SUBSCRIPTION AGREEMENT
Exhibit
10.1
This
Subscription Agreement (this“Agreement”)
is made and entered into as of February 22, 2008 between ProElite, Inc., a
New
Jersey corporation (the “Company”) and Showtime
Networks
Inc.
(the “Issuee”) with reference to the following:
A. Pursuant
to that certain Broadcast
Agreement
dated as of the date hereof (the “Broadcast
Agreement”)
between CBS Entertainment and Issuee, the Company has agreed to issue to Issuee
two warrants (the “Warrants”) to purchase shares of the Company’s Common Stock
(the “Warrant Shares”) on the terms set forth in the applicable
Warrants.
B. In
connection with the issuance of the Warrants, concurrently herewith, the Company
is entering into an Investor Rights Agreement (the “Investor Rights Agreement”)
with Issuee.
The
Company and Issuee hereby agree as follows:
1. Issuance
of Warrants.
The
Company shall issue to Issuee two Warrants to purchase an aggregate of 4,000,000
shares of common stock, par value $0.0001 per share (“Common Stock”), of the
Company, at an exercise price of $2.00 per share.
2. Representations,
Warranties and Covenants of the Company.
The
Company hereby represents and warrants to, and covenants with, the Issuee,
as
follows:
2.1 Due
Organization and Qualification.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey, with full corporate power
and authority to own, lease and operate its business and properties and to
carry
on its business in the places and in the manner as presently conducted or
proposed to be conducted.
2.2 Due
Authorization and Valid Issuance.
The
Company has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement, the Warrants and the Investor Rights
Agreement (collectively, the “Transaction
Documents”),
and
the Transaction Documents have been duly authorized and validly executed and
delivered by the Company and constitute legal, valid and binding agreements
of
the Company enforceable against the Company in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Warrants have been duly authorized and are validly issued, and the Warrant
Shares, when issued pursuant to the valid exercise of the Warrants, will be
fully paid, validly issued and nonassessable. The Company has reserved a
sufficient number of shares of its Common Stock so as to issue Warrant Shares
upon the full exercise of the Warrants.
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2.3 Capitalization.
The
authorized capital stock of the Company consists
of 250,000,000 shares of Common Stock $.0001 par value and 20,000,000 shares
of
Preferred Xxxxx, x.0000 par value. Set forth on Schedule A is a capitalization
table of the Company which is true and correct as of the date hereof. Except
as
set forth on Schedule A, there is no contract, agreement, arrangement, option,
warrant, call, commitment or other right of any character obligating or
entitling the Company to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into
or
exchangeable for Company Common Stock.
2.4 Non-Contravention.
The
execution and delivery of the Transaction Documents by the Company and the
issuance and sale of the Warrants and the Warrant Shares will not (A) conflict
with or constitute a violation of, or default (with the passage of time or
otherwise) under (i) any material debenture, note or other evidence of
indebtedness, or under any material lease, contract, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument to
which the Company is a party or by which the Company or its properties are
bound, (ii) the charter, by-laws or other organizational documents of the
Company, or (iii) any material law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or authority
applicable to the Company or its properties, or (B) result in the creation
or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or
an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of the property or assets of the Company is subject. No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, or other governmental
body in the United States is required for the execution and delivery of the
Transaction Documents by the Company and the valid issuance and sale of the
Warrants and the Warrant Shares other than such as have been made or obtained,
and except for any post-closing securities filings or notifications required
to
be made under federal or state securities laws.
3. Representations,
Warranties and Covenants of the Issuee.
3.1 The
Issuee represents and warrants to, and covenants with, the Company that: (i)
the
Issuee is an “accredited investor” as defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended (the “Securities
Act”)
or is
a “Qualified Institutional Buyer” within the meaning of Rule 144A of the Act
and, in any such case, the Issuee is also knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to,
investments in securities such as the Warrants, including investments in
securities issued by comparable companies, and has requested, received, reviewed
and considered all information it deemed relevant in making an informed decision
to obtain the Warrants; (ii) the Issuee is acquiring the Warrants for its own
account for investment only and with no present intention of distributing any
of
the Warrants or Warrant Shares or any arrangement or understanding with any
other persons regarding the distribution of the Warrants or Warrant Shares
(subject, however, to the rights of Issuee pursuant to the Investors Rights
Agreement); (iii) the Issuee will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Warrants or Warrant Shares
except in compliance with the Securities Act, applicable state securities laws
and the respective rules and regulations promulgated thereunder; and (iv) the
Issuee has been solely responsible for the Issuee’s own “due diligence”
investigation of the Company and its management and business, for its own
analysis of the merits and risks of this investment. The Issuee understands
that
his Warrants and the Warrant Shares have not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Issuee’s investment intent as
expressed herein.
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3.2 The
Issuee hereby covenants with the Company not to make any sale of the Warrants
or
the Warrant Shares without complying with the provisions of this Agreement,
and
the Issuee acknowledges that the certificates evidencing the Warrants and the
Warrant Shares will be imprinted with a legend that prohibits their transfer
except in accordance therewith.
3.3 The
Issuee further represents and warrants to, and covenants with, the Company
that
(i) the Issuee has full right, power, authority and capacity to enter into
this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (ii) this Agreement constitutes a valid and binding
obligation of the Issuee enforceable against the Issuee in accordance with
its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within the United States by first-class
registered mail, Express Mail or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if delivered from outside
the United States, by International Federal Express or facsimile, and shall
be
deemed given (i) if delivered by first-class registered mail, three
business days after so mailed, (ii) if delivered by Express Mail or a
nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days
after so mailed, (iv) if delivered by facsimile, upon electronic
confirmation of receipt and shall be delivered as addressed as
follows:
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(a)
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if to the Company, to: |
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Santa
Xxxxxx Capital Partners
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx XxXxxx
Phone:
(000) 000-0000
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with
a copy to:
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|
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Xxxx
& Xxxxx, Professional Corporation
Attn:
Xxxxx Xxxxxxxx
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
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(b) if
to the
Investor, at its address on the signature page hereto, or at such other address
or addresses as may have been furnished to the Company in writing.
5. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of California, without giving effect to the principles of
conflicts of law. All actions arising out of or relating to this Agreement
shall
be heard and determined exclusively in any California federal court sitting
in
the City of Los Angeles.
6. Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
relating to such subject matter are expressly cancelled.
7. Severability.
In case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
8. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
9. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other
parties.
10. Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of the Company and the Issuee, including without limitation
and without the need for an express assignment, affiliates of the Issuee. With
respect to transfers that are not made pursuant to the Investor Rights
Agreement, the rights and obligations of an Issuee under this Agreement shall
be
automatically assigned by the Issuee to any transferee of all or any portion
of
the Warrants or Warrant Shares who is a Permitted Transferee (as defined below);
provided, however, that within two business days prior to the transfer, (i)
the
Company is provided notice of the transfer including the name and address of
the
transferee and the number of Warrant Shares and/or Warrants transferred; and
(ii) that such transferee agrees in writing to be bound by the terms of this
Agreement and the Investor Rights Agreement. For purposes of this Agreement,
a
“Permitted Transferee” shall mean any person or entity who is an affiliate of
Issuee (as such term is defined in Rule 144 promulgated under the Securities
Act
of 1933, as amended). Upon any transfer permitted by the second sentence of
this
Section 4, the Company shall be obligated to such transferee to perform all
of
its covenants under this Agreement as if such transferee were an
Issuee.
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11. IN
WITNESS WHEREOF, the parties have executed this Subscription Agreement as of
the
date first above written.
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By:_____________________________________
Name: Xxxxxxx
XxXxxx
Title: Chief
Executive Officer
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SHOWTIME
NETWORKS
INC.
By:_____________________________________
Name:
Title:
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