a
Promissory
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