REVOLVING LINE OF CREDIT AGREEMENT
This
Revolving Line of Credit Agreement, dated as of February 11, 2008 (the “Agreement”), is made by and
among Red Mile, Inc., a Delaware corporation whose principal office is located
at 0000 Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 and its subsidiaries
(collectively, the “Borrower”) and Tiger Paw
Capital Corp., an Alberta Company with its principal place of business located
at 0000 00xx Xxxxxx
XX, Xxxxxxx, Xxxxxxx, X0X E42 (“Lender”).
AGREEMENT
In consideration of the mutual promises
set forth herein, and intending to be legally bound, the Borrower and Lender
hereby agree as follows:
|
1.
|
Background. Lender
has approved an uncommitted line of credit up to One Million Dollars
($1,000,000.00) for Borrower’s use pursuant to this
Agreement.
|
|
2.
|
Uncommitted Revolving
Line of Credit. Lender hereby establishes, subject to
the terms and conditions of this Agreement, a secured, uncommitted,
revolving line of credit facility in favor of Borrower in an aggregated
principal amount not to exceed One Million Dollars
($1,000,000.00).
|
|
3.
|
Promise to
Repay. Borrower promises to pay UPON DEMAND or Final
Maturity (as defined herein) the aggregate principal amount of all amounts
provided by Lender to Borrower, up to One Million Dollars ($1,000,000.00),
which are outstanding at any time under this Agreement, together with all
accrued and unpaid Interest (as defined herein), if any, outstanding on
such principal amount.
|
|
4.
|
Interest. Interest
shall accrue on the unpaid principal balance outstanding hereunder at a
simple rate equal to ten percent (10%) per annum, calculated on a daily
basis (the “Interest”).
|
|
5.
|
Interest
Payments. Borrower shall make payments to the order of
Lender of all Interest that accrues during the term of the Agreement UPON
DEMAND or on or before Final
Maturity.
|
|
6.
|
Purpose of
Loan. The line of credit shall be used for general
corporate business purposes for the sole benefit of the Borrower; provided
however, that advances made by the Lender to the Borrower under the line
of credit shall not be used for purposes of paying intra-company debt,
distributions to any shareholders, or corporate debt of any kind without
the express written consent of Lender. Prior to each advance
made under this line of credit, Borrower shall submit to Lender a detailed
written spreadsheet showing the intended use of such funds relating to
such advance, which shall be subject to the Lender’s approval, and
thereafter Borrower agrees to promptly and only use such funds solely for
each use as shown in such spreadsheet and only in the amounts shown on
such spreadsheet.
|
1
|
7.
|
Maturity. In
the event all advances are not converted into an Alternative Financing (as
defined herein), all advances (if any) made under this line of credit will
be due and payable to the order of Lender UPON DEMAND, but in no event
later than 90 days from the date each respective draw is made, (the “Final Maturity”), and at
all times will be subject to the terms and conditions set forth in this
Agreement and in the Promissory Note of even date herewith, a copy of
which is attached hereto as Exhibit A and incorporated as if fully set
forth herein, as given by Borrower in the principal amount of One Million
Dollars ($1,000,000.00), payable to the order of Lender (the “Promissory
Note”). The Borrower agrees to execute the Promissory
Note at the same time that Borrower executes this Agreement. In the event
all advances are converted into an Alternative Financing, this revolving
line of credit facility shall automatically mature and any payment
obligations under this facility shall be converted into payment
obligations pursuant to such the Alternative
Financing.
|
|
|
BORROWER
ACKNOWLEDGES AND AGREES THAT LENDER MAY AT ANY TIME AND IN ITS SOLE
DISCRETION DEMAND PAYMENT OF ALL AMOUNTS OUTSTANDING UNDER THIS AGREEMENT
OR THE PROMISSORY NOTE WITHOUT PRIOR NOTICE TO THE
BORROWER.
|
|
8.
|
Draw
Requests. Borrower may request an advance under this
Agreement in any amount by a written draw request signed by any authorized
signatory of Borrower subject to the submission of a spreadsheet for
Lender approval contemplated in Section 6 of this
Agreement.
|
|
9.
|
Collateral. All
advances (if any) made under this line of credit shall be secured under a
security agreement, a copy of which is attached hereto as Exhibit B and
incorporated as if fully set forth herein (the “Security Agreement”),
pursuant to which Borrower hereby authorizes, subject to any applicable
laws, regulations, or contractual restrictions prohibiting Borrower as set
forth on Schedule A attached hereto and incorporated herein by Reference,
liens to be filed in the appropriate jurisdictions pursuant to the terms
and conditions of the Security Agreement. The Borrower agrees
to execute the Security Agreement at the same time that Borrower executes
this Agreement.
|
|
10.
|
Calculation of
Interest. Interest shall be calculated on the basis of a
year comprised of 360 days over the actual number of days in the
period.
|
|
11.
|
Credit of
Payments. Any payment of principal or Interest under
this Agreement must be received by Lender at its principal office (or at
such other office or depository institution as Lender may from time to
time designate by written notice to Borrower) by 2:00 p.m. prevailing
Eastern Time on a business day in the jurisdiction where such office or
institution is situated, in order to be credited on such
date.
|
2
|
12.
|
Application of
Payments. Payments received by Lender shall be applied
to charges, fees and expenses (including attorneys’ fees), accrued
Interest, and principal in any order Lender may in its sole discretion
choose.
|
|
13.
|
Revolving Nature of
Facility. This Agreement and the Promissory Note
evidence a revolving line of credit. Borrower agrees to be
liable for all sums advanced hereunder. The unpaid principal
balance owing on this facility at any time may be evidenced by
endorsements on the Promissory Note, or by Lender’s records, which shall
be conclusive of indebtedness.
|
| 14. | Prepayment. The indebtedness evidenced by this Agreement and the Promissory Note may be prepaid in whole or in part at any time without penalty. |
|
15.
|
No Commitment to
Fund. This is not a committed line of
credit. The Borrower acknowledges and agrees that advances made
under this line of credit, if any, shall be made at the sole discretion of
Lender. Lender, through its officers, may decline to make
advances under the line, or terminate the line, at any time and for any
reason without prior notice to the Borrower. In no event shall
Borrower be entitled to further advances once the total principal amount
of this facility has been advanced unless (and then only to the extent
that) repayment of advances is received by Lender. This
Agreement sets forth certain terms and conditions solely to assure that
the parties understand each other’s expectations and to assist the parties
in evaluating and monitoring the line of
credit.
|
|
16.
|
Obligations of
Borrower. Lender’s willingness to consider making
advances under this facility is subject to the Borrower’s ongoing
agreement (a) to promptly furnish Lender, upon Lender’s written request,
the Borrower’s unaudited financial statements and such other financial
information as Lender may reasonably request from time to time, and (b) to
notify Lender as soon as practicable following the occurrence of any Event
of Default as defined herein (or event that, with the passage of time or
giving of notice or both, would become an Event of
Default).
|
|
17.
|
Event of
Default. An “Event of Default” shall
exist under this Agreement or the Promissory Note if any of the following
occurs: (a) Borrower fails to make any payment required by this
Agreement or the Promissory Note when due and the same is not cured within
five (5) business days; (b) Borrower breaks any promise that
Borrower has made to Lender, or fails to perform promptly at the time and
strictly in the manner provided in this Agreement, the Promissory Note, or
the Security Agreement; (c) any representation or statement
made to Lender by Borrower or on Borrower’s behalf is false or misleading
in any material respect; (d) Borrower becomes insolvent or a
receiver is appointed for any part of Borrower’s property; (e)
Borrower makes any material assignment for the benefit of
creditors; (f) any proceeding is commenced either by Borrower
or against Borrower under any bankruptcy or insolvency law without prior
written notice to Lender and such proceeding is not cured within sixty
(60) calendar days; or (g) Borrower commits an actual default in the
prompt payment or other performance required with respect to any of its
indebtedness (including but not limited to with respect to Lender
hereunder) for loans, advances or any other forms of borrowings or under
any agreement under which such indebtedness is outstanding or
secured.
|
3
|
18.
|
Lender’s Rights Upon
Default. (a) During the existence of an Event of
Default, Lender may: (i) increase the applicable rate of
interest to a rate per annum that shall be two percentage points (2%) in
excess of the rate otherwise in effect at any time under this Agreement,
but not more than the maximum rate allowed by law (the “Default Interest Rate”);
(ii) demand payment in full or in part of all principal amounts
outstanding hereunder, and accelerate any and all accrued and unpaid
Interest due hereunder to be immediately due and payable; and/or (iii)
exercise all of its rights under this Agreement, the Promissory Note,
and/or the Security Agreement, or at law or in equity, in order to satisfy
the indebtedness of Borrower. In the event that Lender elects
to apply the Default Interest Rate to any principal balance due hereunder,
the Default Interest Rate shall continue to apply whether or not judgment
shall be entered on this Agreement.
|
|
|
(b)
Lender’s Rights
Upon Change in Control; In the event that the majority Borrower’s
capital stock or substantially all of the net assets of the Borrower are
sold in a single transaction or a series of related transactions (a
“Change of Control”), Lender will receive additional consideration equal
to thirty percent (30%) of the aggregate amounts of indebtedness
outstanding at the time of the sale. In the event of a Change
of Control, the terms of this Agreement, the Note and the Security
Agreement shall remain in full force and effect. Prior to any
Change of Control Borrower shall procure evidence sufficient to the Lender
of the written assumption of the terms of this Agreement, the Note and the
Security Agreement by the buyer(s) in connection with such Change of
Control.
|
|
19.
|
Late
Fees. If any payment of interest or principal due
hereunder is ten (10) or more calendar days late, Lender, is its sole
discretion, may charge Borrower a late fee equal to Two Per Cent (2%) of
the unpaid portion of such payment (the “Late Fee”), in addition
to any other remedies authorized in this Agreement. Lender may
not charge Interest against any Late Fee, or assess a Late Fee against any
single unpaid amount on more than one
occasion.
|
|
20.
|
|
21.
|
Jurisdiction. The
Borrower hereby agrees, consents and submits to the jurisdiction and venue
of any state or federal court located within New Castle County, Delaware,
and consents that all service of process be made by certified mail or
overnight delivery service directed to the Borrower at the Borrower’s
address set forth below, and service so made will be deemed to be
completed either three (3) business days after the same has been deposited
in the U.S. mail, postage prepaid or (ii) the next business day after
being deposited with an overnight delivery service; provided that nothing
contained herein shall prevent Lender from bringing any action or
exercising any right against any security or against the Borrower or
against any property of the Borrower, within any other state or nation to
enforce any award or judgment obtained in the forum specified
above. The Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted
hereunder.
|
4
22. Notices.
For
Lender:
Tiger Paw
Capital Corp.
0000
00xx Xx
XX
Xxxxxxx, Xxxxxxx
X0X
0X0
For
Borrower:
Red Mile, Inc.
0000
Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx,
XX 00000
ATTN: Chief Financial
Officer
23. Waivers.
THE
BORROWER HEREBY FOREVER WAIVES ALL OF ITS RESPECTIVE RIGHT TO PRESENTMENT,
DEMAND, PROTEST, NOTICE OF DISHONOR, NONPAYMENT OR DEFAULT AND ANY OTHER NOTICES
OF ANY KIND. THE BORROWER WAIVES ANY AND ALL RIGHTS THE BORROWER MAY
HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE
RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
AGREEMENT (INCLUDING THE PROMISSORY NOTE, THE SECURITY AGREEMENT) OR ANY
TRANSACTION CONTEMPLATED IN ANY OR SUCH DOCUMENTS AND ACKNOWLEDGES THAT THE
FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
|
24.
|
All Rights To Be
Preserved. No failure to exercise, and no delay in
exercising, on the part of Lender, any right, power or privilege hereunder
shall operate as a waiver of the same, nor shall any single or partial
exercise of any right, power or privilege preclude any other or future
exercise thereof, or the exercise of any other power or
right. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by
law.
|
| 25. | Successors in Interest. This Agreement shall bind the Borrower and the successors and assigns of the Borrower, and the benefits hereof shall inure to the benefit of Lender and its successors and assigns. All references herein to “Borrower” shall be deemed to apply to Borrower, all of its subsidiaries, and all of its successors and assigns. All references herein to “Lender” shall be deemed to apply to Lender and its successors and assigns. |
5
|
26.
|
Assignment. This
Agreement shall not be assigned by the Borrower without the prior express
written consent of Lender, but may be assigned by Lender without the
consent of Borrower.
|
|
27.
|
Duly Executed
Documents. Prior to the making of any advances
hereunder, Borrower must deliver to Lender a duly executed original of the
Promissory Note, Security Agreement, and any such other documents that
Lender may reasonably request. All actions of Borrower under
each of this Agreement, the Promissory Note, and the Security Agreement
have been duly approved by Borrower and represents the duly authorized and
legally enforceable actions of
Borrower.
|
|
28.
|
Exchange Option. Lender
agrees to exchange its right to be repaid any advances made pursuant to
this Agreement into a subsequent financing to be negotiated between the
Borrower and certain as yet undetermined investors (referred to herein as
an “Alternative Financing”); provided, however, that Lender must give his
written consent to the terms of such Alternative Financing prior to being
required to exchange his right to repayment under this Agreement or any
related agreements. Any amounts advanced pursuant to this
Agreement, once converted upon the occurrence of an Alternative Financing
shall no longer be due and payable pursuant to the terms of this
Agreement.
|
|
29.
|
Survival. If
any provision of this Agreement shall be held by a court of competent
jurisdiction to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the remainder of the Agreement, which
may be given effect without the invalid or unenforceable provision, and to
this end the provisions of this Agreement shall be
severable.
|
|
30.
|
Entire
Understanding. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and
agreements.
|
|
31.
|
Headings. All
section headings in this Agreement are for convenience of reference only
and do not form part of this Agreement and shall not affect in any way the
meaning or interpretation of this
Agreement.
|
| 32. | Counterparts. This Agreement may be executed in counterparts, each of which when so executed and delivered shall constitute a complete and original instrument, but all of which together shall constitute one and the same agreement, and it shall not be necessary when making proof of this Agreement or any counterpart thereof to account for any other counterpart. |
6
IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
11th day of February
2008.
BORROWER:
LENDER:
REDMILE,
INC.
TIGER PAW CAPITAL CORP.
By: _______________________________ By:
_____________________________
Name: _______________________________ Name: _____________________________
Title: _______________________________ Title: _____________________________
7
SCHEDULE
A
ASSETS SUBJECT TO
CONTRACTUAL RESTRICTION
1. Red
Mile's Merchandise License Agreement With MTV Networks, a division of Viacom,
for use of the Jackass Name and Likeness and Images of the Jackass Talent in
making video games.
2. Sin
City License Agreement with Xxxxx Xxxxxx Inc. for developing and publishing
video games based on the Sin City Comic Series and Graphic Novels.
8
