TEMPORARY FORBEARANCE AGREEMENT
This Temporary Forbearance Agreement
(this “Agreement”) is entered into and effective as of May 7, 2008 by and among
RED MILE ENTERTAINMENT, INC., a Delaware corporation and its subsidiaries
(collectively, the “Borrower”) and TIGER PAW
CAPITAL CORP., an Alberta Company (“Lender”).
RECITALS
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A.
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Borrower
and Lender are parties to that certain Revolving Line of Credit Agreement
dated February 11, 2008 (the “Credit Agreement”) pursuant to which
Borrower issued to Lender a promissory note dated February 11, 2008 in the
principal sum of $1,000,000.00 (the “Promissory
Note”);
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B.
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Under
the Credit Agreement, Borrower is obligated to pay Lender on demand, but
in no event later than 90 days after the date an advance is made under the
Credit Agreement;
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C.
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Borrower
has requested and Lender has agreed, for a period commencing May 7, 2008
and ending November 7, 2008 (the “Forbearance Period”) and subject to the
terms and conditions of this Agreement, (a) to waive any default or Event
of Default under the Credit Agreement or the Promissory Note existing
solely as a result of the failure by Borrower to pay Lender amounts due,
or which become due during the Forbearance Period, on account of advances
already drawn by Borrower under the Credit Agreement (the “Forbearance
Payments”), (b) to not make demand for repayment under the Credit
Agreement or the Promissory Note, and (c) to refrain from exercising its
rights and remedies against Borrower in connection with any failure by
Borrower to pay Lender the Forbearance
Payments.
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AGREEMENT
NOW, THEREFORE, in consideration of the
foregoing premises, the mutual agreements set forth below, and other good and
valuable consideration the parties agree as follows:
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1.
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Waiver of
Default
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Lender hereby waives any default or
Event of Default under the Credit Agreement or the Promissory Note existing
solely as a result of Borrower’s failure to pay Lender the Forbearance Payments
during the Forbearance Period. Borrower acknowledges that interest shall
continue to accrue as provided in the Credit Agreement and Promissory
Note.
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2.
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Standstill
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Lender hereby agrees that during the
Forbearance Period Lender will not (a) make demand for repayment under the
Credit Agreement or the Promissory Note or (b) exercise any remedy under the
Credit Agreement or the Promissory Note, at law or in equity, which it hereafter
may have in respect of any default or Event of Default resulting solely from the
failure of Borrower to pay to Lender the Forbearance Payments.
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3.
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Termination
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This Agreement shall terminate upon the
earlier of (a) the occurrence of an Event of Default under the Credit Agreement
other than in connection with the Forbearance Payments and (b) the end of the
Forbearance Period. Upon termination of this Agreement, the
Forbearance Payments will be due and payable according to the terms of the
Credit Agreement and Promissory Note, except that no Event of Default shall have
occurred by reason of Borrower’s failure to pay the Forbearance Payments during
the Forbearance Period.
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4.
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No Other
Waiver
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Except to the extent expressly set
forth in this Agreement, nothing contained herein shall be deemed to (a) be a
consent to, or waiver of, any default or Event of Default under the Credit
Agreement or Promissory Note; or (b) prejudice any right or remedy which Lender
may now have or may in the future have under the Credit Agreement or the
Promissory Note or otherwise. Except as expressly provided herein,
the Credit Agreement and Promissory Note shall continue unchanged and in full
force and effect, and all rights, powers and remedies of Lender thereunder
and under applicable law are hereby expressly reserved.
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5.
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Miscellaneous
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(a)
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Section
headings used in this Agreement are for convenience of
reference only and shall not affect the construction of this
Agreement.
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(b)
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This
Agreement may be executed in any number of counterparts and by the
different parties on separate counterparts and each such counterpart shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same
agreement.
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(c)
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This
Agreement shall be a contract made under and governed by the laws of the
State of California.
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(d)
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This
Agreement shall be binding on, and inure to the benefit of, Borrower,
Lender and their respective successors and
assigns
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(e)
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All
amendments or modifications of this Agreement and all consents, waivers
and notices delivered hereunder or in connection herewith shall be in
writing.
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of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.
BORROWER: LENDER:
RED MILE
ENTERTAINMENT,
INC. TIGER
PAW CAPITAL CORP.
By: _______________________________
By:
______________________________
Name:
_______________________________ Name: _____________________________
Title: _______________________________ Title: _____________________________
10556339.1
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