f8k120308_redmile.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): December 3, 2008
Red
Mile Entertainment, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation)
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000-50814
(Commission
File
Number)
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20-4441647
(IRS
Employer
Identification
Number)
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223
San Anselmo Way, #3
San
Anselmo, CA 94960
(Address
of principal executive offices) (Zip Code)
(415)
339-4240
(Registrant's
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17
CFR 240.13e-4(c))
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Section
1 – Registrant’s Business and Operations
Item
1.02. Termination of a Material Definitive Agreement.
On
October 7, 2008, Red Mile Entertainment, Inc. (“Red Mile”) entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with SilverBirch Inc., an
Ontario (Canada) corporation (“SilverBirch”), RME Merger Sub Corp., a Delaware
corporation and wholly owned subsidiary of SilverBirch, and Kenny Cheung, as
stockholder representative. A copy of the Merger Agreement was filed
as Exhibit 2.1 to Red Mile’s Current Report on Form 8-K filed with the
Securities and Exchange Commission (the “Commission”) on October 14,
2008. The description of the Merger Agreement in the October 14, 2008
Current Report and the copy of the Merger Agreement attached thereto are each
incorporated by reference in this Current Report.
On
November 27, 2008, SilverBirch issued a press release (the “Press Release”)
announcing that “due to the recent uncertainties in the capital markets and the
senior secured lender collecting on its security, there is no funding in place
for [SilverBirch] to operate and meet its on-going financial obligations. In
addition, [SilverBirch] has received a default and termination notice from G4Box
Inc., its co-publisher, which terminates the licence agreements relating to the
two on-line multiplayer games being operated and developed. As a result of these
events, all of [SilverBirch’s] 4 directors have resigned effective November 27,
2008.” In subsequent discussions between SilverBirch’s and Red Mile’s
management, SilverBirch confirmed the contents of the Press
Release.
On
December 3, 2008, Red Mile sent written notice (“Termination Notice”) to
SilverBirch that Red Mile has terminated the Merger Agreement, effective
immediately, under Section 9.2(c) of the Merger Agreement pursuant to
authorization of Red Mile’s board of directors. Red Mile’s termination is based
on the material breach of the Merger Agreement by SilverBirch, as revealed by
the Press Release and subsequent discussions with SilverBirch’s management. No
termination fee is payable to SilverBirch by Red Mile as a result of the
termination of the Merger Agreement. All ancillary agreements described in the
Current Report on Form 8-K filed by Red Mile on October 14, 2008, have also
terminated concurrent with the termination of the Merger Agreement.
The
termination may trigger direct financial obligations as more fully described
below in Item 2.04.
Section
2 – Financial Obligations
Item
2.04 Triggering Events That Accelerate or Increase a
Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement.
As
previously disclosed in the Current Report on Form 8-K filed by Red Mile on May
12, 2008, SilverBirch advanced $750,000 Canadian Dollars (the
“Advance”) to Red Mile pursuant to a secured credit agreement dated May 7, 2008,
as amended by the parties on October 7, 2008 to extend the maturity date (the
“Facility”). By its terms, the Facility obligates Red Mile to repay
all amounts advanced under the Facility within fifteen days after termination of
the Merger Agreement. In response to Red Mile’s Termination Notice,
Red Mile received a demand from SilverBirch on December 3, 2008 for repayment of
the Advance, with interest, by December 18, 2008. As a result of SilverBirch’s
breach of its representations, warranties and covenants under the Merger
Agreement, Red Mile believes that it has valid claims against SilverBirch for
damages under the Merger Agreement, which may effectively offset some or all of
the amounts due under the Facility.
As
previously disclosed in the Current Report on Form 8-K filed by Red Mile on
February 12, 2008, TigerPaw Capital Corporation (“TigerPaw”) has extended a line
of credit to Red Mile pursuant to a secured credit agreement dated
February 11, 2008 (the “Credit Line”). As previously reported, Red Mile has
borrowed $500,000 under the Credit Line. If Red Mile defaults under the terms of
the Credit Line, TigerPaw may increase the rate of interest to a rate per annum
that is two percentage points in excess of the interest rate in effect at any
time under the Credit Line.
As
previously disclosed in the Current Report on Form 8-K filed by Red Mile on May
12, 2008, in connection with the Merger Agreement TigerPaw entered into a
temporary forbearance agreement dated May 7, 2008 (the “Forbearance Agreement”),
to forbear any demand for repayment of the Credit Line, and a subordination
agreement concurrently with the closing of the Facility, whereby the Credit Line
was subordinated to the Facility. The forbearance period under the
Forbearance Agreement was extended by amendment on November 5, 2008 and ends
fifteen days after termination of the Merger Agreement.
Safe
Harbor for Forward-Looking Statements
Statements
in this Current Report may contain, in addition to historical information,
certain forward-looking statements. All statements included in this Current
Report concerning activities, events or developments that Red Mile expects,
believes or anticipates will or may occur in the future are forward-looking
statements. Actual results could differ materially from the results discussed in
the forward-looking statements. Forward-looking statements are based on current
expectations and projections about future events and involve known and unknown
risks, uncertainties and other factors that may cause actual results and
performance to be materially different from any future results or performance
expressed or implied by forward-looking statements. Additional information on
risks, uncertainties and factors is included in Red Mile’s Annual Report on Form
10-KSB, Quarterly Reports on Form 10-Q and other documents filed with the
Commission.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
Number
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Description
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2.1(1)
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Agreement
and Plan of Merger among SilverBirch Inc., RME Merger Sub Corp., Red Mile
Entertainment, Inc. and Kenny Cheung, as Representative, dated October 7,
2008
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(1)
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Exhibits
have been omitted pursuant to Item 601(b)(2) of Regulation
S-K. Red Mile agrees to furnish a supplemental copy of any
omitted exhibit to the Commission upon
request.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Red
Mile Entertainment, Inc. |
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By:
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/s/ Chester
P. Aldridge |
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Chester
P. Aldridge |
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Chief
Executive Officer |
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Date:
December 4, 2008 |
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