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): October 7, 2008
Red
Mile Entertainment, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation)
|
000-50814
(Commission
File
Number)
|
20-4441647
(IRS
Employer
Identification
Number)
|
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:
|
|_|
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
|X|
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|_|
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17
CFR 240.14d-2(b))
|
|
|_|
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17
CFR 240.13e-4(c))
|
Item
1.01. Entry into a Material Definitive Agreement.
Merger
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 (“Merger Sub”), and Kenny
Cheung, as stockholder representative (the “Representative”). On
October 2, 2008, Red Mile’s board of directors unanimously approved the Merger
Agreement and recommended its adoption by the Red Mile
stockholders.
Under the
Merger Agreement, Merger Sub will merge with Red Mile, which will survive as a
wholly-owned subsidiary of SilverBirch. Each issued and outstanding
share of Red Mile common stock will be converted into the right to receive 0.875
shares of SilverBirch common stock. Any Red Mile stockholders who
demand appraisal of their Red Mile shares in accordance with Delaware law will
be entitled to seek a judicial determination of the fair value of such
shares.
Non-management
holders of options or warrants to purchase Red Mile common stock will have the
right to either net exercise such options or warrants for Red Mile common stock
immediately before the closing of the merger or convert such options or warrants
into the right to receive options or warrants to purchase a number of shares of
SilverBirch common stock equal to the number of shares of Red Mile common stock
subject to such option or warrant times 0.875. The exercise price for
each share of SilverBirch common stock will equal the exercise price of the Red
Mile common stock subject to such option or warrant times
1.14286. Under the Merger Agreement, certain officers and employees,
including Chester Aldridge (Red Mile’s Chief Executive Officer) and Simon Price
(Red Mile’s President), will surrender and cancel each of their options and
warrants to purchase Red Mile common stock.
Under an
earnout provision of the Merger Agreement, SilverBirch will issue additional
SilverBirch Shares (or options or warrants, as the case may be) to holders of
Red Mile common stock (or options or warrants to purchase common stock) if
either or both of the following circumstances occur:
|
(i)
|
if
Red Mile, as the surviving company, meets certain gross revenue milestones
in connection with the Publishing Agreement between Red Mile and Atari
Interactive, Inc. regarding the
Heroes over Europe
video game franchise, or
|
|
(ii)
|
if
Red Mile secures a co-publishing agreement with a third party for the
Sin City
video
game currently in development, provided that thirty percent of such shares
will be held back to offset certain cost overruns in the development of
the Sin City game.
|
All
undistributed earnout shares will be available to satisfy indemnity claims under
the Merger Agreement.
All of
the SilverBirch shares issued as merger consideration are subject to transfer
restrictions that lapse after closing of the Merger Agreement (the “Closing”),
as follows:
|
(i)
|
30%
of the shares shall not be transferred for 240 days after
Closing;
|
|
(ii)
|
30%
of the shares shall not be transferred for 300 days after
Closing;
|
|
(iii)
|
20%
of the shares shall not be transferred for 360 days after Closing;
and
|
|
(iv)
|
20%
of the shares shall not be transferred for 420 days after
Closing.
|
The total
number of shares of SilverBirch stock issuable as merger consideration will be
reduced for merger expenses incurred by Red Mile in excess of
$70,000.
The
Merger Agreement includes customary representations, warranties and covenants by
the parties and is subject to customary closing conditions. The shares of
SilverBirch stock to be issued in the merger will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), and will be issued in
reliance on the exemption from registration provided by Section 3(a)(10) of the
Securities Act, relating to an exchange of securities after a hearing regarding
the fairness of the transaction. Accordingly, closing of the Merger
Agreement (the “Closing”) is conditioned on obtaining a permit for the issuance
of the SilverBirch stock from the California Commissioner of Corporations after
a hearing regarding the fairness of the transaction. The Closing is
also conditioned on approval by Red Mile’s stockholders as well as U.S.
regulatory approval and approval by the Toronto Venture Stock Exchange
(TSX-V).
Under the
terms of the Merger Agreement, Red Mile has agreed not to solicit, discuss or
negotiate alternative transactions regarding the acquisition of Red Mile or its
assets. The parties may terminate the Merger Agreement by mutual
written consent at any time and either party may terminate the Merger Agreement
if the transaction has not closed by January 31, 2009. Red Mile will
be obligated to pay SilverBirch a termination fee equal to 1,500,000 shares of
Red Mile common stock if (i) the Red Mile stockholders do not approve the
merger, (ii) Red Mile fails to obtain any required approval from any
governmental authority, or (iii) Red Mile’s board of directors recommends an
alternative transaction or withdraws its recommendation in favor of the Merger
Agreement.
The
foregoing summary of the Merger Agreement, and related transactions, does not
purport to be complete and is subject to, and qualified in its entirety by, the
full text of the Merger Agreement, which is attached to this Current Report as
Exhibit 2.1 and incorporated herein by reference. The Merger
Agreement has been attached as an exhibit only to provide information regarding
its terms and is not intended to provide any other factual information about Red
Mile, Merger Sub or SilverBirch. The parties made the
representations, warranties and covenants in the Merger Agreement only for the
purposes of such agreement, solely for the benefit of the parties to the Merger
Agreement, and subject to limitations agreed on by the parties. The
parties to the Merger Agreement have made certain of the representations and
warranties for the purposes of allocating contractual risk between the parties
instead of establishing these matters as facts.
In
addition, the representations and warranties contained in the Merger Agreement
(i) are qualified by information in a confidential disclosure schedule, (ii)
were made only as of the date of such agreement or a prior, specified date, and
(iii) in some cases are subject to qualifications with respect to materiality,
knowledge and/or other matters, including standards of materiality applicable to
the contracting parties that differ from those applicable to investors.
Information concerning the subject matter of the representations and warranties
may change after the date of the Merger Agreement. Accordingly,
investors should not rely on the representations and warranties as
characterizations of the actual state of facts or condition of the Red Mile or
any of its subsidiaries or affiliates.
Red
Mile’s press release of October 14, 2008, announcing the merger is also attached
hereto as Exhibit 99.1 and incorporated herein by reference.
Other
Material Agreements in Connection with the Merger
Concurrently
with the execution of the Merger Agreement, certain Red Mile stockholders,
representing approximately 23% of the combined voting power of the issued and
outstanding Red Mile voting securities, entered into a Voting Agreement (the
“Voting Agreement”) with Merger Sub. Under the Voting Agreement, the
Red Mile stockholders agreed to vote all Red Mile securities owned of record or
beneficially owned by such stockholders to facilitate consummation of the
Merger. Each of the Red Mile stockholders who signed a Voting
Agreement also signed an irrevocable proxy to vote and exercise all voting and
related rights with respect to such stockholder’s shares.
The
foregoing description of the Voting Agreement does not purport to be complete
and is subject to, and qualified in its entirety by, the full text of the Voting
Agreement, which is attached to this Current Report as Exhibit 10.1 and
incorporated herein by reference.
In
connection with the Merger Agreement certain officers and employees of Red Mile,
including Mr. Aldridge and Mr. Price, have each executed employment or
consulting agreements with SilverBirch, which will become effective at
Closing.
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, including the risk that the
Merger Agreement will not close. Additional information on risks, uncertainties
and factors is included in Red Mile’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and other documents filed with the U.S. Securities and
Exchange Commission.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits
|
Exhibit
Number
|
Description
|
|
2.1(1)
|
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.
|
|
10.1(1)
|
Voting
Agreement among RME Merger Sub Corp., and certain stockholders of Red Mile
Entertainment, Inc., dated October 7, 2008.
|
|
99.1
|
Press
Release of Red Mile Entertainment, Inc. of October 14,
2008.
|
|
|
|
|
(1)
|
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 SEC upon
request.
|
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.
|
|
Red
Mile Entertainment, Inc.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Chester
Aldridge
|
|
|
|
|
Name:
Chester Aldridge
|
|
|
|
|
Title:
Chief Executive Officer
|
|
|
Date:
October 14, 2008
|
|
|
|