Document:

f8k050708ex10v_redmile.htm

    Exhibit
10.5

    

     

    SUBORDINATION
AND POSTPONEMENT AGREEMENT

     

    THIS
AGREEMENT, dated for reference May 7, 2008, is made among:

     

    

     

    SILVERBIRCH INC., an Ontario
corporation, having an office at Suite 500, 150 Ferrand Drive, Toronto, Ontario
M3C 3E5

     

     (“Senior Lender”)

     

    AND:

     

    TIGER PAW CAPITAL CORP., an
Alberta corporation, having an office at 1802 16th Street
SW, Calgary, Alberta T2T E42

     

     (“Subordinate
Lender”)

     

    AND:

     

    RED MILE ENTERTAINMENT INC., a
Delaware corporation, having an office at 223 San Anselmo Way, #3, San Anselmo,
CA 94960

     

     (the
“Borrower”)

     

    WHEREAS:

     

    A. The
Borrower is indebted to the Subordinate Lender in an amount of up to
CAD$1,000,000 under or by virtue the Subordinate Lender Credit Agreement and
Subordinate Lender Promissory Note, secured by the Subordinate Lender Security
(capitalized terms as hereinafter defined).

     

    B. The
Senior Lender has agreed, subject to certain conditions, to lend monies to the
Borrower in the principal amount of CAD$750,000 under or by virtue of the Senior
Lender Credit Agreement and Senior Lender Promissory Note, and secured by the
Senior Lender Security (capitalized terms as hereinafter defined).

     

    C. The
parties have agreed that all indebtedness of the Borrower to the Subordinate
Lender and the Subordinate Lender Charges will be subordinate to the
indebtedness of the Borrower to the Senior Lender and the Senior Lender Charges,
as under the terms of this Agreement.

     

    D. The
parties hereto have agreed to enter into this Agreement in order to set out the
respective priorities of the Senior Lender Charges and the Subordinate Lender
Charges and to establish certain terms and conditions in respect of the
Subordinate Lender Indebtedness and the Senior Lender Indebtedness (capitalized
terms as hereafter defined).

     

    NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the
respective covenants and agreements of the parties specified in this Agreement
and of other good and valuable consideration (the receipt and sufficiency of
which is hereby acknowledged by each of the parties hereto) the parties hereto
agree as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -2-

     

     

    
      	
              1.  

            	
              Definitions

            

    

     

    In this Agreement the following terms
shall have the following meanings:

     

    
      	
              (a)  

            	
              “Business Day” means any
      day, other than a Saturday, Sunday or statutory holiday in
      Ontario;

            

    

     

    
      	
              (b)  

            	
              “Charge” means any
      mortgage, assignment, pledge, hypothecation, lien, lease, charge, security
      interest, conditional sale or other title retention agreement, right of
      set-off or other encumbrance of any nature whatsoever in or of the
      Collateral, whether now existing or hereafter
  arising;

            

    

     

    
      	
              (c)  

            	
              “Collateral” means all of
      the present and after-acquired property, both real and personal, assets
      and undertaking of the Borrower, and for clarification purposes, any
      reference to “Collateral” in this Agreement shall, unless the context
      shall otherwise require, be deemed to be a reference to “all or any part
      of the Collateral”;

            

    

     

    
      	
              (d)  

            	
              “Demand” means a demand
      made by a Secured Party for the payment in full of any indebtedness owing
      to such Secured Party by the Borrower or the acceleration by a Secured
      Party of the time for payment of any of such indebtedness to a time prior
      to its stated maturity;

            

    

     

    
      	
              (e)  

            	
              “Distribution” has the
      meaning set forth in section 9
      below;

            

    

     

    
      	
              (f)  

            	
              “Enforcement Action”
      means any action to enforce payment of or recover indebtedness or
      liabilities or to enforce any Charge or any rights and remedies of a
      Secured Party in connection therewith, whether by way of power of sale,
      taking of possession, commencement of bankruptcy proceedings, appointment
      of a Receiver, foreclosure proceedings or otherwise, but excludes making
      Demand or issuing a Notice of
Default;

            

    

     

    
      	
              (g)  

            	
              “Notice of Default”
      means a notice in writing of one or more defaults or events of default
      issued by the Subordinate Lender to the Borrower in relation to any of the
      Subordinate Lender Loan Documents or a notice in writing of one or more
      defaults or events of default issued by the Senior Lender to the Borrower
      in relation to any of the Senior Lender Loan
  Documents;

            

    

     

    
      	
              (h)  

            	
              “Purchase Agreement”
      means the purchase of all of the issued and outstanding shares of the
      Borrower by the Senior Lender, as contemplated by a letter of intent
      agreement between the Borrower and Senior Lender dated or about May 6,
      2008 (“LOI”);

            

    

     

    
      	
              (i)  

            	
              “Receiver” means a
      receiver, receiver-manager, custodian and receiver and
      manager;

            

    

     

    
      	
              (j)  

            	
              “Secured Parties” means
      the Subordinate Lender and the Senior Lender and “Secured Party” means
      either one of them;

            

    

     

    
      	
              (k)  

            	
              “Senior Lender Charges”
      means any and all Charges now or hereafter held by the Senior Lender as
      they may be modified, amended, extended or supplemented from time to time,
      pursuant to the Senior Lender Security and as set out in Part One of
      Schedule “A” hereto;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -3-

    

     

    
      	
              (l)  

            	
              “Senior Lender Credit
      Agreement” means the loan agreement between the Senior Lender and
      the Borrower dated May 7, 2008 whereby the Senior Lender approved a loan
      facility of CAD$750,000 in favour of the
  Borrower;

            

    

     

    
      	
              (m)  

            	
              “Senior Lender Event of
      Default” means the making of any Demand by the Senior Lender or the
      occurrence of any default or event of default by the Borrower under any of
      the Senior Lender Loan Documents;

            

    

     

    
      	
              (n)  

            	
              “Senior Lender Promissory
      Note” means the promissory note between the Senior Lender and the
      Borrower, dated May 7, 2008 for the principal sum of
    $750,000;

            

    

     

    
      	
              (o)  

            	
              “Senior Lender
      Indebtedness” means all present and future indebtedness and other
      liabilities and obligations, including, without limitation, all interest,
      charges, fees and costs, whether absolute or contingent, matured or
      unmatured, at any time or from time to time owing or otherwise payable by
      the Borrower (whether alone or with another or others and whether as
      principal or surety), or any of them,  to the Senior Lender
      arising under or in connection with the credit facilities made available
      by the Senior Lender pursuant to the Senior Lender Promissory Note for the
      purposes set out therein;

            

    

     

    
      	
              (p)  

            	
              “Senior Lender Loan
      Documents” means, collectively, the Senior Lender Credit Agreement
      and Senior Lender Promissory Note any and all other instruments,
      agreements and documents entered into by the Borrower with or in favour of
      the Senior Lender as evidence of, security for or otherwise in relation to
      the credit facilities made available pursuant to the Senior Lender Credit
      Agreement, including, without limitation, the Senior Lender Security, all
      as any of them may be amended, supplemented, restated or replaced from
      time to time;

            

    

     

    
      	
              (q)  

            	
              “Senior Lender Security”
      means, collectively, any and all of the instruments, agreements and
      documents pursuant to which any of the Senior Lender Charges have been
      created, including, without limitation, the Senior Lender Security
      Agreements;

            

    

     

    
      	
              (r)  

            	
              “Senior Lender Security
      Agreements” means the general security agreement between the
      Borrower and the Senior Lender governed by Ontario law dated May 7, 2008,
      and the general security agreement between the Borrower and the Lender
      governed by California law, dated May 7,
2008;

            

    

     

    
      	
              (s)  

            	
              “Subordinate Lender
      Charges” means any and all Charges now or hereafter held by the
      Subordinate Lender over the property and assets of the Borrower,
      including, without limitation, general security agreements from the
      Borrower, as they may be modified, amended, extended or supplemented from
      time to time, and the Charges referred to in Part Two of Schedule A
      hereto;

            

    

     

    
      	
              (t)  

            	
              “Subordinate Lender Credit
      Agreement” means the uncommitted revolving line of credit
      agreement, as amended between the Subordinate Lender and the Borrower
      dated February 11, 2008;

            

    

     

    
      	
              (u)  

            	
              “Subordinate Lender
      Indebtedness” means all present and future indebtedness and other
      liabilities and obligations, including, without limitation, all interest,
      charges, fees and costs, whether absolute or contingent, matured or
      unmatured, at any time or from time to time owing or otherwise payable by
      the Borrower (whether alone or with another or others and whether as
      principal or surety), or any of them, to the Subordinate Lender arising
      under or in connection with any loan or loans or other credit facilities
      made available by the Subordinate Lender to the Borrower, or any of
      them;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -4-

    

     

     

    
      	
              (v)  

            	
              “Subordinate Lender Loan
      Documents” means, collectively, the Subordinate Lender Credit
      Agreement and Subordinate Lender Promissory Note, and any and all
      instruments, agreements and documents, entered into by the Borrower, or
      any of them, with or in favour of the Subordinate Lender as evidence of,
      security for or otherwise in relation to the Subordinate Lender Credit
      Agreement, including, without limitation the Subordinate Lender Security,
      all as any of them may be amended, supplemented, restated or replaced from
      time to time;

            

    

     

    
      	
              (w)  

            	
              “Subordinate Lender Promissory
      Note” means the promissory note between the Subordinate Lender and
      the Borrower, as amended, for the principal sum of $1,000,000 and dated
      for reference  ,
      2008;

            

    

     

    
      	
              (x)  

            	
              “Subordinate Lender
      Security” means, collectively, any and all of the instruments,
      agreements and documents pursuant to which any of the Subordinate Lender
      Charges have been created, together with any amendments and supplements
      thereto and replacements thereof;
and

            

    

     

    
      	
              (y)  

            	
              “UCC” means the Uniform
      Commercial Code.

            

    

     

    
      	
              2.  

            	
              Representations
      and Warranties

            

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender represents and warrants in favour of the Senior Lender
      that:

            

    

     

    
      	
              (i)  

            	
              it
      has not assigned any of its right, title or interest in or to any of the
      Subordinate Lender Charges or the Subordinate Lender
      Indebtedness;

            

    

     

    
      	
              (ii)  

            	
              the
      Borrower is not, to the best of the Subordinate Lender’s knowledge, in
      default under any of the Subordinate Lender Loan Documents;
      and

            

    

     

    
      	
              (iii)  

            	
              it
      is entitled to all of the monies secured by the Subordinate Lender
      Charges.

            

    

     

    
      	
              (b)  

            	
              The
      Senior Lender represents and warrants in favour of the Subordinate Lender
      that:

            

    

     

    
      	
              (i)  

            	
              it
      has not assigned any of its right, title or interest in or to any of the
      Senior Lender Charges or the Senior Lender
  Indebtedness;

            

    

     

    
      	
              (ii)  

            	
              the
      Borrower is not, to the best of the Senior Lender’s knowledge, in default
      under any of the Senior Lender Loan Documents;
  and

            

    

     

    
      	
              (iii)  

            	
              it
      is entitled to all of the monies secured by the Senior Lender
      Charges.

            

    

     

    
      	
              3.  

            	
              Consent
      to Security

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -5-

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender hereby consents to the creation, issuance, delivery,
      registration and perfection of the Senior Lender Charges and the
      incurrence by the Borrower of the Senior Lender Indebtedness and further
      waives any breach or default under any of the Subordinate Lender Loan
      Documents and the Subordinate Lender Indebtedness, respectively, which may
      have been occasioned by the creation, issuance, delivery, registration or
      perfection of any of the Senior Lender Charges or the incurrence by the
      Borrower of the Senior Lender Indebtedness. Notwithstanding the foregoing,
      the Subordinate Lender’s consent to the Senior Lender Charges shall not be
      considered or deemed to be consent to any change of ownership or control
      of the Borrower which may result in a default by the Borrower under any of
      the Subordinate Lender Charges.

            

    

     

    
      	
              (b)  

            	
              The
      Senior Lender hereby consents to the creation, issuance, delivery,
      registration and perfection of the Subordinate Lender Charges and the
      incurrence by the Borrower of the Subordinate Lender Indebtedness and
      further waives any breach or default under any of the Senior Lender Loan
      Documents and the Senior Lender Indebtedness, respectively, which may have
      been occasioned by the creation, issuance, delivery, registration or
      perfection of any of the Subordinate Lender Charges or the incurrence by
      the Borrower of the Subordinate Lender
  Indebtedness.

            

    

     

    
      	
              4.  

            	
              Priority
      and Postponement

            

    

     

    
      	
              (a)  

            	
              The
      Senior Lender Loan Documents shall, in all respects, rank in priority to
      the Subordinate Lender Loan Documents and the Senior Lender Charges shall
      have priority to the Collateral over any and all of the Subordinate Lender
      Charges.

            

    

     

    
      	
              (b)  

            	
              The
      Subordinate Lender hereby subordinates and postpones all of its right,
      title and interest in and to the Collateral under or by virtue of the
      Subordinate Lender Security to the prior right, title and interest of the
      Senior Lender in and to the Collateral under or by virtue of the Senior
      Lender Security, including all principal, interest and costs payable by
      the Borrower to the Senior Lender pursuant to the Senior Lender Credit
      Agreement and Senior Lender Promissory
Note.

            

    

     

    
      	
              5.  

            	
              Application
      of Priorities

            

    

     

    
      	
              (a)  

            	
              The
      priorities established in this Agreement shall be effective
      notwithstanding:

            

    

     

    
      	
              (i)  

            	
              any
      provisions of the common law or any statute (including without limitation
      the Personal Property
      Security Act (Ontario) and the UCC) to the
  contrary;

            

    

     

    
      	
              (ii)  

            	
              the
      affixation or degree of affixation to any real property of all or any part
      of the Collateral;

            

    

     

    
      	
              (iii)  

            	
              the
      respective dates or times of execution, delivery or enforcement of any of
      the Subordinate Lender Security and the Senior Lender
      Security;

            

    

     

    
      	
              (iv)  

            	
              the
      respective dates or times of attachment, registration or perfection or the
      crystallization of any floating charge constituting part of the
      Subordinate Lender Charges or the Senior Lender
  Charges;

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -6-

    

     

     

    
      	
              (v)  

            	
              the
      respective dates or times of registration or filing of any financing
      statements or other instruments or documents in respect of any of the
      Subordinate Lender Charges and the Senior Lender
  Charges;

            

    

     

    
      	
              (vi)  

            	
              the
      timing of any advances or re-advances secured by or demand made in respect
      of any indebtedness secured by any of the Subordinate Lender Charges and
      the Senior Lender Charges; and

            

    

     

    
      	
              (vii)  

            	
              the
      giving of or the failure to give any notice to any person in respect of
      the creation or granting of any of the Senior Lender Charges or in respect
      of this Agreement or the timing of the giving of such
    notice.

            

    

     

    
      	
              6.  

            	
              Consent
      to Payments

            

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender postpones payment of the Subordinate Lender
      Indebtedness to the prior payment and satisfaction of the Senior Lender
      Indebtedness in accordance with the terms of this
      Agreement.  Except as provided herein, the Subordinate Lender
      shall not accept from the Borrower or from any guarantor of the
      Subordinate Lender Indebtedness, and the Borrower shall not pay, any
      payments, whether of principal, interest, fees, costs or expenses under
      the Subordinate Lender Indebtedness, while any of the Senior Lender
      Indebtedness remains outstanding.

            

    

     

    
      	
              7.  

            	
              Duration

            

    

     

    
      	
              (a)  

            	
              The
      provisions of this Agreement shall remain in effect until the first of the
      following dates, being:

            

    

     

    
      	
              (i)  

            	
              the
      date of the cancellation of this Agreement following a written consent of
      all the parties hereto;

            

    

     

    
      	
              (ii)  

            	
              the
      date on which the Senior Lender Indebtedness is indefeasibly repaid and
      satisfied; or

            

    

     

    
      	
              (iii)  

            	
              the
      date on which the Subordinate Lender Indebtedness is indefeasibly repaid
      and satisfied in accordance with this
Agreement.

            

    

     

    
      	
              8.  

            	
              Notice
      of Default and Demand

            

    

     

    
      	
              (a)  

            	
              Each
      Secured Party shall, concurrently with the giving of any Notice of
      Default, Demand or any pleadings in respect of any Enforcement Action,
      provide a copy of such Notice of Default, Demand or pleadings to the other
      Secured Party.

            

    

     

    
      	
              (b)  

            	
              A
      Notice of Default shall be deemed to have been terminated
    if:

            

    

     

    
      	
              (i)  

            	
              the
      Secured Party that issued such Notice of Default subsequently issues to
      the Borrower a written waiver of the event or events of default specified
      in such Notice of Default; or

            

    

     

    
      	
              (ii)  

            	
              the
      Secured Party that issued such Notice of Default subsequently issues to
      the Borrower a written notice revoking such Notice of
    Default.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -7-

    

     

    
      	
              (c)  

            	
              Each
      Secured Party shall provide the other Secured Party with a copy of any
      waiver or revocation terminating any Notice of Default concurrently with
      the issuance of such waiver or revocation notice to the
      Borrower.

            

    

     

    
      	
              (d)  

            	
              No
      Secured Party shall have any liability whatsoever to the other Secured
      Party for any inadvertent failure to provide such other Secured Party with
      a copy of any Notice of Default, Demand or waiver or termination thereof
      as contemplated in this Section, provided that nothing in this section
      shall in any way limit or derogate from any of the rights or obligations
      under section 10
  below.

            

    

     

    
      	
              9.  

            	
              Priority
      on Realization or Liquidation

            

    

     

    
      	
              (a)  

            	
              Upon
      any disposition or realization of Collateral pursuant to any of the Senior
      Lender Charges, the Subordinate Lender Charges or otherwise upon any
      distribution of or in respect of the Borrower; or upon any dissolution or
      winding up or total liquidation or reorganization of the Borrower, whether
      in receivership, bankruptcy, insolvency; or upon an assignment for the
      benefit of creditors; or any other marshalling of the assets and
      liabilities of the Borrower (any such event being referred to herein as a
      “Distribution”),
      the Subordinate Lender agrees that all of the Senior Lender Indebtedness
      shall be indefeasibly paid in full, in cash from the proceeds of such
      Distribution, in priority before any payment is made therefrom on account
      of any of the Subordinate Lender Indebtedness. Any Distribution to which
      the Subordinate Lender would be entitled but for the provisions of this
      section will be retained by the Senior Lender or directed to be paid by
      the person making such Distribution (whether a liquidator, agent, trustee
      in bankruptcy, Receiver or otherwise) directly to the Senior Lender, to
      the extent necessary to pay all of the Senior Lender Indebtedness in full
      in cash.

            

    

     

    
      	
              10.  

            	
              Trust

            

    

     

    
      	
              (a)  

            	
              All
      payments, Distributions and other sums (including without limitation the
      proceeds of any Enforcement Action) which are received by the Subordinate
      Lender contrary to the provisions of this Agreement shall be received in
      trust for the benefit of the Senior Lender, shall be segregated from other
      funds and property of the Subordinate Lender and shall immediately be paid
      over to the Senior Lender in the same form received (with any necessary
      endorsement) to be applied (in the case of cash) to, or held as collateral
      (in the case of non-cash property or securities) for, the payment or
      prepayment of the Senior Lender Indebtedness in accordance with its
      terms.

            

    

     

    
      	
              11.  

            	
              Insurance
      Proceeds

            

    

     

    
      	
              (a)  

            	
              Any
      insurance proceeds received by the Borrower, the Senior Lender or the
      Subordinate Lender in respect of the Collateral shall be dealt with
      according to the provisions of this Agreement as though such insurance
      proceeds were paid or payable as proceeds of realization of such of the
      Collateral for which they
compensate.

            

    

     

    
      	
              12.  

            	
              Validity
      of Security

            

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender will not:

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -8-

    

     

    
      	
              (i)  

            	
              assert
      in any action, suit or proceeding whatsoever the invalidity,
      unenforceability or ineffectiveness of this Agreement, any of the Senior
      Lender Loan Documents or any of the Senior Lender Charges;
    or

            

    

     

    
      	
              (ii)  

            	
              participate
      in or co-operate with any other party to pursue any such action, suit or
      proceeding.

            

    

     

    
      	
              (b)  

            	
              The
      Senior Lender will not:

            

    

     

    
      	
              (i)  

            	
              assert
      in any action, suit or proceeding whatsoever the invalidity,
      unenforceability or ineffectiveness of this Agreement, any of the
      Subordinate Lender Loan Documents or any of the Subordinate Lender
      Charges; or

            

    

     

    
      	
              (ii)  

            	
              participate
      in or co-operate with any other party to pursue any such action, suit or
      proceeding.

            

    

     

    
      	
              13.  

            	
              Borrower
      Bound

            

    

     

    
      	
              (a)  

            	
              By
      executing this Agreement, the Borrower acknowledges its existence and
      agrees to be bound by its terms.  Nothing in this Agreement
      shall confer or be deemed to confer any right, benefit or advantage on the
      Borrower.  The consent of the Borrower to any amendment to this
      Agreement shall not be required.

            

    

     

    
      	
              14.  

            	
              Amendment/Waiver

            

    

     

    
      	
              (a)  

            	
              No
      amendment, modification or waiver of any of the provisions of this
      Agreement by the Subordinate Lender or the Senior Lender shall be deemed
      to be made unless the same shall be in writing signed on behalf of each of
      the Senior Lender and the Subordinate Lender and each waiver, if any,
      shall be a waiver only with respect to the specific instance involved and
      shall in no way impair the rights of the parties making such waiver or the
      obligations of the other parties to such party in any other respect or at
      any other time.  As contemplated in Section 13 above, the Borrower shall not have any right
      to consent to or approve any amendment, modification or waiver of any
      provision of this Agreement.

            

    

     

    
      	
              15.  

            	
              Further
      Assurances

            

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender hereby agrees that it will, from time to time at the
      reasonable request of the Senior Lender execute and deliver such further
      documents, agreements, opinions, certificates and instruments and so such
      other acts and things as may be necessary or desirable to accomplish the
      covenants and agreements hereunder or to create, preserve, validate or
      otherwise protect the subordinations and postponements hereby constituted,
      or intended so to be constituted, or to state more fully the obligations
      of the Subordinate Lender or the rights, powers, authority and discretion
      of the Senior Lender as set out herein or to make any recording, file any
      notice or obtain any consents as may be necessary or appropriate in
      connection herewith or therewith or to enable the Senior Lender to
      exercise and enforce its rights and remedies
  hereunder.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -9-

    

     

    
      	
              16.  

            	
              Time
      of Essence

            

    

     

    
      	
              (a)  

            	
              Time
      shall be of the essence of this
Agreement.

            

    

     

    
      	
              17.  

            	
              Notices

            

    

     

    
      	
              (a)  

            	
              Any
      notice, direction or other communication required or permitted to be given
      under this Agreement shall be in writing and given by delivering it or
      sending it by facsimile or other similar form of recorded communication
      addressed:

            

    

     

    
      	
              (i)  

            	
              to
      SilverBirch Inc. at:

            

    

    

    Suite
500, 150 Ferrand Drive

    Toronto,
Ontario M3C 3E5

    

    Attention:                  Derek
van der Plaat

    Fax
No.:                      (416)
621-7715

     

    
      	
              (ii)  

            	
              to
      Tiger Paw Capital Corp. at:

            

    

     

    1802 16th Street
SW

    Calgary, Alberta T2T 4E2

     

    Attention:                  Kenny
Cheung

     

    Fax
No.:                      (403)
531-3334

     

    
      	
              (iii)  

            	
              to
      Red Mile Entertainment Inc. at:

            

    

     

    223 San Anselmo Way, #3

    San Anselmo, CA 94960

     

    Attention:                  Chester
Aldridge

     

    Fax
No:                      (415)
480-1393

     

    Any such
communication shall be deemed to have been validly and effectively given (i) if
personally delivered, on the date of such delivery if such date is a Business
Day and such deliver was made prior to 4:00 p.m. (local time in Toronto,
Ontario), otherwise on the next Business Day, and (ii) if transmitted by
facsimile or similar means of recorded communication, on the Business Day
following the date of transmission.  Any party may change its address
for service from time to time by notice given in accordance with the foregoing
and any subsequent notice shall be sent to the party at its changed
address.

     

    
      	
              18.  

            	
              Assignment

            

    

     

    
      	
              (a)  

            	
              The
      Subordinate Lender shall not assign any of its interests in the
      Subordinate Lender Indebtedness or any of its right, title or interest in,
      to, or arising under the Subordinate Lender Charges unless it also assigns
      to such assignee a corresponding interest in this Agreement and such
      assignee executes and delivers to the Senior Lender an agreement, in form
      and content satisfactory to the Senior Lender, acting reasonably, whereby
      such assignee agrees to be bound, to the extent of the interest acquired
      from the Subordinate Lender, by the covenants and obligations of the
      Subordinate Lender hereunder.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -10-

    

     

     

    
      	
              (b)  

            	
              The
      Senior Lender shall not assign any of its interests in the Senior Lender
      Indebtedness or any of its right, title or interest in, to, or arising
      under the Senior Lender Charges unless it also assigns to such assignee a
      corresponding interest in this Agreement and such assignee executes and
      delivers to the Subordinate Lender an agreement, in form and content
      satisfactory to the Subordinate Lender, acting reasonably, whereby such
      assignee agrees to be bound, to the extent of the interest acquired from
      the Senior Lender, by the covenants and obligations of the Senior Lender
      hereunder.

            

    

     

    
      	
              19.  

            	
              Applicable
      Law and Attornment

            

    

     

    
      	
              (a)  

            	
              This
      Agreement shall be construed in accordance with and shall be governed by
      the laws of the Province of Ontario and the federal laws of Canada in
      effect therein.  The parties hereto hereby irrevocably attorn to
      the non-exclusive jurisdiction of the courts of the Province of Ontario
      with respect to any proceedings relating to this
  Agreement.

            

    

     

    
      	
              20.  

            	
              Counterparts

            

    

     

    
      	
              (a)  

            	
              This
      Agreement may be executed in one or more counterparts and by telecopier,
      all of which when taken together shall constitute one and the same legally
      valid, binding and enforceable agreement.  Any party executing
      and delivering a counterpart of this Agreement by telecopier shall use its
      best efforts to deliver to the other parties hereto a counterpart of this
      Agreement originally executed by such party as soon as possible and in any
      event within ten days of the date of delivery of the counterpart of this
      Agreement by telecopier.

            

    

     

    
      	
              21.  

            	
              Enurement

            

    

     

    
      	
              (a)  

            	
              This
      Agreement shall enure to the benefit of and be binding upon the parties
      hereto and their respective successors and
  assigns.

            

    

     

    IN
WITNESS WHEREOF the Senior Lender, the Subordinate Lender and the Borrower have
executed this Agreement as of the _____ day of May, 2008

     

    
      	
              SILVERBIRCH
      INC.

               

              Per:________________________________________

              Authorized
      Signatory

               

               

            
	
              TIGER
      PAW CAPITAL CORP.

               

              Per:________________________________________

              Authorized
      Signatory

               

            
	
               

              RED
      MILE ENTERTAINMENT INC.

              Per:________________________________________

              Authorized
      Signatory

            

    

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      -11-

     

    SCHEDULE A

     

    Part One

     

    The
Senior Lender Charges:

     

    With the
Delaware Secretary of State, UCC financing statements registered under base
registration no(s)  on

     

    Part Two

     

    The
Subordinate Lender Charges:

     

    With the
Delaware Secretary of State, the UCC financing statements registered under base
registration no(s)  onf8k050708ex10vi_redmile.htm

     

     

    TEMPORARY
FORBEARANCE AGREEMENT

     

     

    This Temporary Forbearance Agreement
(this “Agreement”) is entered into and effective as of May 7, 2008 by and among
RED MILE ENTERTAINMENT, INC., a Delaware corporation and its subsidiaries
(collectively, the “Borrower”) and TIGER PAW
CAPITAL CORP., an Alberta Company (“Lender”).

     

    RECITALS

     

     

    
      	
              A.  

            	
              Borrower
      and Lender are parties to that certain Revolving Line of Credit Agreement
      dated February 11, 2008 (the “Credit Agreement”) pursuant to which
      Borrower issued to Lender a promissory note dated February 11, 2008 in the
      principal sum of $1,000,000.00 (the “Promissory
  Note”);

            

    

     

     

    
      	
              B.  

            	
              Under
      the Credit Agreement, Borrower is obligated to pay Lender on demand, but
      in no event later than 90 days after the date an advance is made under the
      Credit Agreement;

            

    

     

     

    
      	
              C.  

            	
              Borrower
      has requested and Lender has agreed, for a period commencing May 7, 2008
      and ending November 7, 2008 (the “Forbearance Period”) and subject to the
      terms and conditions of this Agreement, (a) to waive any default or Event
      of Default under the Credit Agreement or the Promissory Note existing
      solely as a result of the failure by Borrower to pay Lender amounts due,
      or which become due during the Forbearance Period, on account of advances
      already drawn by Borrower under the Credit Agreement (the “Forbearance
      Payments”), (b) to not make demand for repayment under the Credit
      Agreement or the Promissory Note, and (c) to refrain from exercising its
      rights and remedies against Borrower in connection with any failure by
      Borrower to pay Lender the Forbearance
Payments.

            

    

     

     

    AGREEMENT

     

     

    NOW, THEREFORE, in consideration of the
foregoing premises, the mutual agreements set forth below, and other good and
valuable consideration the parties agree as follows:

     

    
      	
              1.  

            	
              Waiver of
      Default

            

    

     

    Lender hereby waives any default or
Event of Default under the Credit Agreement or the Promissory Note existing
solely as a result of Borrower’s failure to pay Lender the Forbearance Payments
during the Forbearance Period. Borrower acknowledges that interest shall
continue to accrue as provided in the Credit Agreement and Promissory
Note.

     

    
      	
              2.  

            	
              Standstill

            

    

     

    Lender hereby agrees that during the
Forbearance Period Lender will not (a) make demand for repayment under the
Credit Agreement or the Promissory Note or (b) exercise any remedy under the
Credit Agreement or the Promissory Note, at law or in equity, which it hereafter
may have in respect of any default or Event of Default resulting solely from the
failure of Borrower to pay to Lender the Forbearance Payments.

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              3.  

            	
              Termination

            

    

     

    This Agreement shall terminate upon the
earlier of (a) the occurrence of an Event of Default under the Credit Agreement
other than in connection with the Forbearance Payments and (b) the end of the
Forbearance Period.  Upon termination of this Agreement, the
Forbearance Payments will be due and payable according to the terms of the
Credit Agreement and Promissory Note, except that no Event of Default shall have
occurred by reason of Borrower’s failure to pay the Forbearance Payments during
the Forbearance Period.

     

    
      	
              4.  

            	
              No Other
      Waiver

            

    

     

    Except to the extent expressly set
forth in this Agreement, nothing contained herein shall be deemed to (a) be a
consent to, or waiver of, any default or Event of Default under the Credit
Agreement or Promissory Note; or (b) prejudice any right or remedy which Lender
may now have or may in the future have under the Credit Agreement or the
Promissory Note or otherwise.  Except as expressly provided herein,
the Credit Agreement and Promissory Note shall continue unchanged and in full
force and effect, and all rights, powers and remedies of Lender thereunder
and under applicable law are hereby expressly reserved.

     

    
      	
              5.  

            	
              Miscellaneous

            

    

     

    
      	
              (a)  

            	
              Section
      headings used in this Agreement are for  convenience of
      reference only and shall not affect the construction of this
      Agreement.

            

    

     

    
      	
              (b)  

            	
              This
      Agreement may be executed in any number of counterparts and by the
      different parties on separate counterparts and each such counterpart shall
      be deemed to be an original, but all such counterparts shall together
      constitute but one and the same
agreement.

            

    

     

    
      	
              (c)  

            	
              This
      Agreement shall be a contract made under and governed by the laws of the
      State of California.

            

    

     

    
      	
              (d)  

            	
              This
      Agreement shall be binding on, and inure to the benefit of, Borrower,
      Lender and their respective successors and
  assigns

            

    

     

    
      	
              (e)  

            	
              All
      amendments or modifications of this Agreement and all consents, waivers
      and notices delivered hereunder or in connection herewith shall be in
      writing.

            

    

     

     

     

    [Remainder
of page intentionally left blank]

     

    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

     

    IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.

     

     

    BORROWER:                                                                                     LENDER:

     

     

    RED MILE
ENTERTAINMENT,
INC.                                              TIGER
PAW CAPITAL CORP.

     

     

    By:           _______________________________                      
By:       
______________________________

     

    Name:     
_______________________________                       Name:   _____________________________

     

    Title:        _______________________________                       Title:     _____________________________

     

     

    

    
      

       

      10556339.1

       

       

      3

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