AMENDMENT TO STRATEGIC INVESTMENT AGREEMENT
AMENDMENT
TO STRATEGIC INVESTMENT AGREEMENT
THIS
AMENDMENT TO STRATEGIC INVESTMENT AGREEMENT (the “Amendment”) dated as
of January 26, 2010 (the “Amendment Effective
Date”) between Stratus Media Group, Inc., a Nevada corporation (“SMGI”), and ProElite,
Inc., a New Jersey corporation (the “Company”):
A. The
Company and SMGI entered into that certain Strategic Investment Agreement dated
as of October 9, 2009 (the “Agreement”) pursuant
to which the Company agreed to sell and SMGI agreed to purchase shares of the
Company’s preferred stock. Defined terms not defined herein shall
have the meanings ascribed to them in the Agreement.
B. The
Parties wish to amend the Agreement on the terms set forth below.
ARTICLE
I.
AMENDMENT
OF AGREEMENT
1.1. Section
4.1(i) is hereby amended and restated as follows:
“Availability of
Funds. SMGI currently has, readily available, and under its
control on an unrestricted basis (except only those restrictions set forth on
Schedule 4.1(i) hereto, which for clarity, are not conditions to Closing or to
SMGI’s obligations, but merely modifications to this representation) all funds
necessary to perform its obligations under the Agreement and the Amendment to
provide interim funding and make the payments contemplated by Section 5.9 and
5.10(b) of the Amendment, and not later than the Outside Date will have, readily
available, and under its control on an unrestricted basis (except only those
restrictions set forth on Schedule 4.1(i) hereto, which for clarity, are not
conditions to Closing or SMGI’s obligations, but merely modifications to this
representation) all funds necessary to consummate the purchase of all of the
Preferred Shares contemplated to be purchased hereby.”
1.2. Article
5 is hereby amended by adding the following sections.
“5.9 Interim
Funding. During the period between the Amendment Effective
Date and the Closing, SMGI shall continue to provide funding to the Company in
accordance with the budget attached as Schedule A, it being
acknowledged that, through the Amendment Effective Date, SMGI has provided
funding to the Company in the aggregate amount of $228,894.23. All
amounts so funded (the “Funded Payments”)
shall be evidenced by promissory notes of the Company (each a “Note”) in the same
form and having the same terms as the notes already issued to SMGI in respect of
advances of the Purchase Price. Any Note shall be convertible, at the
option of SMGI, into shares of Preferred Stock on a pro rata basis based on the
conversion ratio set forth in the Series A Certificate of
Designation. To the extent applicable, the Funded Payments shall
reduce the Closing Payments.
5.10 Management
Change.
(a) The
Company is delivering the following resignations and written consents, which
shall be (and may state that they are) subject to SMGI’s timely compliance with
Section 5.10(b): (i) Xxxxxxx Xxxxxxxx’x resignation as Chief Executive Officer
of the Company and the appointment of Xxxxxxx Xxxxx as President and Chief
Operating Officer of the Company; and (ii) the election by the current members
of the board of directors by written consent of Xxxx Xxxxxx, Xxxxx Xxxxxxxxx and
Xxxxxxx Xx Xxxx to the Company’s board of directors and the resignation of such
current members.
(b) SMGI
shall promptly (but not later than the close of business on Friday, February 11,
2010):
(i) In
satisfaction of the Company’s obligations to Xxxxxxx Xxxxxxxx, pay to Xx.
Xxxxxxxx $150,000 (the “Champion Payment”) as
follows: $75,000 in cash and issuing to him restricted shares of
SMGI’s Common Stock valued at $2.30 per share.
(ii) Pay
all amounts due as of the Amendment Effective Date pursuant to Section 5.9, and
make the those portions of the “Closing Payments” to the persons specified in
Section 5.6 of the Disclosure Schedule as specified on Schedule
A.
(c) Notwithstanding
Xx. Xxxxxxxx’x resignation, upon new board members being appointed under Section
5.10(a), prior to the Closing he (or his designee or designees) shall be vested
with the sole authority to take, at Company expense, with the same authority and
protection as if specifically instructed by the board of directors, all
appropriate action on behalf of the Company to enforce the Company’s rights
under the Agreement and Amendment, grant waivers thereunder or hereunder,
execute any amendment to the Agreement or the Amendment on behalf of the Company
and authorize any deliveries or other actions necessary for the
Closing.”
5.11. Credit to Purchase
Price. The Purchase Price payable at Closing shall be reduced
by the aggregate amount of the Funded Payments, the Champion Payment, all
amounts paid to Xxxxxxxx Xxxxxx, Inc. with respect to the audit and review of
the Company’s financial statements, and all amounts (not to exceed $231,525)
paid to Xxxxxxx Xxxxx or assumed by SMGI in connection with the amount owed by
the Company to Xx. Xxxxx.
1.3. SMGI
agrees acknowledges that all of the conditions to closing in Section 6.1, have
been satisfied to date and agrees that, notwithstanding such conditions (other
than the conditions in Section 6.1(f) and 6.1 (d)(i),(ii), (iv), (v) and (vi),
which shall continue to be conditions to Closing in accordance with their terms;
provided, that
6.1(d)(iv), (v) and (vi) need only be satisfied as of the Amendment Effective
Date in order for such conditions to be deemed satisfied for all purposes), SMGI
is unconditionally obligated to consummate the purchase and other transactions
contemplated by the Agreement and this Amendment and pay the full Purchase Price
(as may be adjusted by Sections 5.9 and 5.11) as provided in amended Section 7.1
of the Agreement (see section 1.4 of this Amendment below). Additionally, SMGI
shall pay any additional amount required to purchase an extended discovery
policy upon the Closing.
1.4. Section
7.1 of the Agreement is hereby amended in its entirety by inserting the
following in lieu thereof.
“The
completion of any transactions of purchase and sale contemplated by this
Agreement (the “Closing”) shall take
place at the offices of TroyGould PC, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 as soon as possible but in no event shall the Closing
occur later than March 31, 2010 (the “Outside Date”) except
that the Outside Date may be extended with approval of the
Parties. In the event that the Closing has not occurred by the
Outside Date, or in the event of any other material breach hereof by SMGI, then
in addition to any other remedies available to the Company, on five business
days notice, SMGI shall cause the SMGI Designees to appoint the designees of the
Company to the Company’s board of directors (the “Company Designees”)
and the SMGI Designees shall resign. The Company Designees shall be
the individual(s) designated by Xxxxxxx Xxxxxxxx.”
1.5. Section
9.1(b) of the Agreement is hereby amended by inserting the following in lieu
thereof:
“(b) The
Company, on the one hand, or SMGI, on the other hand, if the Closing has not
occurred by Outside Date because the non-terminating party has materially
breached this Agreement and not cured such breach in a reasonable time; provided, the party
purporting to terminate is not itself in material breach.”
1.7. Xxxx
Xxxxxx shall deliver to the Company, at the Amendment Effective Date, a
guarantee of certain obligations in form and substance satisfactory to the
Company.
1.8 In
addition to its post-Closing obligations under Section 8.3, SMGI shall also
comply with such section prior to the Closing after the board and management
changes contemplated by Section 5.10 have become effective. In
addition, those persons who are reasonably intended third party beneficiaries of
the post-Closing obligations in Section 8.3 shall be deemed to have such status,
notwithstanding anything contrary in the Agreement.
1.9 The
Company may file this Amendment on Xxxxx.
ARTICLE
II.
EFFECT OF
AMENDMENT
Except as
expressly provided herein, all of the terms of the Agreement shall remain in
full force and effect.
IN
WITNESS WHEREOF the Parties have executed this Amendment effective as of the
Amendment Effective Date.
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By:
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/s/
Xxxxxxx Xxxxxxxx
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Name:
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Xxxxxxx
Xxxxxxxx
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Title:
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Chief
Executive Officer
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STRATUS
MEDIA GROUP, INC.
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By:
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/s/
Xxxx Xxxxxx
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Name:
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Xxxx
Xxxxxx
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Title:
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President
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