Document:

f8k050708ex10i_redmile.htm

    Exhibit
10.1

     

    CREDIT
AGREEMENT

     

    THIS
AGREEMENT dated for reference May 7, 2008 is between:

     

    

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

     

    (the
"Lender")

     

    AND:

    

    RED MILE ENTERTAINMENT, INC.,
a Delaware corporation, having its chief executive office at at 223 San Anselmo
Avenue, Suite #3, San Anselmo, CA 94960

    (the
“Borrower”)

     

    BACKGROUND

     

    A.           The
Lender has agreed to lend to the Borrower and the Borrower has agreed to borrow
from the Lender the aggregate principal amount of CAD$750,000 on the terms and
subject to the conditions of this Agreement.

     

    AGREEMENTS

     

    For good
and valuable consideration, the receipt and sufficiency of which each party
acknowledges, the parties agree as follows:

     

    
      	
              1.  

            	
              Definitions.  In
      this Agreement:

            

    

     

    
      	
              (a)  

            	
              "Advance" means the
      advance of the Facility hereunder;

            

    

     

    
      	
              (b)  

            	
              "Borrower" means Red Mile
      Entertainment, Inc.;

            

    

     

    
      	
              (c)  

            	
              "Business Day" means a
      day which is not a Saturday, Sunday or a statutory holiday in the Province
      of Ontario;

            

    

     

    
      	
              (d)  

            	
              "Event of Default" has
      the meaning set forth in paragraph 12
below;

            

    

     

    
      	
              (e)  

            	
              "Facility" means the
      CAD$750,000 credit facility granted by the Lender to the Borrower pursuant
      to this Agreement;

            

    

     

    
      	
              (f)  

            	
              "Financial Statements"
      has the meaning set forth in subparagraph 9(h)
  below;

            

    

     

    
      	
              (g)  

            	
              "Lender" means
      Silverbirch Inc. and its successors and
assigns;

            

    

     

    
      	
              (h)  

            	
              "Maturity Date" has the
      meaning set forth in subparagraph 4(a)
below;

            

    

     

    
      	
              (i)  

            	
              "Note" has the meaning
      set forth in subparagraph 7(a)
below;

            

    

     

    
      	
              (j)  

            	
              "Outstanding Balance" has
      the meaning set forth in subparagraph 4(a)
  below;

            

    

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              (k)  

            	
              "Pledged Securities"
      means all securities of the Subsidiaries which are or may become subject
      to the Securities Pledge Agreement;

            

    

     

    
      	
              (l)  

            	
              "Securities Pledge
      Agreement" means the securities pledge agreement referred to in
      subparagraph 7(c) below;

            

    

     

    
      	
              (m)  

            	
              "Security" has the
      meaning set forth in paragraph 7 below;
and

            

    

     

    
      	
              (n)  

            	
              "Subsidiaries" means (i)
      2WG Media, Inc (Texas Corporation); (ii) Roveractive LTD (a Delaware
      Corporation); and (iii) Red Mile Entertainment PTY LTD (an Australian
      corporation) and any other corporation, limited liability company,
      partnership or other entity of which securities or other ownership
      interests having ordinary voting power to elect a majority of the board of
      directors or other persons performing similar functions are at the time
      directly or indirectly owned by the Borrower and "Subsidiary" shall mean
      any one of them.

            

    

     

    
      	
              2.  

            	
              Facility
      Advance.  Subject to and upon the fulfilment of the
      conditions precedent contained in paragraph 8 of this Agreement, the
      Lender will advance the principal amount of the Facility to the Borrower,
      or as the Borrower may otherwise direct (the "Advance").

            

    

     

    
      	
              3.  

            	
              Use of
      Proceeds.  The Borrower covenants and agrees with the
      Lender that the Facility proceeds will be used by the Borrower to advance
      funds to IR Gurus PTY LTD. for the purpose of payment of the costs owing
      on the development and production of “Heroes Over Europe” video game, and
      for no other purpose whatsoever other than general and administrative
      expenditures less than USD$10,000, without the express written consent of
      the Lender.

            

    

     

    
      	
              4.  

            	
              Term
      and Prepayment.

            

    

     

    
      	
              (a)  

            	
              The
      principal amount of the Advance, together with all accrued but unpaid
      interest and other costs or charges payable hereunder from time to time in
      connection with such Advance (collectively the "Outstanding Balance"),
      will be immediately due and payable by the Borrower to the Lender on the
      earlier of (the "Maturity
      Date"):

            

    

     

    
      	
              (i)  

            	
              November
      7, 2008;

            

    

     

    
      	
              (ii)  

            	
              the
      date of any change of control of the Borrower or the Subsidiaries of the
      Borrower ("control" being defined
      as ownership of or control or direction over, directly or indirectly, 20%
      or more of the outstanding voting securities of the Borrower by any party
      other than the Lender); or

            

    

     

    
      	
              (iii)  

            	
              the
      occurrence of an Event of Default.

            

    

     

    
      	
              (b)  

            	
              If
      after the Advance, the Borrower or any of its Subsidiaries sell or
      otherwise dispose of any assets outside of the ordinary course of
      business, or close one or more equity or debt financings, the Borrower
      will pay or cause to be paid to the Lender all proceeds from such sale,
      disposition or financing, net of legal fees, financing fees and any other
      actual out-of-pocket costs incurred by the Borrower in connection with
      such sale, disposition or financing, up to the full amount of the
      Outstanding Balance, to be applied on account of the Outstanding
      Balance.  Any payment made under this paragraph will be without
      notice or penalty.

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)  

            	
              In
      addition to its obligation to prepay the Facility under subparagraph (b)
      above, the Borrower may prepay the Outstanding Balance including all
      accrued interest thereon, in whole at any time before maturity, provided
      that such prepayment is made on the last Business Day of the calendar
      month and the Borrower has provided to the Lender not less than ten (10)
      Business Days’ prior written notice of its intention to prepay the
      Facility.

            

    

     

    
      	
              5.  

            	
              Interest.  Interest
      will accrue on the Outstanding Balance from and after May 7, 2008 at the
      rate of ten percent (10%) per annum, and be payable by the Borrower to the
      Lender quarterly (every three month anniversary) in arrears, on the last
      Business Day of every month, as well at the rate of twenty percent (20%)
      per annum after maturity or
default.

            

    

     

    
      	
              6.  

            	
              Costs.  The
      Borrower shall pay the reasonable costs of the expenses of the Facility
      which amounts shall be deducted from the initial advance.  The
      Borrower irrevocably authorizes and directs the Lender to deduct the
      expenses from the proceeds of the Advance.  Costs will be
      CAD$10,000 for the establishment of the
  Facility.

            

    

     

    
      	
              7.  

            	
              Security.  As
      security for the Borrower's obligations hereunder including but not
      limited to the repayment of the Facility, the Borrower, as indicated, will
      execute and deliver, or cause to be executed and delivered to the
      Lender:

            

    

     

    
      	
              (a)  

            	
              a
      promissory note, in the form attached as Schedule "A" hereto (the "Note");

            

    

     

    
      	
              (b)  

            	
              a
      general security agreement under which the Borrower will grant to the
      Lender a first priority security interest over all of its present and
      after-acquired property;

            

    

     

    
      	
              (c)  

            	
              a
      securities pledge agreement (the "Securities Pledge
      Agreement") pursuant to which
      Red Mile Entertainment, Inc. will pledge and grant to the Lender a first
      priority security interest over all of the securities held in: (i) 2WG
      Media, Inc (Texas Corporation); (ii) Roveractive LTD (a Delaware
      Corporation); and (iii) Red Mile Entertainment PTY LTD (an Australian
      corporation); and

            

    

     

    all in
form and terms satisfactory to the Lender and its counsel (collectively, the
"Security").

     

    
      	
              8.  

            	
              Conditions Precedent to
      Advance.  As conditions precedent to the Advance of the
      Facility by the Lender:

            

    

     

    
      	
              (a)  

            	
              the
      Borrower shall have executed and delivered or caused to be executed and
      delivered or caused to be executed and
  delivered:

            

    

     

    
      	
              (i)  

            	
              all
      of the Security and the documents, securities and instruments referred to
      in paragraph 7 above and the Lender will have
      completed all registrations and other filings that may be prudent or
      necessary to perfect the security interest created
  therein;

            

    

     

    
      	
              (ii)  

            	
              a
      certified copy of its directors' resolutions authorizing the borrowing of
      the Facility, the grant of the Security and the execution and delivery of
      this Agreement and all agreements, documents and instruments referred to
      herein, together with an officer's certificate, certifying certain factual
      matters;

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)  

            	
              the
      representations and warranties of the Borrower contained in paragraph 9 will be true and correct in all material
      respects and the Borrower will have complied with all covenants required
      to be complied with by it in relation to this Agreement prior to the
      Advance under the Facility by the
Lender;

            

    

     

    
      	
              (c)  

            	
              the
      Lender shall be satisfied with its due diligence review of the Borrower is
      intended use of proceeds of the
Facility;

            

    

     

    
      	
              (d)  

            	
              there
      shall have been no adverse material change in the business, operations,
      assets or ownership of the Borrower, its Subsidiaries or any of their
      respective properties and assets since the date of this
      Agreement;

            

    

     

    
      	
              (e)  

            	
              the
      Lender will, in its sole and absolute discretion, be satisfied as to the
      creditworthiness of the Borrower and the adequacy of the collateral
      security contemplated herein.

            

    

     

    If any of
the foregoing conditions precedent are not satisfied or waived by the Lender in
writing on or before May 7, 2008, this Agreement will terminate, and the Lender
will be under no further obligation to the Borrower in connection with the
transaction contemplated herein.

     

    
      	
              9.  

            	
              Representations and
      Warranties.  The Borrower represents and warrants to the
      Lender as follows, as of the date of this Agreement and the date of
      Advance made hereunder:

            

    

     

    
      	
              (a)  

            	
              the
      Borrower exists as a corporation under the laws of Delaware, has not
      discontinued or been dissolved under those laws, and is in good standing
      with respect to all filings required
thereunder;

            

    

     

    
      	
              (b)  

            	
              the
      Borrower has the power and authority to (i) carry on its businesses as now
      being conducted and is licensed or registered or otherwise qualified in
      all jurisdictions where in the nature of its assets or the business
      transacted makes such licensing, registration or qualification necessary,
      (ii) acquire, own, hold, lease and mortgage or grant security in its
      assets including real property and personal property and (iii) enter into
      and perform its obligations under this Agreement and all other documents
      or instruments delivered hereunder;

            

    

     

    
      	
              (c)  

            	
              this
      Agreement and all ancillary instruments or documents issued, executed and
      delivered hereunder by the Borrower, have been duly authorized by all
      necessary action of the Borrower and each constitutes or will constitute a
      legal, valid and binding obligation of the Borrower, enforceable against
      the Borrower in accordance with their terms, subject to applicable
      bankruptcy, insolvency, reorganization, moratorium and other similar laws
      affecting the rights and remedies of creditors and to the general
      principles of equity;

            

    

     

    
      	
              (d)  

            	
              all
      authorizations of every governmental authority required to be obtained by
      the Borrower in connection with the execution, delivery and performance of
      this Agreement and all ancillary instruments and security and other
      documents issued, executed and delivered hereunder, have been obtained and
      are valid and subsisting;

            

    

     

    
      	
              (e)  

            	
              other
      than amounts owing to IR Gurus PTY LTD., the Borrower is not in breach of
      or in default under any material obligation in respect of borrowed money
      and the execution and delivery of this Agreement and all ancillary
      instruments or documents issued and delivered hereunder or thereunder, and
      the performance of the terms hereof and thereof will not be, or result in,
      a material violation or breach of, or default under the Borrower's
      constating documents, any law, any judgment, agreement or instrument to
      which it is a party or may be
bound;

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              (f)  

            	
              the
      Security creates a valid registered first charge, lien and security
      interest on the property and assets of the Borrower (subject to the
      subordination of the interests held by Tiger Paw Capital
      Corp.);

            

    

     

    
      	
              (g)  

            	
              no
      litigation or administrative proceedings before any court or governmental
      authority are presently ongoing, or have been threatened in writing
      received by the Borrower, or to the best of the Borrower's knowledge are
      pending, against the Borrower or any of its properties or assets or
      affecting any of its properties or assets which could reasonably be
      expected to have a material adverse effect on its business, properties or
      assets;

            

    

     

    
      	
              (h)  

            	
              the
      financial statements of Red Mile Entertainment, Inc. for the nine months
      ended December 31, 2007 (collectively, the "Financial Statements"),
      fairly present the financial affairs of Red Mile Entertainment, Inc. and
      the Subsidiaries as of the date to which they are made, and have been
      prepared in accordance with US generally accepted accounting principles,
      consistently applied, except as may be otherwise specified in such
      financial statements or the notes
thereto;

            

    

     

    
      	
              (i)  

            	
              other
      than the discontinuance of the sales of the “Jack Ass” game, there has
      been no adverse material change (actual, contemplated or threatened) in
      the property, assets, business or operations of the Borrower since the
      date of release of the Financial Statements, except as disclosed in
      writing by the Borrower to the Lender prior to the date of this
      Agreement;

            

    

     

    
      	
              (j)  

            	
              no
      order ceasing or suspending trading in securities of the Borrower or
      prohibiting the sale of securities by the Borrower has been issued and no
      proceedings for this purpose have been instituted or, to the best of the
      knowledge of the Borrower, are pending, contemplated or
      threatened;

            

    

     

    
      	
              (k)  

            	
              other
      than amounts potentially owing with respect to the Delaware Franchise Tax,
      neither Canada Revenue Agency nor any other taxation authority has
      asserted or, to the best of the Borrower's knowledge, has threatened to
      assert any assessment, claim or liability for taxes due or to become due
      in connection with any review or examination of the tax returns of the
      Borrower filed for any year which would have material adverse effect on
      the assets, properties, business, results of operations, prospects or
      condition (financial or otherwise) of the
  Borrower;

            

    

     

    
      	
              (l)  

            	
              the
      Borrower has no direct or indirect subsidiary corporations other
      than: (i) 2WG
      Media, Inc (Texas Corporation); (ii) Roveractive LTD (a Delaware
      Corporation); and (iii) Red Mile Entertainment PTY LTD (an Australian
      corporation);

            

    

     

    
      	
              (m)  

            	
              the
      Borrower owns its business, operations and assets and holds good title
      thereto, free and clear of all liens, claims or encumbrances (subject to
      the subordination of the interests held by Tiger Paw Capital
      Corp.);

            

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              (n)  

            	
              all
      factual information previously or contemporaneously furnished to the
      Lender by or on behalf of the Borrower for purposes of or in connection
      with this Agreement or any transaction contemplated hereby, is true and
      accurate in every material respect and such information is not incomplete
      by the omission of any material fact necessary to make such information
      not misleading;

            

    

     

    
      	
              (o)  

            	
              the
      Borrower is solvent and is generally able to pay its debts as they come
      due and will be able to do so after giving effect to the transactions
      contemplated in this Agreement; and

            

    

     

    
      	
              (p)  

            	
              the
      chief executive office, principal place of business and place where the
      Borrower keeps its books and records is located at 223 San Anselmo Avenue,
      Suite #3, San Anselmo, CA 94960.

            

    

     

    
      	
              10.  

            	
              Positive Covenants of the
      Borrower.  The Borrower covenants and agrees that so long
      as any monies will be outstanding under this Agreement, it
      will:

            

    

     

    
      	
              (a)  

            	
              at
      all times maintain its corporate existence and that of its
      Subsidiaries;

            

    

     

    
      	
              (b)  

            	
              duly
      perform its obligations under this Agreement and all other agreements and
      instruments executed and delivered hereunder or
  thereunder;

            

    

     

    
      	
              (c)  

            	
              promptly
      pay when due all agency or  fees incurred by the Borrower that
      are payable in connection with the Facility or this Agreement and
      indemnify and save harmless the Lender from all claims in respect of any
      such fees;

            

    

     

    
      	
              (d)  

            	
              carry
      on and conduct its business in a proper business-like manner in accordance
      with good business practice and will keep or cause to be kept proper books
      of account in accordance with generally accepted accounting
      principles;

            

    

     

    
      	
              (e)  

            	
              at
      all times comply with all applicable laws, except such voluntary
      non-compliance as shall, in its good faith business judgment, not have a
      material adverse effect on the business, properties and assets of the
      Borrower taken as a whole;

            

    

     

    
      	
              (f)  

            	
              pay
      and discharge promptly when due, all taxes, assessments and other
      governmental charges or levies imposed upon them or upon their properties
      or assets, or upon any part thereof, as well as all claims of any kind
      (including claims for labour, materials and supplies) which, if unpaid,
      would by law become a lien, charge, trust or other claims upon any such
      properties or assets, except such as would shall not have a material
      adverse effect on the business, properties and assets of the Borrower
      taken as a whole, provided however that the Borrower shall not be required
      to pay any such tax, assessment, charge or levy or claim if the amount,
      applicability or validity thereof shall currently be contested in good
      faith by appropriate proceedings and if the Borrower shall have set aside
      on its books the reserve the extent required by generally accepted
      accounting principles in an amount which is reasonably adequate with
      respect thereto;

            

    

     

    
      	
              (g)  

            	
              furnish
      and give to the Lender within three (3) Business Days of receipt of any
      request from the Lender such reports, certificates, updated financial
      statements, including monthly internal financial and operational reports
      and documents and such other information with respect to the Borrower,
      it's securities and their respective properties and assets, as the Lender
      may reasonably request from time to time during the term of this
      Agreement;

            

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              (h)  

            	
              promptly
      provide the Lender with written notice of any proposed financing made by
      or to any of the Borrower;

            

    

     

    
      	
              (i)  

            	
              furnish
      and give to the Lender (if such is the case) notice that an Event of
      Default has occurred and, if applicable, is continuing or notice in
      respect of any event which would constitute an Event of Default hereunder
      and specifying the nature of same;
and

            

    

     

    
      	
              (j)  

            	
              perform
      and do all such acts and things as are necessary to perfect and maintain
      the Security provided to the Lender pursuant to this
      Agreement.

            

    

     

    
      	
              11.  

            	
              Negative Covenants of the
      Borrower.  The Borrower covenants and agrees with the
      Lender that it will not without first obtaining the written consent of the
      Lender:

            

    

     

    
      	
              (a)  

            	
              except
      as permitted pursuant to subparagraph (g), make, give, create or permit or
      attempt to make, give or create any mortgage, charge, lien or encumbrance
      over any assets of the Borrower;

            

    

     

    
      	
              (b)  

            	
              change
      the name of the Borrower or any
Subsidiary;

            

    

     

    
      	
              (c)  

            	
              allot
      and issue any new shares of any
Subsidiary;

            

    

     

    
      	
              (d)  

            	
              declare
      or provide for any dividends or other payments based on share
      capital;

            

    

     

    
      	
              (e)  

            	
              redeem
      or purchase any shares of the Borrower or any
  Subsidiary;

            

    

     

    
      	
              (f)  

            	
              make
      any sale of or dispose of any substantial or material part of its
      business, assets or undertaking, including its interest in the shares or
      assets of any Subsidiary, outside of the ordinary course of
      business;

            

    

     

    
      	
              (g)  

            	
              save
      and except for purchase money security interests, chattel mortgages and
      equipment leases entered into in the ordinary course of business, borrow
      or cause any Subsidiary to borrow money from any person other than the
      Lender without first obtaining and delivering to the Lender a duly signed
      subordination and postponement of claim by such person in favour of the
      Lender, in form and terms satisfactory to the
  Lender;

            

    

     

    
      	
              (h)  

            	
              pay
      out any shareholders loans or other indebtedness to non-arm's length
      parties; or

            

    

     

    
      	
              (i)  

            	
              guarantee
      the obligations of any other person, directly or
    indirectly.

            

    

     

    
      	
              12.  

            	
              Events of
      Default.  Each and every of the events set forth in this
      paragraph will be an event of default ("Event of
      Default"):

            

    

     

    
      	
              (a)  

            	
              if
      the Borrower fails to make any payment of principal or interest when due
      hereunder, and such failure continues for five (5) Business
      Days;

            

    

     

    
      	
              (b)  

            	
              if
      the Borrower defaults in observing or performing any material term,
      covenant or condition of this Agreement or any other collateral document
      delivered hereunder or in connection with the Facility, other than the
      payment of monies as provided for in subparagraph (a) hereof, on its part
      to be observed or performed and such failure continues for five (5)
      Business Days;

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)  

            	
              if
      the Borrower is in material default of prescribed filings with applicable
      securities regulatory authorities, the stock exchange or market on which
      its shares trade (collectively, the "Authorities"), or is
      subject to any suspension in excess of two (2) trading days or cease trade
      order issued by any such Authority, excluding for clarity a halt in
      trading in connection with the review of the potential acquisition with
      the Lender;

            

    

     

    
      	
              (d)  

            	
              if
      any of the Borrower's representations, warranties or other statements in
      this Agreement or any other collateral document delivered hereunder or in
      connection with the Facility were at the time given false or misleading in
      any material respect;

            

    

     

    
      	
              (e)  

            	
              if
      the Borrower defaults, in any material respect, in observing or performing
      any term, covenant or condition of any debt instrument or obligation by
      which it is bound which results in an amount of more than CAD$50,000
      becoming due and payable or
accelerated;

            

    

     

    
      	
              (f)  

            	
              if
      the Borrower permits any sum which has been admitted as due by it, or is
      not disputed to be due by it, and which forms or is capable of being made
      a charge upon any of the assets or undertaking of the Borrower to remain
      unpaid or not challenged for 30 days after proceedings have been taken to
      enforce the same;

            

    

     

    
      	
              (g)  

            	
              if
      the Borrower, either directly or indirectly through any Subsidiary, ceases
      or threatens to cease to carry on
business;

            

    

     

    
      	
              (h)  

            	
              if
      any order is made or issued by a competent regulatory authority ceasing
      the trading in shares of the Borrower or if the Borrower's common shares
      are suspended or de-listed from trading on any stock exchange, excluding
      for clarity a halt in trading in connection with the review of the
      potential acquisition with the
Lender;

            

    

     

    
      	
              (i)  

            	
              if,
      in the reasonable opinion of the Lender, a material adverse change occurs
      in the financial condition of the
Borrower;

            

    

     

    
      	
              (j)  

            	
              if
      the Lender in good faith and on commercially reasonable grounds believes
      that the ability of the Borrower to pay any of the Outstanding Balance to
      the Lender or to perform any of the covenants contained in this Agreement
      or any other collateral agreement or other document is impaired or any
      security granted by the Borrower to the Lender is or is about to be
      impaired or in jeopardy;

            

    

     

    
      	
              (k)  

            	
              if
      the Borrower petitions or applies to any tribunal for the appointment of a
      trustee, receiver or liquidator or commences any proceedings under any
      bankruptcy, insolvency, readjustment of debt or liquidation law of any
      jurisdiction, whether now or hereafter in effect;
  or

            

    

     

    
      	
              (l)  

            	
              if
      any petition or application for appointment of a trustee, receiver or
      liquidator is filed, or any proceedings under any bankruptcy, insolvency,
      readjustment of debt or liquidation law are commenced, against the
      Borrower which is not opposed by the Borrower in good faith, or an order,
      judgment or decree is entered appointing any such trustee, receiver, or
      liquidator, or approving the petition in any such
    proceeding.

            

    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              13.  

            	
              Effect of Event of
      Default.  If any one or more of the Events of Default
      occur or occurs and is or are continuing, the Lender may without
      limitation in respect of any other rights it may have in law or pursuant
      to this Agreement or any other document or instrument delivered hereunder,
      demand immediate payment of all monies owing
  hereunder.

            

    

     

    
      	
              14.  

            	
              Lender's Legal
      Fees.  The Borrower will pay for the Lender's reasonable
      legal fees (on a solicitor and own client basis) and other costs, charges
      and expenses (including due diligence expenses) of and incidental to the
      security hereunder, including in respect of any enforcement or collection
      process thereof.  All amounts will be payable upon presentment
      of an invoice.  If not paid within 30 days of presentment of an
      invoice, such amount will be added to and form part of the principal
      amount of the Facility and shall accrue interest from the date of
      presentment of an invoice as if it had been advanced by the Lender to the
      Borrower hereunder.

            

    

     

    
      	
              15.  

            	
              Indemnity.  The
      Borrower agrees to indemnify and save harmless the Lender and each of its
      directors, officers, employees and agents from and against all
      liabilities, claims, losses, damages and reasonable costs and expenses in
      any way caused by or arising directly or indirectly from or in consequence
      of the occurrence of any Event of Default under this
      Agreement.

            

    

     

    
      	
              16.  

            	
              Notices.  In
      this Agreement:

            

    

     

    
      	
              (a)  

            	
              any
      notice or communication required or permitted to be given under this
      Agreement will be in writing and will be considered to have been given if
      delivered by hand, transmitted by facsimile transmission or mailed by
      prepaid registered post to the address or facsimile transmission number of
      each party set out below:

            

    

     

    
      	
              (i)  

            	
              if
      to the Lender:

            

    

     

    Suite 500, 150 Ferrand
Drive

     

    Toronto, Ontario M3C 3E5

     

    Attention:  Derek van der
Plaat

     

    Fax No.: (416)
621-7715

     

    (ii
)           if to the
Borrower:

     

    Red Mile
Entertainment, Inc.

     

    223 San
Anselmo Avenue, Suite #3, San Anselmo, CA 94960

     

    Attention:  Chester
Aldridge

     

    Fax
No:  (415) 480-1393

     

    or to
such other address or facsimile transmission number as any party may designate
in the manner set out above; and

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)  

            	
              notice
      or communication will be considered to have been
  received:

            

    

     

    
      	
              (i)  

            	
              if
      delivered by hand during business hours on a Business Day, upon receipt by
      a responsible representative of the receiver, and if not delivered during
      business hours, upon the commencement of business on the next Business
      Day;

            

    

     

    
      	
              (ii)  

            	
              if
      sent by facsimile transmission during business hours on a Business Day,
      upon the sender receiving confirmation of the transmission, and if not
      transmitted during business hours, upon the commencement of business on
      the next Business Day; and

            

    

     

    
      	
              (iii)  

            	
              if
      mailed by prepaid registered post upon the fifth Business Day following
      posting; except that, in the case of a disruption or an impending or
      threatened disruption in postal services every notice or communication
      will be delivered by hand or sent by facsimile
    transmission.

            

    

     

    
      	
              17.  

            	
              Assignment.  The
      Borrower acknowledges and agrees that the Lender may assign all or part of
      the Facility, this Agreement and all collateral agreements, documents or
      instruments delivered hereunder to one or more assignees, free from any
      right of set-off or counterclaim or equity, subject only to the Lender's
      notification of such assignment or assignments being given in writing to
      the Borrower, provided that any interest in the Security shall be assigned
      only in proportion to the indebtedness under the
  Facility.

            

    

     

    
      	
              18.  

            	
              Agreement to
      Pay.  Upon receipt of written notice and direction from
      the Lender, the Borrower covenants and agrees to make all payments of
      interest and principal due under this Agreement to the Lender and any
      assignee pro rata in accordance with their respective proportionate
      interests in the Facility as set out in such written notice and direction,
      absent which all such payments may be made to the
  Lender.

            

    

     

    
      	
              19.  

            	
              Withholding Taxes,
      etc.  All payments in respect of interest under this
      Agreement will be made free and clear without deduction or withholdings
      for any taxes, duties, fees or other charges, unless those deductions or
      withholdings are required by law.  If the Borrower is required
      by law to make any such deduction or withholding, it will pay such
      additional amounts as will result in receipt by the Lender of the full
      amount which would have been paid had no such deduction or withholding
      been made.  If the Borrower is required by law to make a
      deduction or withholding, the Borrower shall make that deduction or
      withholding within the time allowed and in the minimum amount required by
      law.  Within 30 days of making any such deduction or
      withholding, the Borrower shall deliver to the Lender evidence
      satisfactory to the Lender that the deduction or withholding has been made
      and that appropriate payment has been made to the relevant taxing
      authority.

            

    

     

    
      	
              20.  

            	
              Payments.  All
      payments made hereunder shall be made by way of certified cheque, bank
      draft or wire transfer by or on behalf of the Borrower and shall be
      delivered to the office of the Lender set forth in paragraph 16 above no
      later than 2:00 p.m. (Pacific time) on the due date
      therefor.  Any payments received after such time shall be
      considered for all purposes as having been made on the next following
      Business Day.

            

    

     

    
      	
              21.  

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

            

    

     

    
      	
              22.  

            	
              Waivers.  No
      failure or delay on the Lender's part in exercising any power or right
      hereunder will operate as a waiver
thereof.

            

    

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              23.  

            	
              Remedies are
      Cumulative.  The Lender's rights and remedies hereunder
      are cumulative and not exclusive of any rights or remedies at law or in
      equity.

            

    

     

    
      	
              24.  

            	
              Time.  Time is
      of the essence of this Agreement and all documents or instruments
      delivered hereunder.

            

    

     

    
      	
              25.  

            	
              Gender and
      Number.  Words in one gender include all genders, and
      words in the singular include the plural and vice
  versa.

            

    

     

    
      	
              26.  

            	
              Criminal Code
      Compliance.  In this paragraph the terms "interest", "criminal rate" and
      "credit advanced"
      have the meanings ascribed to them in Section 347 of the Criminal Code
      (Canada) as amended from time to time.  The Borrower and the
      Lender agree that, notwithstanding any agreement to the contrary, no
      interest on the Facility or the credit advanced by the Lender under this
      Agreement will be payable in excess of that permitted under the laws of
      Canada.  If the effective rate of interest, calculated in
      accordance with generally accepted actuarial practices and principles,
      would exceed the criminal rate on the credit advanced,
    then:

            

    

     

    
      	
              (a)  

            	
              the
      elements of return which fall within the term "interest" will be reduced
      to the extent necessary to eliminate such
  excess;

            

    

     

    
      	
              (b)  

            	
              any
      remaining excess that has been paid will be credited towards prepayment of
      the Facility; and

            

    

     

    
      	
              (c)  

            	
              any
      overpayment that may remain after such crediting will be returned
      forthwith to the Borrower upon demand, and, in the event of dispute, a
      Fellow of the Canadian Institute of Actuaries appointed by the Lender will
      perform the relevant calculations and determine the reductions,
      modifications and credits necessary to effect the foregoing and the same
      will be conclusive and binding on the parties.  This Agreement,
      the Note and all related agreements and documents will automatically be
      modified to reflect such modifications without the necessity of any
      further act or deed of the Borrower and the Lender to give effect to
      them.

            

    

     

    
      	
              27.  

            	
              Invalidity.  If
      at any time any one or more of the provisions hereof is or becomes
      invalid, illegal or unenforceable in any respect under any law, the
      validity, legality and enforceability of the remaining provisions hereof
      will not in any way be affected or impaired thereby to the fullest extent
      possible by law.

            

    

     

    
      	
              28.  

            	
              Governing
      Laws.  This Agreement will be governed by and interpreted
      in accordance with the laws of the Province of Ontario and the laws of
      Canada applicable therein.  The Borrower submits to the
      non-exclusive jurisdiction of the Courts of the Province of Ontario and
      agrees to be bound by any suit, action or proceeding commenced in such
      Courts and by any order or judgment resulting from such suit, action or
      proceeding, but the foregoing will in no way limit the right of the Lender
      to commence suits, actions or proceedings based on this Agreement in any
      jurisdiction it may deem
appropriate.

            

    

     

    
      	
              29.  

            	
              Amendment.  This
      Agreement supersedes all prior agreements and discussions between the
      parties with respect to the subject matter set forth
      herein.  This Agreement may be varied or amended only by or
      pursuant to an agreement in writing signed by the parties
      hereto.  For clarity, the business combination or merger
      agreement and letter of intent will not supersede this Agreement in any
      manner.

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              30.  

            	
              Schedules.  All
      Schedules attached hereto will be deemed fully a part of this
      Agreement.

            

    

     

    
      	
              31.  

            	
              Further
      Assurances.  The Borrower will, and will cause its
      Subsidiaries, from time to time and upon reasonable request of the Lender
      do, execute and deliver all further assurances, acts and documents for the
      purpose of giving full force and effect to the covenants, agreements and
      provisions herein contained.

            

    

     

    
      	
              32.  

            	
              Currency.  All
      references herein to "dollars", "USD" or "$" are to United States
      dollars, unless otherwise
indicated.

            

    

     

    
      	
              33.  

            	
              Counterparts.  This
      Agreement may be signed in one or more counterparts, originally or by
      facsimile, each such counterpart taken together will form one and the same
      agreement.

            

    

     

    TO
EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on the
date first above written.

     

     

     

    SILVERBIRCH
INC.

     

    Per:                                                      

     

    Authorized
Signatory

     

    

     

    Per:                                                      

     

    Authorized
Signatory

     

     

     

    RED
MILE ENTERTAINMENT, INC.

     

    

     

    Per:                                                      

     

    Authorized
Signatory

     

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
"A"

     

     

    PROMISSORY
NOTE

     

     

    Principal
Amount:  CAD$750,000

     

    For value
received, RED MILE ENTERTAINMENT, INC. (the "Borrower") hereby promises to
pay to SILVERBIRCH INC. (the "Lender") the principal amount
of seven hundred fifty thousand (CAD$750,000) (the "Principal Amount") on the
earlier of:

     

    
      	
              (a)  

            	
              November
      7, 2008;

            

    

     

    
      	
              (b)  

            	
              the
      date of any change of control of the Borrower or the Subsidiaries of the
      Borrower ("control" being defined
      as ownership of or control or direction over, directly or indirectly, 20%
      or more of the outstanding voting securities of the Borrower by any party
      other than the Lender); and

            

    

     

    
      	
              (c)  

            	
              the
      occurrence of an Event of Default (as defined in the Credit Agreement
      dated May 7, 2008 between the Lender and the
  Borrower),

            

    

     

    together
with interest accruing from and after May 7, 2008, on the outstanding principal
amount and overdue interest, if any, from the date hereof at a rate of ten (10%)
per annum, before and twenty percent (20%) per annum after maturity or default,
payable by the Borrower to the Lender quarterly (every three month anniversary)
in arrears, on the last Business Day of every month.

     

    If after
the advance of the Principal Amount, the Borrower or any of its subsidiaries
sell or otherwise dispose of any assets outside of the ordinary course of
business, now owned by the Borrower, or close one or more equity or debt
financings, the Borrower will pay or cause to be paid to the Lender all proceeds
from such sale, disposition or financing, net of legal fees, financing fees and
any other actual out-of-pocket costs incurred by the Borrower in connection with
such sale, disposition or financing, up to the full amount of the outstanding
balance hereunder (the "Outstanding Balance"), to be
applied on account of the Outstanding Balance.  Any payment made under
this paragraph will be without notice or penalty.

     

    The
Borrower may prepay the Outstanding Balance including all accrued interest
thereon, in whole at any time before maturity, provided that such prepayment is
made on the last Business Day of the calendar month and the Borrower has
provided to the Lender not less than ten (10) Business Days’ prior written
notice of its intention to prepay the Outstanding Balance.

     

    The
undersigned waives demand and presentment for payment, notice of non-payment,
protest, notice of protest and notice of dishonour.  This promissory
note will be governed by and construed in accordance

     

    with the
laws of Ontario and the federal laws of Canada applicable therein.  In
this promissory note, "Business
Day" means a day which is not a Saturday, Sunday or a statutory holiday
in Ontario.

     

    Dated:  May
7, 2008.

     

    

    
      	
              RED
      MILE ENTERTAINMENT, INC.

               

              Per:                                                      

              Authorized
      Signatory

            	 
      

    

     

    

     

    

    13f8k050708ex10ii_redmile.htm

    
      Exhibit
10.2

     

    GENERAL
SECURITY AGREEMENT

     

    THIS
AGREEMENT dated for reference May__, 2008 is between:

     

    RED MILE ENTERTAINMENT, INC. a
Delaware company having an office at 223 San Anselmo Avenue, Suite #3, San
Anselmo, CA 94960

     

     (the
“Debtor”)

     

    AND

     

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

     

     (the
“Secured
Party”)

     

    PART
1- SECURITY INTERESTS

     

    1.1 Security
Interests.  For valuable consideration and as security for the
payment and performance of the Obligations (as later defined) the Debtor hereby
mortgages, charges, assigns and transfers to the Secured Party, and grants to
the Secured Party a security interest in, and the Secured Party hereby takes a
security interest in, all the Debtor’s right, title and interest in and to all
of the Debtor’s present and after-acquired property and all proceeds thereof
(except the property of the Debtor described in paragraphs 1.2 and 1.4) of
whatsoever nature and kind and wherever situate including, without limiting the
generality of the foregoing:

     

    
      	
              (a)  

            	
              Accounts.  All
      debts, accounts, claims, monies and choses in action which now are, or
      which may at any time hereafter be due or owing to or owned by the Debtor,
      and all books, records, documents, papers and electronically recorded data
      recording, evidencing, securing or otherwise relating to such debts,
      accounts, claims, monies and choses in action or any part or parts thereof
      (collectively “Accounts”);

            

    

     

    
      	
              (b)  

            	
              Equipment.  All
      present and future equipment now or hereafter owned by the Debtor,
      including all machinery, fixtures, plants, tools, furniture, vehicles of
      any kind or description, all spare parts, accessions and accessories
      located at or installed in or affixed or attached to any of the foregoing,
      and all drawings, specifications, plans and manuals relating thereto and
      any other goods that are not Inventory (collectively “Equipment”);

            

    

     

    
      	
              (c)  

            	
              Inventory. All present
      and future inventory of whatever kind now or hereafter owned by the
      Debtor, including all raw materials, materials used or consumed in the
      business or profession of the Debtor, goods, work in progress, finished
      goods, returned goods, repossessed goods, goods used for packing, all
      packaging materials, supplies and containers, materials used in the
      business of the Debtor whether or not intended for sale and goods acquired
      or held for sale, lease or resale or furnished or to be furnished under
      contracts of rental or service (collectively “Inventory”);
      and

            

    

     

    
      	
              (d)  

            	
              Other Personal
      Property.  All chattel paper, documents of title,
      instruments and securities now or hereafter owned by the Debtor that are
      not Accounts, Equipment or
Inventory.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -2-

     

    1.2 Intangibles.  For
valuable consideration and as security for the payment and performance of the
Obligations (as later defined) the Debtor grants to the Secured Party a security
interest in, and the Secured Party takes a security interest in, all the
Debtor’s right, title and interest in and to all the Debtor’s present and
after-acquired intangible property (save and except for Accounts) wherever
situate and now or hereafter owned by the Debtor including, without limitation,
all contractual rights, licenses, goodwill, patents, trademarks, trade names,
copyrights, other industrial designs and other industrial or intellectual
property and undertaking of the Debtor and all other choses in action of the
Debtor of every kind which now are, or which may at any time hereafter be, due
or owing to or owned by the Debtor and all other intangible property of the
Debtor which is not Accounts, goods, chattel paper, documents of title,
instruments, money or securities.

     

    1.3 Collateral.  The
term “Collateral” means
collectively all of the Debtor’s right, title and interest in and to all of the
Debtor’s present and after-acquired property and all proceeds thereof (except
the property of the Debtor described in paragraph 1.4) of whatsoever nature
and kind and wherever situate including without limiting the generality of the
foregoing all of the property described in paragraphs 1.1(a) to (d)
inclusive and paragraph 1.2.

     

    1.4 Exclusions. The security
interests granted in this Agreement do not apply or extend to:

     

    
      	
              (a)  

            	
              any
      real property or interests therein of the
  Debtor;

            

    

     

    
      	
              (b)  

            	
              the
      last day of any term created by any lease or agreement therefor now held
      or hereafter acquired by the Debtor but the Debtor will stand possessed of
      the reversion thereby remaining in the Debtor of any leasehold premises
      upon trust for the Secured Party to assign and dispose thereof as the
      Secured Party or any purchaser of such leasehold premises
      directs;

            

    

     

    
      	
              (c)  

            	
              other
      than the in connection with a United States General Security Agreement,
      any lease or other agreement which contains a provision which provides in
      effect that such lease or agreement may not be assigned, subleased,
      charged or encumbered without the leave, licence, consent or approval of
      the lessor, until such leave, licence, consent or approval is obtained and
      the security interest created hereby will attach and extend to such lease
      or agreement as soon as such leave, licence, consent or approval is
      obtained; and

            

    

     

    
      	
              (d)  

            	
              any
      consumer goods of the Debtor.

            

    

     

    1.5 Attachment. The Debtor and the
Secured Party do not intend to postpone the attachment of the security interests
hereby created save as provided in paragraph 1.4(c) and except as provided
therein the security interests hereby created will attach when:

     

    
      	
              (a)  

            	
              this
      Security Agreement has been executed, or in the case of after-acquired
      property, such property has been acquired by the
  Debtor;

            

    

     

    
      	
              (b)  

            	
              value
      has been given; and

            

    

     

    
      	
              (c)  

            	
              the
      Debtor has rights in the Collateral, or in the case of after-acquired
      property, acquires rights in the
Collateral.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      -3-

    

     

     

    1.6 Notification.  If
this Security Agreement grants a security interest in Accounts, after an Event
of Default (as later defined) has occurred, the Secured Party may notify any
debtor of the Debtor on an intangible, chattel paper, or account, or any obligor
on an instrument (“Account
Debtor”) to make all payments on Collateral to the Secured Party and the
Debtor acknowledges that the proceeds of all sales, or any payments on or other
proceeds of the Collateral, including but not limited to payments on, or other
proceeds of, the Collateral received by the Debtor from any Account Debtor,
after notification to such Account Debtor and after default under this Agreement
will be received and held by the Debtor in trust for the Secured Party and will
be turned over to the Secured Party upon request and the Debtor will not
commingle any proceeds of or payments on the Collateral with any of the Debtor’s
funds or property, but will hold them separate and apart.

     

    1.7 Purchase Money Security
Interests.  The security interests created hereby will
constitute purchase money security interests to the extent that any of the
Obligations (as later defined) are monies advanced by the Secured Party to the
Debtor for the purpose of enabling the Debtor to purchase or acquire rights in
any of the Collateral and were so used by the Debtor and a certificate of an
officer of the Secured Party as to the extent that the Obligations are monies so
advanced and used will be prima facie proof of the purchase money security
interests constituted hereby.

     

    PART
2- OBLIGATIONS SECURED

     

    2.1 Obligations.  This
Security Agreement and the security interests hereby created will be continuing
security for the payment of all and every indebtedness, both present and future,
of the Debtor to the Secured Party (the “Obligations”).

     

    PART
3- REPRESENTATIONS AND WARRANTIES

     

    3.1 Representations and
Warranties.  The Debtor represents and warrants to the Secured
Party the following:

     

    
      	
              (a)  

            	
              Corporate Requirements.
      If the Debtor is a corporation:

            

    

     

    
      	
              (i)  

            	
              it
      is duly incorporated and it is in good standing under the laws of its
      incorporating jurisdiction;

            

    

     

    
      	
              (ii)  

            	
              it
      has the power and authority to carry on the business now being carried on
      by it and has the full power and authority to execute and deliver this
      Security Agreement;

            

    

     

    
      	
              (iii)  

            	
              all
      necessary and requisite corporate proceedings, resolutions and
      authorizations have been taken, passed, done and given by it and by its
      directors to authorize, permit and enable it to execute and deliver this
      Security Agreement; and

            

    

     

    
      	
              (iv)  

            	
              the
      entering into of this Security Agreement is not in contravention of any
      statute, the organizational or constating documents of the Debtor or any
      agreement or other document to which the Debtor is a
  party;

            

    

     

    
      	
              (b)  

            	
              No
      Actions.  There are no actions or proceedings pending or,
      to the knowledge of the Debtor, threatened which challenge the validity of
      this Security Agreement or which might result in a material adverse change
      in the financial condition of the Debtor or any of its subsidiaries or
      which would materially adversely affect the ability of the Debtor to
      perform its obligations under this Security Agreement or any document
      evidencing any indebtedness of the Debtor to the Secured
      Party;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -4-

    

     

    
      	
              (c)  

            	
              Owns Collateral. Other
      than the subordinated interest held by Tiger Paw Capital Corp., the Debtor
      owns and possesses all presently held Collateral and has good title
      thereto, free from all security interests, charges, encumbrances, liens
      and claims;

            

    

     

    
      	
              (d)  

            	
              Right and
      Authority.  The Debtor has the right and authority to
      create the security interests created in this
  Agreement;

            

    

     

    
      	
              (e)  

            	
              Location of
      Collateral.  The only locations of Collateral (other than
      Inventory in transit) and the only places the Debtor carries on business
      are described in Schedule 2;

            

    

     

    
      	
              (f)  

            	
              Financial
      Information.  All financial information and financial
      statements supplied to the Secured Party by or for the
    Debtor:

            

    

     

    
      	
              (i)  

            	
              are
      not untrue in any material respect;

            

    

     

    
      	
              (ii)  

            	
              have
      revealed all material facts the omission of which would make such
      information or statements
misleading;

            

    

     

    
      	
              (iii)  

            	
              disclose
      all facts which materially adversely affect, or so far as the Debtor can
      reasonably foresee will materially adversely affect, the Debtor’s
      financial condition, the Collateral or the Debtor’s ability to perform its
      obligations hereunder; and

            

    

     

    
      	
              (iv)  

            	
              in
      the case of financial statements, have been prepared in accordance with
      generally accepted accounting
principles.

            

    

     

    3.2 Reliance and
Survival.  All representations and warranties of the Debtor
made in this Agreement or in any certificate or other document delivered by or
on behalf of the Debtor for the benefit of the Secured Party are material, will
survive the execution and delivery of this Security Agreement and will continue
in full force and effect without time limit.  The Secured Party will
be considered to have relied upon each such representation and warranty in spite
of any investigation made by or on behalf of the Secured Party at any
time.

     

    PART
4- POSITIVE COVENANTS

     

    4.1 Positive
Covenants.  The Debtor covenants with the Secured Party the
following:

     

    
      	
              (a)  

            	
              Defend
      Collateral.  It will defend the Collateral against all
      claims and demands of all persons claiming the Collateral or an interest
      therein at any time;

            

    

     

    
      	
              (b)  

            	
              Lists of
      Accounts.  If the Collateral includes Accounts, the
      Debtor will deliver to the Secured Party, within 30 days following a
      written request by the Secured Party, an aged list of the Accounts in a
      form acceptable to the Secured Party acting
  reasonably;

            

    

     

    
      	
              (c)  

            	
              Provide
      Information.  Upon the demand by the Secured Party it
      will furnish in writing to the Secured Party all information requested
      concerning the Collateral and that it will promptly advise the Secured
      Party of the serial number, year, make and model of each serial numbered
      good at any time included in the
Collateral;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -5-

    

     

    
      	
              (d)  

            	
              Other
      Indebtedness.  It will pay and discharge as they become
      due all payments due and owing under or concerning any previous
      indebtedness created or security given by the Debtor to any person or
      corporation and will observe, perform and carry out all the terms,
      covenants, provisions and agreements relating thereto and any default in
      payment of any monies due and payable under or relating to any material
      previous indebtedness or security or in the observance, performance or
      carrying out of any of the material terms, covenants, provisions and
      agreements relating thereto will be considered to be a default hereunder
      at the option of the Secured Party and any and all remedies available to
      the Secured Party hereunder by reason of any default hereunder or by law
      or otherwise will be immediately available to the Secured Party upon any
      default of the Debtor under the previous material indebtedness created or
      security given by the Debtor;

            

    

     

    
      	
              (e)  

            	
              Right of Inspection.
      Upon an Event of Default, the Secured Party will have the right
      either by its officers or authorized agents upon notice to enter upon the
      Debtor’s premises and to inspect the Collateral, all books of account and
      records of the Debtor and copies of all returns made from time to time by
      the Debtor to boards, agencies or governmental departments and to make
      extracts therefrom and generally to conduct such examinations as it may
      see fit and without limiting the generality of the foregoing, the Secured
      Party may request information from the Debtor and the Debtor shall provide
      such information concerning the affairs and the conduct of business of the
      Debtor as the Secured Party may request and any reasonable costs, expenses
      and outlays which the Secured Party may incur pursuant hereto will be
      payable immediately by the Debtor to the Secured Party, will bear interest
      at the highest rate borne by any of the other Obligations and will,
      together with such interest, form part of the Obligations secured by this
      Security Agreement.  Except as may be necessary for the
      enforcement of the security provided hereunder and the recovery of the
      Obligations by the Secured Party, the Secured Party will retain all
      information and documentation received pursuant to this subsection (e) in
      confidence.  The Secured Party acknowledges that the information
      collected under this subsection (e) may constitute material non-public
      information of the Debtor and agrees to comply with all applicable
      securities laws in connection with receiving such information, including
      laws with respect to insider trading and
  “tipping”;

            

    

     

    
      	
              (f)  

            	
              Costs of Preparation &
      Enforcement.  It will pay all reasonable costs, charges
      and expenses of and incidental to the taking, preparation, execution and
      registering notice (and any amendments and renewals of such notice) of
      this Security Agreement and in taking, recovering, keeping possession of
      or inspecting the Collateral and generally in any other proceedings taken
      in enforcing the remedies in this Security Agreement or otherwise in
      connection with this Security Agreement or by reason of non-payment or
      procuring payment of the monies hereby
secured;

            

    

     

    
      	
              (g)  

            	
              Costs Caused by
      Default.  If the Debtor makes default in any covenant to
      be performed by it hereunder, the Secured Party may perform any covenant
      of the Debtor capable of being performed by the Secured Party and if the
      Secured Party is put to any costs, charges, expenses or outlays to perform
      any such covenant, the Debtor will indemnify the Secured Party for such
      reasonable costs, charges, expenses or outlays and such costs, charges,
      expenses or outlays (including solicitors’ fees and charges incurred by
      the Secured Party on an “own client” basis) will be payable immediately by
      the Debtor to the Secured Party, will bear interest at the highest rate
      borne by any of the other Obligations and will, together with such
      interest, form part of the Obligations secured by this Security
      Agreement;

            

    

     

    
      	
              (h)  

            	
              Court
      Costs.  In any judicial proceedings taken to enforce this
      Security Agreement and the covenants of the Debtor hereunder the Secured
      Party will be entitled to special
  costs.  

            

    

     

    
       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        -6-

      

       

      
        	
                  

              	
                Any
      costs so recovered will be credited against any solicitors’ fees and
      charges paid or incurred by the Secured Party relating to the matters in
      respect of which the costs were awarded and which have been added to the
      monies secured hereunder pursuant to the foregoing
  clause;

              

      

       

    

    
      	
              (i)  

            	
              Notice of
      Litigation.  Other than litigation ongoing at the date of
      execution of this Agreement which has been publicly disclosed by the
      Debtor, it will give written notice to the Secured Party of all material
      litigation before any court, administrative board or other tribunal
      affecting the Debtor or the Collateral or any part
  thereof;

            

    

     

    
      	
              (j)  

            	
              Corporate Existence
      etc.  It will at all times maintain its corporate
      existence; that it will carry on and conduct its business in a proper,
      efficient and businesslike manner and in accordance with good business
      practice; and that it will keep or cause to be kept proper books of
      account in accordance with sound accounting
  practice;

            

    

     

    
      	
              (k)  

            	
              Taxes.  It
      will pay all taxes, rates, levies, charges, assessments, statute labour or
      other imposition whatsoever now or hereafter rated, charged, assessed,
      levied or imposed by any lawful authority or otherwise howsoever on it, on
      the Collateral or on the Secured Party in respect of the Collateral or any
      part or parts thereof, or any other matter or thing in connection with
      this Security Agreement, save and except when and so long as the validity
      of such taxes, rates, levies, charges, assessments, statute labour or
      other imposition is in good faith contested by it, and will, if and when
      required in writing by the Secured Party, furnish for inspection the
      receipts for any such payments;

            

    

     

    
      	
              (l)  

            	
              Payments.  It
      will promptly pay or remit all amounts which if left unpaid or unremitted
      might give rise to a lien or charge on any of the Collateral ranking or
      purporting to rank in priority to any security interest created by this
      Security Agreement;

            

    

     

    
      	
              (m)  

            	
              Further
      Assurances.  It will do, execute, acknowledge and deliver
      or cause to be done, executed, acknowledged or delivered, such further
      acts, deeds, mortgages, transfers and assurances as the Secured Party will
      reasonably require for the better assuring, charging, assigning and
      conferring unto the Secured Party the Collateral and the security
      interests intended to be created hereunder, for the purpose of
      accomplishing and effecting the intention of this Security
      Agreement;

            

    

     

    
      	
              (n)  

            	
              Purchase
      Monies.  If the Secured Party advances money to the
      Debtor for the purpose of enabling the Debtor to purchase or acquire
      rights in any Collateral the Debtor will use such money only for that
      purpose and will promptly provide the Secured Party with evidence that
      such money was so applied;

            

    

     

    PART
5- NEGATIVE COVENANTS

     

    5.1 Negative
Covenants.  The Debtor covenants and agrees with the Secured
Party that it will not, without the prior written consent of the Secured Party
which will not be unreasonably withheld:

     

    
      	
              (a)  

            	
              Change
      Name.  Change its
name;

            

    

     

    
      	
              (b)  

            	
              Amalgamate.  Amalgamate
      or otherwise merge its business with the business of any other
      person;

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -7-

    

     

     

    
      	
              (c)  

            	
              Continue.  Continue
      from the jurisdiction which presently exercises primary corporate
      governance over the affairs of the
Debtor;

            

    

     

    
      	
              (d)  

            	
              Permit
      Charges.  Permit the Collateral or any part or parts
      thereof to become subject to any mortgage, charge, lien, encumbrance or
      security interest which would rank equal to or in priority to any
      mortgage, charge, lien, encumbrance or security interest created by this
      Agreement or otherwise granted in favour of the Secured Party, whether
      made, given or created by the Debtor or
  otherwise;

            

    

     

    
      	
              (e)  

            	
              Sell
      Collateral.  Save as permitted in paragraph 5.2 and
      paragraph 5.3 sell, lease or otherwise dispose of the Collateral or any
      part or parts thereof (and in the event of any sale, lease or other
      disposition permitted or consented to it will pay the proceeds to the
      Secured Party), except in the ordinary course of
  business;

            

    

     

    
      	
              (f)  

            	
              Abandon
      Collateral.  Release, surrender or abandon the Collateral
      or any part or parts thereof;

            

    

     

    
      	
              (g)  

            	
              Move
      Collateral.  Move the Collateral or any part or parts
      thereof outside of California  (and will promptly advise the
      Secured Party of the new location or
locations);

            

    

     

    5.2 Sale of
Inventory.  If this Security Agreement grants a security
interest in Inventory, until an Event of Default has occurred and the Secured
Party has determined to enforce the security interests hereby created, the
Debtor may only sell Inventory in the ordinary course of business and provided
that all sales will be on commercially reasonable terms.

     

    5.3 Sale of
Equipment.  If this Security Agreement grants a security
interest in Equipment, until an Event of Default has occurred and the Secured
Party has determined to enforce the security interests hereby created, the
Debtor may sell Equipment:

     

    
      	
              (a)  

            	
              which
      is replaced by Equipment of like or superior quality and capacity
      (“Replacement Equipment”), or

            

    

     

    
      	
              (b)  

            	
              which
      is obsolete, worn out or otherwise no longer used or useful to the Debtor
      in its business,

            

    

     

    and the
proceeds of which are applied to the purchase price of Replacement
Equipment.

     

    PART
6- DEFAULT AND ENFORCEMENT

     

    6.1 Events of
Default.  The happening of any Event of Default under the
Credit Agreement shall be deemed to be an Event of Default
hereunder.

     

    6.2 Acceleration.  If
any Event of Default occurs, the Secured Party, in its sole and absolute
discretion, may declare all or any part of the Obligations (whether or not by
its terms payable on demand) immediately due and payable.

     

    6.3 Remedies of the Secured
Party.  If the security interests hereby created become
enforceable, subject to applicable law the Secured Party may enforce its rights
by any one or more of the following remedies:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -8-

    

     

    
      	
              (a)  

            	
              Take
      Possession.  By taking possession of the Collateral or
      any part thereof, and collecting, demanding, suing, enforcing, recovering,
      receiving and otherwise getting in the same and for that purpose entering
      into and upon any lands, tenements, buildings, houses and premises
      wheresoever and whatsoever and to do any act and take any proceedings in
      the name of the Debtor, or otherwise, as the Secured Party will consider
      necessary;

            

    

     

    
      	
              (b)  

            	
              Court Appointed
      Receiver.  By proceedings in any court of competent
      jurisdiction for the appointment of a receiver or receiver-manager of all
      or any part of the Collateral;

            

    

     

    
      	
              (c)  

            	
              Court Ordered
      Sale.  By proceedings in any court of competent
      jurisdiction for the sale or foreclosure of all or any part of the
      Collateral;

            

    

     

    
      	
              (d)  

            	
              File Proofs of
      Claim.  By filing of proofs of claim and other documents
      to establish its claims in any proceeding or proceedings relating to the
      Debtor;

            

    

     

    
      	
              (e)  

            	
              Appoint
      Receiver.  By appointment by instrument in writing of a
      receiver or receiver-manager of all or any part of the
      Collateral;

            

    

     

    
      	
              (f)  

            	
              Sale or
      Lease.  By sale or lease by the Secured Party of all or
      any part of the Collateral (whether or not it has taken possession of the
      same);

            

    

     

    
      	
              (g)  

            	
              Voluntary
      Foreclosure.  By retaining any of the Collateral in
      satisfaction of all or part of the Obligations, in accordance with
      paragraph 6.9; and

            

    

     

    
      	
              (h)  

            	
              Other
      Remedies.  By any other remedy or proceeding authorized
      or permitted hereby or by law or equity (including all of the rights and
      remedies of a secured party under the Personal Property Security
      Act (Ontario) (the “PPSA”) in effect from
      time to time);

            

    

     

    and in
exercising, delaying in exercising or failing to exercise, any such right or
remedy the Secured Party will not incur any liability to the Debtor except as
prescribed by applicable law.

     

    6.4 Power of Sale.  The
provisions of paragraph 6.5(g) will apply, mutatis mutandis, to a sale
or lease of any of the Collateral by the Secured Party under paragraph
6.3(f).

     

    6.5 Receiver or
Receiver-Manager.  Any time after the security interests hereby
created have become enforceable, the Secured Party may from time to time appoint
in writing any qualified person to be a Receiver or Receiver and Manager (“Receiver”) of the Collateral
and may likewise remove any such person so appointed and appoint another
qualified person in his stead.  Any such Receiver appointed hereunder
will have the following powers:

     

    
      	
              (a)  

            	
              Take Possession. To take
      possession of the Collateral or any part thereof, and to collect and get
      in the same and for that purpose to enter into and upon any lands,
      tenements, buildings, houses and premises wheresoever and whatsoever and
      to do any act and take any proceedings in the name of the Debtor, or
      otherwise, as the Receiver will consider
  necessary;

            

    

     

    
      	
              (b)  

            	
              Carry On
      Business.  If this Security Agreement creates security
      interests in substantially all of the Debtor’s present and after-acquired
      personal property, to carry on or concur in carrying on the business of
      the Debtor (including, without limiting the generality of the powers
      contained in this Agreement, the payment of the obligations of the Debtor
      whether or not the same are due and the cancellation or amendment of any
      contracts between the Debtor and any other person) and the employment and
      discharge of such agents, managers, clerks, accountants, servants, workmen
      and others upon such terms and with such salaries, wages or remuneration
      as the Receiver thinks proper;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -9-

    

     

     

    
      	
              (c)  

            	
              Repair.  To
      repair and keep in repair the Collateral or any part or parts thereof and
      to do all necessary acts and things for the protection of the
      Collateral;

            

    

     

    
      	
              (d)  

            	
              Arrangements.  To
      make any arrangement or compromise which the Receiver thinks expedient in
      the interest of the Secured Party or the Debtor and to assent to any
      modification or change in or omission from the provisions of this Security
      Agreement;

            

    

     

    
      	
              (e)  

            	
              Exchange.  To
      exchange any part or parts of the Collateral for any other property
      suitable for the purposes of the Debtor upon such terms as may seem
      expedient and either with or without payment or exchange of money or
      equality of exchange or otherwise;

            

    

     

    
      	
              (f)  

            	
              Borrow.  To
      raise on the security of the Collateral or any part or parts thereof, by
      mortgage, charge or otherwise any sum of money required for the repair,
      insurance or protection thereof, or any other purposes mentioned in this
      Agreement, or as may be required to pay off or discharge any lien, charge
      or encumbrance upon the Collateral or any part thereof, which would or
      might have priority over the security interests hereby
      created;

            

    

     

    
      	
              (g)  

            	
              Sell or
      Lease.  Whether or not the Receiver has taken possession,
      to sell or lease or concur in the sale or leasing of any of the Collateral
      or any part or parts thereof after giving the Debtor not less than 20
      days’ written notice of his intention to sell or lease and to carry any
      such sale or lease into effect by conveying, transferring, letting or
      assigning in the name of or on behalf of the Debtor or otherwise; and any
      such sale or lease may be made either at public auction or privately as
      the Receiver will determine and any such sale or lease may be made from
      time to time as to the whole or any part or parts of the Collateral; and
      the Receiver may make any stipulations as to title or conveyance or
      commencement of title or otherwise which the Receiver considers proper;
      and the Receiver may buy in or rescind or vary any contract for the sale
      or lease of any of the Collateral or any part or parts thereof, and may
      resell and release without being answerable for any loss occasioned
      thereby; and the Receiver may sell or lease any of the same as to cash or
      part cash and part credit or otherwise as will appear to be most
      advantageous and at such prices as can be reasonably obtained therefor and
      in the event of a sale or lease on credit neither he nor the Secured Party
      will be accountable or charged with any monies until actually
      received.

            

    

     

    6.6 Liability of
Receiver.  The Receiver appointed and exercising powers under
the provisions hereof will not be liable for any loss howsoever arising unless
the same will be caused by the Receiver’s own negligence or wilful default, and
the Receiver will when so appointed be considered to be the agent of the Debtor
and the Debtor will be solely responsible for the Receiver’s acts and defaults
and for the Receiver’s remuneration.

     

    6.7 Effect of Appointment of
Receiver.  As soon as the Secured Party takes possession of any
Collateral or appoints a Receiver, all powers, functions, rights and privileges
of the directors and officers of the Debtor concerning the Collateral will
cease, unless specifically continued by the written consent of the Secured Party
or the Receiver.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      -10-

    

     

    6.8 Validity of Sale or
Lease.  No purchaser at any sale and no lessee under any lease
purporting to be made in pursuance of the power set out in paragraph 6.3(f) and
paragraph 6.5(g) will be bound to see or enquire whether any default has been
made or continues or whether any notice required hereunder has been given or as
to the necessity or expediency of the stipulations subject to which sale or
lease will have been made or otherwise as to the propriety of such sale or
lease, or regularity of proceedings or be affected by notice that such default
has been made or continues or notice given as aforesaid, or that the sale or
lease is otherwise unnecessary, improper or irregular; and in spite of any
impropriety or irregularity or notice thereof to such purchaser or lessee the
sale or lease as regards such purchaser or lessee will be considered to be
within the aforesaid power and be valid accordingly and the remedy (if any) of
the Debtor in respect of any impropriety or irregularity whatsoever in any such
sale or lease will be in damages only.

     

    6.9 Voluntary
Foreclosure.  The Secured Party may elect to retain any of the
Collateral in satisfaction of the Obligations or any of them.  The
Secured Party may designate any part of the Obligations to be satisfied by the
retention of particular Collateral which the Secured Party considers to have a
net realizable value approximating the amount of the designated part of the
Obligations, in which case only the designated part of the Obligations will be
considered to be satisfied by the retention of the particular
Collateral.

     

    6.10 Proceeds of
Disposition.  The proceeds of the sale, lease or other
disposition of the whole or any part of the Collateral will be applied as
follows:

     

    
      	
              (a)  

            	
              FIRSTLY
      to pay and discharge all rents, taxes, rates, insurance premiums and
      out-goings affecting the
Collateral;

            

    

     

    
      	
              (b)  

            	
              SECONDLY
      to pay all costs and expenses of taking possession and/or sale or lease or
      otherwise (including the Receiver’s remuneration, if
  any);

            

    

     

    
      	
              (c)  

            	
              THIRDLY
      to pay such amounts as are necessary to keep in good standing all liens
      and charges on the Collateral prior to the security interests hereby
      created;

            

    

     

    
      	
              (d)  

            	
              FOURTHLY
      to pay any principal, interest and other monies due and payable hereunder
      (in such order as the Secured Party may require);
  and

            

    

     

    
      	
              (e)  

            	
              should
      any surplus remain in the hands of the Receiver or the Secured Party then
      the Debtor will be entitled to such
surplus.

            

    

     

    6.11 No Set-Off Etc.  The
Obligations will be paid by the Debtor without regard to any equities between
the Debtor and the Secured Party or any right of set-off, combination of
accounts or cross-claim.  Any indebtedness owing by the Secured Party
to the Debtor may be set off or applied against, or combined with, the
Obligations by the Secured Party at any time, either before or after maturity,
without demand upon, or notice to, anyone.

     

    6.12 Deficiency.  If the
proceeds of the realization of the Collateral are insufficient to fully pay to
the Secured Party the Obligations, the Debtor will immediately pay such
deficiency or cause it to be paid to the Secured Party.

     

    6.13 Waiver.  The Secured
Party may waive any breach by the Debtor of any of the provisions contained in
this Security Agreement or any Event of Default, provided always that no act or
omission of the Secured Party will extend to or be taken in any manner
whatsoever to affect any subsequent breach or Event of Default or the rights
resulting therefrom not so specifically waived.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -11-

    

     

     

    PART
7- NOTICES

     

    7.1 Notices.  In this
Agreement:

     

    
      	
              (a)  

            	
              Any
      notice or communication required or permitted to be given under the
      Agreement will be in writing and will be considered to have been given if
      delivered by hand, transmitted by facsimile transmission or mailed by
      prepaid registered post in Canada, to the address or facsimile
      transmission number of each party set out
below:

            

    

     

     

    
      
        	
                (i) 

              	
                if
      to the Secured Party:

              
	 	 
	 
      	
                Silverbirch
      Inc.

                Suite
      500 - 150 Ferrand Drive

              
	 
      	
                Toronto,
      Ontario M3C 3E5

              
	 	 
	 
      	
                Attention:                      Derek
      van der Plaat

              
	 
      	
                Fax
      No:                           (416)
      621-7715

              
	 	 
	
                (ii) 

              	
                if
      to the Debtor:

              
	 
      	 
      
	 
      	
                Red
      Mile Entertainment, Inc.

                223
      San Anselmo Avenue,

              
	 
      	
                Suite
      #3, San Anselmo, CA 94960

              
	 	 
	 
      	
                Attention:                      Chester
      Aldridge

                Fax
      No:                          
      (415) 480-1393

              

      

    

     

    or to
such other address or facsimile transmission number as any party may designate
in the manner set out above.

     

    
      	
              (b)  

            	
              Notice
      or communication will be considered to have been
  received:

            

    

     

    
      	
              (i)  

            	
              if
      delivered by hand during business hours, upon receipt by a responsible
      representative of the receiver, and if not delivered during business
      hours, upon the commencement of the next business
  day;

            

    

     

    
      	
              (ii)  

            	
              if
      sent by facsimile transmission during business hours, upon the sender
      receiving confirmation of the transmission, and if not transmitted during
      business hours, upon the commencement of the next business day;
      and

            

    

     

    
      	
              (iii)  

            	
              if
      mailed by prepaid registered post in Canada, upon the fifth business day
      following posting; except that, in the case of a disruption or an
      impending or threatened disruption in postal services every notice or
      communication will be delivered by hand or sent by facsimile
      transmission.

            

    

     

    
      	
              (c)  

            	
              In
      this Agreement “business
      day” will mean a day which is not a Saturday, Sunday or defined as
      a “holiday” under the Interpretation Act
      (Ontario), as amended or replaced from time to
  time.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -12-

    

     

     

    PART
8- GENERAL

     

    8.1 No Automatic
Discharge.  This Security Agreement will not be or be
considered to have been discharged by reason only of the Debtor ceasing to be
indebted or under any liability, direct or indirect, absolute or contingent, to
the Secured Party.

     

    8.2 Discharge.  If at
any time there are no Obligations then in existence then, at the request and at
the expense of the Debtor the Secured Party will cancel and discharge this
Security Agreement and the security interests granted in this Agreement and the
Secured Party will execute and deliver to the Debtor all such documents as are
required to effect such discharge.

     

    8.3 No Obligation to
Advance.  The Debtor acknowledges and agrees that none of the
preparation, execution or registration of notice of this Security Agreement will
bind the Secured Party to advance the monies hereby secured nor will the advance
of a part of the monies hereby secured bind the Secured Party to advance any
unadvanced portion thereof.

     

    8.4 Security
Additional.  The Debtor agrees that the security interests
created by this Security Agreement are in addition to and not in substitution
for any other security now or hereafter held by the Secured Party.

     

    8.5 Realization.  The
Debtor acknowledges and agrees that the Secured Party may realize upon various
securities securing the Obligations or any part thereof in such order as it may
be advised and any such realization by any means upon any security or any part
thereof will not bar realization upon any other security or the security hereby
constituted or parts thereof.

     

    8.6 No Merger.  This
Security Agreement will not operate so as to create any merger or discharge of
any of the Obligations, or of any assignment, transfer, guarantee, lien,
contract, promissory note, bill of exchange or security interest held or which
may hereafter be held by the Secured Party from the Debtor or from any other
person whomsoever.  The taking of a judgment concerning any of the
Obligations will not operate as a merger of any of the covenants contained in
this Security Agreement.

     

    8.7 Extensions.  The
Secured Party may grant extensions of time and other indulgences, take and give
up security, accept compositions, compound, compromise, settle, grant releases
and discharges, refrain from perfecting or maintaining perfection of security
interests and otherwise deal with the Debtor, Account Debtors (but only after an
Event of Default), sureties and others and with the Collateral and other
security interests as the Secured Party may see fit without prejudice to the
liability of the Debtor or the Secured Party’s right to hold and realize on the
security constituted by this Security Agreement.

     

    8.8 Provisions
Reasonable.  The Debtor acknowledges that the provisions of
this Security Agreement and, in particular, those respecting rights, remedies
and powers of the Secured Party or any Receiver against the Debtor, its business
and any Collateral are commercially reasonable.

     

    8.9 Assignment.  The
Secured Party may, without notice to the Debtor, at any time assign, transfer or
grant a security interest in this Security Agreement and the security interests
hereby granted.  The Debtor expressly agrees that the assignee,
transferee or secured party, as the case may be, will have all of the Secured
Party’s rights and remedies under this Security Agreement and the Debtor will
not assert any defence, counter-claim, right of set-off or otherwise any claim
which the Debtor now has or hereafter acquires against the Secured Party in any
action commenced by any such assignee, transferee or secured party, as the case
may be, and will pay the Obligations to the assignee, transferee or secured
party, as the case may be, as the Obligations become due.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -13-

    

     

    8.10 Appropriation of
Payments.  Any and all payments made in respect of the
Obligations from time to time and monies realized from any security interests
held therefor (including monies collected in accordance with or realized on any
enforcement of this Security Agreement) may be applied to such part or parts of
the Obligations as the Secured Party may see fit and the Secured Party may at
all times and from time to time change any appropriation as the Secured Party
may see fit.

     

    8.11 No
Representations.  The Debtor acknowledges and agrees that the
Secured Party has made no representations or warranties other than those
contained in this Security Agreement.

     

    8.12 Use of Collateral by
Debtor.  Save as provided in paragraph 1.6, until an Event of
Default occurs the Debtor will be entitled to possess, operate, collect, use and
enjoy the Collateral in any manner not inconsistent with the terms
hereof.

     

    8.13 Modifications,
Etc.  No modification or amendment of this Security Agreement
will be effective unless in writing and executed by the Debtor and the Secured
Party and no waiver of any of the provisions of this Security Agreement will be
effective unless in writing and signed by the party waiving the
provision.

     

    8.14 Disclosure of
Information.  The Debtor hereby consents to the Secured Party,
in compliance with any statutory disclosure requirements, disclosing information
about the Debtor, this Security Agreement, the Collateral and the Obligations to
any person for the purpose of the enforcement of this Security
Agreement.

     

    8.15 Statutory
Waivers.  To the fullest extent permitted by law, the Debtor
waives all of the rights, benefits and protections given by the provisions of
any existing statute which imposes limitations upon the powers, rights or
remedies of a secured party or upon the methods of realization of security,
including any seize or sue or anti-deficiency statute except the
PPSA.

     

    PART
9- INTERPRETATION

     

    9.1 Incorporated
Definitions.  In this Security Agreement words which are
defined in the PPSA which are not defined in this Agreement will have the
meaning set out in the PPSA.

     

    9.2 Headings.  The
headings in this Security Agreement are inserted for convenience of reference
only and will not affect the construction or interpretation of this Security
Agreement.

     

    9.3 Severability.  If
any provision contained in this Security Agreement is invalid or unenforceable
the remainder of this Security Agreement will not be affected thereby and each
provision of this Security Agreement will separately be valid and enforceable to
the fullest extent permitted by law.

     

    9.4 Laws of
Ontario.  This Agreement is governed by, and construed in
accordance with, the laws of the Province of Ontario and the Debtor hereby
submits to the non-exclusive jurisdiction of the Courts of Ontario concerning
this Security Agreement.

     

    9.5 Time of
Essence.  Time will be of the essence hereof.

     

    9.6 Number and
Gender.  In this Security Agreement, words in the singular
include the plural and vice-versa and words in one gender include all
genders.

     

    9.7 Enurement.  This
Security Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -14-

    

     

    PART
10- ACKNOWLEDGMENT AND WAIVER

     

    10.1 Acknowledgment and
Waiver.  The Debtor hereby:

     

    
      	
              (a)  

            	
              acknowledges
      receiving a copy of this Security Agreement;
and

            

    

     

    
      	
              (b)  

            	
              waives
      all rights to receive from the Secured Party a copy of any financing
      statement, financing change statement or verification statement filed or
      issued, as the case may be, at any time in respect of this Security
      Agreement or any amendments hereto.

            

    

     

    TO
EVIDENCE ITS AGREEMENT the Debtor has executed this Security Agreement on the
date first above written.

    

    

    RED
MILE ENTERTAINMENT, INC.

    

    

    By:

    

    

    Chester
Aldridge

    Chief
Executive Officer and Chairman

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      -15-

    SCHEDULE
1

    

    Prior
Security Interests

     

    Tiger Paw
Capital Corp.

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      -16-

    

     

     

    SCHEDULE
2

    

    

    Debtor’s
Place(s) of Business and Location(s) of Collateral

    

     

    223 San
Anselmo Avenue, Suite #3, San Anselmo, CA 94960

    

    See
attached

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