INVESTMENT AGREEMENT
This
Investment Agreement (this “Agreement”)
is
made and entered into as of August 24, 2007, by and among ENTLIAN
CORPORATION,
a
Korean corporation (the “Company”),
CJ
MEDIA Inc.,
a
Korean corporation (“CJM”)
and
PROELITE,
INC.,
a New
Jersey corporation registered in the United States of America (“PE”,
together with the Company and CJM, the “Parties”),
with
reference to the following facts:
A. The
Company is engaged primarily in the business of promoting and producing mixed
martial arts or MMA events, providing MMA services and producing MMA products
as
set forth in Schedule
A
to this
Agreement (the “Business”),
using
the MMA brands, SpiritMC, Spirit Market Challenge and InterLeague (collectively,
“SMC”).
B. Xxxxx
Xxxx Park (“KP”)
is the
current president of the Company and owns approximately 85% of the outstanding
capital stock of the Company.
C. CJM
and
the Company previously entered into those certain bond warrant agreements on
August 25, 2006 (the “BW
Agreement”),
attached hereto as Exhibit
A,
pursuant to which CJM has advanced to the Company to date KRW 1,000,000,000
(the
“Initial
CJM Investment”)
and
agreed to provide a certain amount of additional funds to the
Company.
D. CJM
and
the Company desire to revise the terms of the BW agreement pursuant to the
terms
of this Agreement.
E. PE
provides certain MMA products and services through its two operating
subsidiaries: XxxXxxxx.xxx, an online community providing content and tools
for
martial arts enthusiasts, and EliteXC Live, a mixed martial arts live events
production company.
F. PE
desires to purchase, and the Company desires to sell shares of the Company’s
capital stock.
Based
upon the foregoing, and in consideration of the mutual promises set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereby agree as follows:
ARTICLE
I
Investment
in the Company by PE
1.1. Transaction;
Purchase Price; Form of Payment.
Upon
the terms and subject to the conditions contained in this Agreement, on or
before August 24, 2007 (the “Closing”),
the
Company will sell to PE, and PE will purchase from the Company, upon the terms
and conditions hereinafter set forth 133,333 shares of the capital stock of
the
Company (“ENT
Shares”)
at an
aggregate purchase price equal to US$2,000,000 (the “PE
Investment”),
which
shall be composed of the following:
1.1.1. US$1,000,000
in cash (the “PE
Cash”);
and
1.1.2. 100,000
restricted shares of common stock of PE, at US$10.00 per share (each a
“PE
Share”
and
collectively, the “PE
Shares”),
provided, however, that, if on the date that the Lock-up Period (as defined
below) expires, the Market Price of the PE Shares is less than $10 per
Share (adjusted for stock splits, stock recapitalizations, etc.), then PE shall
issue such additional PE Shares (up to a maximum of 100,000 additional shares)
so that the Company would have received PE Shares with a Market Value of
$1,000,000. As used herein, “Market
Value”
shall
mean the average of the last reported sale prices for the five trading days
immediately prior to the date of determination.
The
PE
Cash shall be wired or deposited into a Korean bank account, which shall be
designated by the Company. The PE Shares shall be delivered to the Company.
1.2. Interest
in the Company.
The ENT
Shares shall represent no less than approximately 30% of the outstanding capital
stock of the Company after giving effect to the transactions contemplated in
this Agreement and in other ancillary documents referred to herein (the
“Transactions”)
and
the conversion of the CJM Investment into ENT Shares in January 2010 (the
“Conversion”).
Attached as Schedule
1.2
is a
projected capitalization table.
1.3. Employment
Agreement.
Effective as of the Closing, the Company shall enter into an employment
agreement with KP for a period ending December 31, 2010, substantially in the
form set forth in Exhibit
B
to this
Agreement, pursuant to which KP shall serve as the President and Chief Executive
Officer of the Company.
ARTICLE
II
Investment
in the Company by CJM
2.1. Transaction;
Purchase Price; Form of Payment.
The
Company will sell to CJM, and CJM will purchase from the Company, upon the
terms
and conditions hereinafter set forth, an aggregate of 166,667 shares of the
Company’s common stock (the “CJM
Shares”),
at an
aggregate purchase price equal to KRW2,000,000,000 in cash as
follows:
2.1.1. BW
Agreement.
Under
the terms of the BW Agreement, CJM is currently committed to invest
KRW2,000,000,000 in the Company in total.
(1) CJM
has
already made the Initial CJM Investment
(2) Pursuant
to the BW Agreement, CJM shall advance to the Company an additional
KRW500,000,000 on or before June 30, 2008 and an additional KRW500,000,000
on or
before December 31, 2008 (collectively, the “Second
CJM Investment”).
2.2. Conversion
of Investment.
Subject
to Article
IV
herein,
on or before January 1, 2010, CJM shall convert (the “Conversion”)
the
Initial CJM Investment and the Second CJM Investment (plus all accrued interest
thereon) into the CJM Shares. Upon the Conversion, the BW Agreement shall be
terminated and the Company shall have no further obligations thereunder, with
the understanding that the obligations of CJM shall continue.
2
ARTICLE
III
Valuation
of Investment; the Exchange Rates.
3.1. Valuation
of ENT Shares.
3.1.1. The
CJM
Investment shall result in the following number of shares of capital stock
in
the Company:
(1) 100,000
ENT Shares for the aggregate purchase price of KRW1,000,000,000, based on a
per
share price of KRW10,000;
(2) 66,667
ENT Shares for the aggregate purchase price of KRW1,000,000,000 injected from
CJM shall have a per share conversion rate valued at KRW15,000 per
share.
3.1.2. The
PE
Investment shall result in 133,333 ENT Shares, based on a per share price of
KRW15,000 per share, in accordance with Section
3.2
below.
3.2. US
Dollar Exchange Rate
3.2.1. For
purposes of the transactions contemplated in this Agreement, and subject to
Subsections
3.2.2 and 3.2.3
below,
the PE Investment shall be equal to approximately KRW2,000,000,000.
3.2.2. Notwithstanding
any fluctuations of the US dollar and Korean won exchange rate, PE shall have
no
less than a 30% equity interest (percentage of ownership) in the Company as
of
the date of the Conversion (assuming no further equity investment in the
Company).
3.2.3. Subject
to Subsection
3.2.2
above,
the PE Investment shall be converted to the Korean Won based on the then current
exchange rate of the date of the cable or wire transfer of the PE Investment.
The Parties acknowledge, understand and recognize the risk of possible equity
interest (percentage of ownership) changes caused by any fluctuations of the
US
dollar exchange rate and hereby agree and accept such changes, if any.
ARTICLE
IV
BW
Agreements
In
the
event that PE materially fails to perform and carry out its obligations in
accordance with the terms and conditions of this Agreement, the BW Agreements
shall continue to remain in full force and effect.
ARTICLE
V
Due
Diligence
5.1. The
Company, its subsidiaries and executives shall accord PE, its accountants and
lawyers, with full access to any and all required personnel and materials for
due diligence purposes from the Company or any of its subsidiaries. For the
avoidance of doubt, this shall include all fighter agreements, venue contracts,
financials statements and bank account statements, business plans, TV exhibition
and distribution contracts, video distribution contracts, advertiser and
sponsorship contracts (the “Assets”).
3
5.2. The
Parties hereto covenant and agree as follows:
5.2.1. Business
Examinations.
PE
shall be entitled, through its employees and representatives, to make such
investigations and examinations of the Assets and the books and records of
the
Company as PE may request for the purpose of familiarizing the Company with
the
Assets. Any such investigations and examinations shall be conducted at
reasonable times and under reasonable circumstances. No investigation by PE
shall, however, diminish or obviate in any way, or affect PE’s right to rely
upon, any of the representations, warranties, covenants or agreements of the
Company contained in this Agreement.
5.2.2. Cooperation;
Consents.
Prior
to Closing, each party shall cooperate with each other to the end that the
parties shall (i) in a timely manner make all necessary filings with, and
conduct negotiations with, any and all federal, state, local or foreign
government, authority, instrumentality, department, commission, board, bureau,
agency, official, court or other tribunal (each an “Authority”,
collectively, the “Authorities”)
and
any individual, corporation, association, limited liability company,
partnership, joint venture or other entity or organization of any kind or
Authorities (each a “Person”
and
collectively, “Persons”)
the
consent or approval of which, or a license or permit from which, is required
for
the consummation of the transactions contemplated herein and (ii) provide to
each other party such information as the other party may reasonably request
in
order to enable it to prepare such filings and to conduct such negotiations.
The
parties shall also use their respective best efforts to expedite the review
process and to obtain all such necessary consents, approvals, licenses and
permits as promptly as practicable. To the extent permitted by applicable all
constitutions, laws, statutes, principles of common law, rules, regulations,
resolutions, ordinances, codes, edicts, decrees and orders promulgated,
implemented or otherwise put into effect by or under the authority of any
Authority (“Laws”),
the
parties shall request that each Authority or other Person whose review, consent
or approval is requested treat as confidential all information which is
submitted to it. Each of the parties shall bear its own costs and expenses
incurred or fees paid to Authorities to obtain any governmental approvals and
contractual consents. Each Party shall bear its own costs and expenses
(including fees paid to authorities) incurred to obtain such consents,
approvals, licenses or permits.
ARTICLE
VI
Representations
and Warranties by the Company and KP
Each
of
the Company and KP, jointly and severally, hereby represents and warrants to
PE,
as of the date hereof, as follows, except as set forth on the Disclosure
Schedules; provided,
however,
that no
exception to any representation or warranty disclosed on one schedule of the
Disclosure Schedules shall constitute an exception to any other representation
or warranty made in this Agreement unless the substance of such exception is
disclosed on each such other applicable schedule or a specific cross-reference
to a disclosure on another schedule is made:
4
6.1. Organization,
Qualification and Power.
Such
Party (if an entity) is an entity duly organized or incorporated, as applicable,
validly existing, and in good standing under the Laws of the Republic of Korea.
The shareholders listed in Schedule
6.1
are the
only holders of equity interest in the Company and own 100% of the ENT Shares.
The Company has all power and authority to carry on its business as presently
conducted. The Company is duly licensed or qualified to transact business and
is
in good standing to transact business in each jurisdiction in which the conduct
of its business requires such licensing or qualification.
6.2. Authority,
Enforceability, No Violation, Consents, Etc.
6.2.1. Authority.
The
Company has full power and authority (including full corporate, company, trust,
or other entity power and authority) to execute and deliver this Agreement
and
the other Documents to which it is or will become party and to consummate the
Transactions and perform its obligations hereunder and thereunder. This
Agreement constitutes the valid and legally binding obligation of such Party,
enforceable in accordance with its terms and conditions. Upon the execution
and
delivery of each of the other Documents at the Closing, each of such other
Documents to which such Party is a party will constitute the legal, valid,
and
binding obligation of such Party and will be enforceable against such Party
in
accordance with its terms and conditions, except to the extent that such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Law relating to creditors’ rights
generally and to general principles of equity. The execution, delivery, and
performance of this Agreement, the BW Agreement, the Lock-Up Agreement and
the
Employment Agreement (the “Documents”),
and
all other agreements contemplated hereby or thereby have been duly authorized
by
such Party.
6.2.2. No
Violation.
Except
as set forth on Schedule
6.2.2,
neither
the execution or delivery by any Party of any of the Documents to which such
Party is or will be a party, the consummation by such Party of the Transactions,
nor the performance by such Party of such Party’s obligations hereunder and
thereunder will (i) violate any provision of the documented or undocumented
charter document of the Company; (ii) violate any Law or order, in each case,
applicable to such Party or such Party’s assets, properties or rights; (iii)
violate, or give any Authority the right to revoke, suspend, cancel, terminate,
or modify, any authorization by any Authority that is held by such Party or
that
otherwise is applicable to such Party or such Party’s assets, properties or
rights, (iv) result in the imposition of any encumbrance upon or with respect
to
any asset owned or used by such Party, or (v) violate, result in a breach of
or
constitute (with notice or lapse of time or both) a default under, or give
rise
to any right of termination, cancellation, rebate, chargeback or acceleration
under, or a right to a penalty, premium or change in delivery schedule under,
any of the terms of, any material contract to which such Party is a party or
by
which such Party or any of their respective properties or assets may be bound
or
affected.
6.2.3. Consents.
Except
as set forth on Schedule
6.2.3,
no
filing with, and no permit, authorization, consent or approval of, any Person
is
necessary for such Party’s execution and delivery of the Documents, the
consummation by such Party of the Transactions or such Party’s performance of
its obligations hereunder or thereunder.
5
6.3. Capitalization.
6.3.1. Ownership.
Except
as set forth on Schedule
6.3.1,
no
Person owns or holds any equity interest (or any right to acquire or security
interest convertible or exchangeable into any equity interest) in the
Company.
6.3.2. Authorized
Capital.
The
authorized capital stock of the Company consists of 200,000 shares of common
stock, of which 244,933 shares will outstanding immediately after the Closing
as
contemplated herein. The ENT Shares have been duly authorized, validly issued,
fully paid and nonassessable, and have not been issued in violation of any
preemptive right of stockholders.
6.4. Litigation.
Except
as set forth in Schedule
6.4,
there
is no litigation pending or, to the knowledge of either of the Company and
KP,
threatened relating to the Company.
6.5. Intellectual
Property.
As of
the date hereof to the knowledge of the Company and KP:
6.5.1. all
Intellectual Property within the Business are valid and in full force and
effect;
6.5.2. there
are
no pending claims, actions, or other adversary proceedings, disputes or
disagreements involving the Company concerning any item of its Intellectual
Property, and, to the actual knowledge of the Company and KP, no such action,
proceeding, dispute or disagreement is threatened.
6.5.3. “Intellectual
Property”
means
all (a) U.S., Korean and other foreign patents and patent applications and
disclosures relating thereto (and any patents that issue as a result of those
patent applications), and any renewals, reissues, reexaminations, extensions,
continuations, continuations-in-part, divisions and substitutions relating
to
any of the patents and patent applications, (b) U.S., Korean and other foreign
trademarks, service marks, trade dress, logos, trade names and corporate names,
whether or not registered, and the goodwill associated therewith and
registrations and applications for registration thereof, (c) U.S. and foreign
copyrights and rights under copyrights, including moral rights, whether or
not
registered, and registrations and applications for registration thereof,
(d) U.S. and foreign mask work rights and registrations and applications
for registration thereof, (e) Trade Secrets, (f) all domain name
registrations, (g) any other inventions (whether or not patentable) or
know-how and all improvements thereto and (h) all other works of authorship
(whether or not copyrightable).
6.5.4. “Trade
Secrets”
means
all trade secrets and confidential business information (including ideas,
formulas, compositions, know-how, research and development information,
software, drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans marketing mailing and e-mail lists,
and customer and supplier mailing and e-mail lists and
information).
6.6. Investment
Representation.
The
Company is and will be acquiring the PE Shares for investment purposes only
and
not with a view to distribution.
6
ARTICLE
VII
Representations
and Warranties of CJM
CJM
hereby represents and warrants to PE, as of the date hereof, as follows, except
as set forth on the Disclosure Schedules; provided,
however,
that no
exception to any representation or warranty disclosed on one schedule of the
Disclosure Schedules shall constitute an exception to any other representation
or warranty made in this Agreement unless the substance of such exception is
disclosed on each such other applicable schedule or a specific cross-reference
to a disclosure on another schedule is made:
7.1. Organization,
Qualification and Power.
CJM is
an entity duly organized or incorporated, as applicable, validly existing,
and
in good standing under the Laws of the Republic of Korea. CJM has all power
and
authority to carry on its business as presently conducted. CJM is duly licensed
or qualified to transact business and is in good standing to transact business
in each jurisdiction in which the conduct of its business requires such
licensing or qualification.
7.2. Authority,
Enforceability, No Violation, Consents, Etc.
7.2.1. Authority.
CJM has
full power and authority (including full corporate, company, trust, or other
entity power and authority) to execute and deliver this Agreement and the other
Documents to which it is or will become party and to consummate the Transactions
and perform its obligations hereunder and thereunder. This Agreement constitutes
the valid and legally binding obligation of CJM, enforceable in accordance
with
its terms and conditions. Upon the execution and delivery of each of the other
Documents at the Closing, each of such other Documents to which CJM is a party
will constitute the legal, valid, and binding obligation of CJM and will be
enforceable against CJM in accordance with its terms and conditions, except
to
the extent that such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Law relating to
creditors’ rights generally and to general principles of equity. The execution,
delivery, and performance of this Agreement, the Documents, and all other
agreements contemplated hereby or thereby have been duly authorized by such
Party.
7.2.2. No
Violation.
Except
as set forth on Schedule
7.2.2,
neither
the execution or delivery by CJM of any of the Documents to which CJM is or
will
be a party, the consummation by CJM of the Transactions, nor the performance
by
CJM of CJM’s obligations hereunder and thereunder will (i) violate any provision
of the documented or undocumented charter document of CJM; (ii) violate any
Law
or order, in each case, applicable to CJM; (iii) violate, or give any Authority
the right to revoke, suspend, cancel, terminate, or modify, any authorization
by
any Authority that is held by CJM or that otherwise is applicable to CJM or
CJM’s assets, properties or rights; (iv) result in the imposition of any
encumbrance upon or with respect to any asset owned or used by CJM; or (v)
violate, result in a breach of or constitute (with notice or lapse of time
or
both) a default under, or give rise to any right of termination, cancellation,
rebate, chargeback or acceleration under, or a right to a penalty, premium
or
change in delivery schedule under, any of the terms of, any material contract
to
which CJM is a party or by which CJM or any of their respective properties
or
assets may be bound or affected.
7
7.2.3. Consents.
Except
as set forth on Schedule
7.2.3,
no
filing with, and no permit, authorization, consent or approval of, any Person
is
necessary for CJM’s execution and delivery of the Documents, the consummation by
CJM of the Transactions or CJM’s performance of its obligations hereunder or
thereunder.
ARTICLE
VIII
Representations
and Warranties of PE
PE
represents and warrants to the Company as follows:
8.1. Due
Incorporation.
PE is a
corporation in good standing under the applicable Laws of the state of
California, United States and is duly organized, validly existing and in good
standing under the applicable Laws of the state of New Jersey, United
States.
8.2. Authority
to Execute and Perform Agreements.
PE has
all requisite power, authority and approval required to enter into, execute
and
deliver this Agreement and the other Documents and to perform fully their
respective obligations hereunder and thereunder.
8.3. Due
Authorization; Enforceability.
PE has
taken all actions necessary to enter into and perform its obligations under
this
Agreement including the issuance of the PE Shares and all other Documents and
to
consummate the transactions contemplated herein and therein. This Agreement
has
been duly and validly executed by PE and (assuming the due authorization,
execution and delivery by the Company, CJM and KP) constitutes the legal, valid
and binding obligations of Purchaser and Parent enforceable in accordance with
its terms.
8.4. Capitalization.
The
authorized capital stock of PE consists of (i) 250,000,000 shares of common
stock, par value $0.0001, of which 46,242,619 shares are outstanding as of
the
date of this Agreement and (ii) 20,000,000 shares of preferred stock, par value
$0.001 per share, none of which are outstanding. The PE Shares have been duly
authorized, validly issued, fully paid and nonassessable, and have not been
issued in violation of any preemptive right of stockholders.
8.5
No
Violation
Except
as set forth on Schedule
8.5.
neither
the execution or delivery by PE of any of the Documents to which PE is or will
be a party, the consummation by PE of the Transactions, nor the performance
by
PE of PE’s obligations hereunder and thereunder will (i) violate any provision
of the documented or undocumented charter document of PE; (ii) violate any
Law
or order, in each case, applicable to PE; (iii) violate, or give any Authority
the right to revoke, suspend, cancel, terminate, or modify, any authorization
by
any Authority that is held by PE or that otherwise is applicable to PE or PE’s
assets, properties or rights; (iv) result in the imposition of any encumbrance
upon or with respect to any asset owned or used by PE; or (v) violate, result
in
a breach of or constitute (with notice or lapse of time or both) a default
under, or give rise to any right of termination, cancellation, rebate,
chargeback or acceleration under, or a right to a penalty, premium or change
in
delivery schedule under, any of the terms of, any material contract to which
PE
is a party or by which PE or any of their respective properties or assets may
be
bound or affected.
8.6
Consents.
Except as set forth on Schedule
8.6,
no
filing with, and no permit, authorization, consent or approval of, any Person
is
necessary for PE’s execution and delivery of the Documents, the consummation by
PE of the Transactions or PE’s performance of its obligations hereunder or
thereunder.
8
ARTICLE
IX
Covenants
9.1. Pre-Closing
Covenants.
9.1.1. Number
of Authorized Shares.
The
number of authorized shares of capital stock of the Company shall be increased
to 500,000 shares of capital stock prior to the Closing.
9.2. Post-Closing
Covenants.
9.2.1. Lock-up.
The PE
Shares shall not be sold, transferred, assigned, pledged or hypothecated, nor
shall any of the PE Shares be subject to any hedging, short sale, derivative,
put, or call transactions that would result in the effective economic
disposition of such PE Shares for a period ending on the 18-month anniversary
of
the effective date of a registration statement on Form SB-2 that PE plans to
file with the United States Securities and Exchange Commission on or before
August 24, 2007 (the “Lock-Up
Period”).
The
form of the Lock-Up Agreement is attached hereto as Exhibit
C.
9.2.2. Board
Representation.
PE
shall have a minimum of one seat on the board of directors of the Company at
all
times, and shall always have no less than the same board representation as
CJM
and KP at any given time.
9.2.3. Use
of
Proceeds from PE Investment.
The PE
Investment shall be used to fund the Business, including SMC operating costs,
marketing and fight promotion expenditures.
9.2.4. International
Programming Distribution.
PE
shall have the exclusive right to exploit all SMC content in the Company’s
library in the United States of America, as listed in Schedule
9.2
(“SMC
Content”).
However, PE shall not assign its right to exploit all SMC Content without prior
written consent from the Company. The Company shall have the exclusive right
to
exploit all SMC Content. Both PE and CJM shall equally share worldwide
distribution rights of all SMC Content outside of both the United States and
the
Republic of Korea, provided that: (1) PE or the CJM, as the case may be, gives
notice to the Company or PE of any potential deal, transaction or opportunity
to
the other Party, and (2) such potential deal, transaction or opportunity is
approved by the Company’s management.
(1) PE
shall
receive a distribution fee equal to 30% of the gross proceeds from such
licensing of any and all distribution services it provides. All expenses
relating to the sales of such programming shall be at PE’s expense.
9
(2) PE
shall
have the right to stream all SMC live events, (“Streaming
Rights”)
and
the proceeds shall be divided equally between PE and the Company, net of any
costs and expenses incurred by PE. Any
exercising of Streaming Rights shall employ such reasonable technological and
physical security measures designed to ensure that the SMC live events is made
available only to such viewers who have been specifically authorized to receive
the SMC events and who are located within the territory of United States.
Without limiting the generality of the foregoing, at all times, all commercially
reasonable and current technologies and methods with respect to geofiltering,
encryption, and digital rights management, designed to prevent any unauthorized
copying, access, distribution, streaming, or downloading of the Picture shall
be
employed when exercising Streaming Rights. For the avoidance of doubt, the
above shall also apply to PE’s exploitation of Streaming Rights outside the
United States.
(3) PE
shall
keep books of account relating to its exploitation of SMA Content. The Company
may, at its own discretion, audit the applicable records at the place where
PE
maintains the same in order to verify any earning statements provided by PE,
provided that the Company provide reasonable advance notice in accordance with
Section
11.2
below
9.2.5. Promotional
Rights.
PE
shall receive unlimited access and usage for promotional purposes at no cost
to
PE to the SMC library of all existing and future programming and content. No
license fees shall be payable to the Company, KP or CJM by PE if such library
content are used for the purpose of promoting MMA events produced by either
PE
or the Company.
9.2.6. Signage
Rights and Marketing Recognition.
PE
shall have signage rights and marketing recognition at MMA events promoted
by
SMC, including but not limited to prominent banner presence, logo positioning
on
the ring mat and ring posts and event program and in arena video promotion
branding through interstitials and promos. Such signage rights and marketing
recognition shall be on par with other recognized sponsors at such MMA events.
9.2.7. Anti-Dilution.
The
Company shall not issue any additional ENT Shares without (i) the approval
by
holders of at least 50% of the then outstanding ENT Shares and (ii) the majority
approval of its board of directors as to both the number of additional ENT
Shares to be issued and the share price, subject to the following
conditions:
(1) The
share
price shall be greater than KRW15,000 per ENT Share (“Minimum
Price”),
unless a share price at or below the Minimum Price is approved by each of KP,
CJM and PE.
(2) Each
Party shall have the right to purchase its pro rata share of such additional
ENT
Shares (“Additional
Shares”),
which
shall be a number equal to the product obtained by multiplying (x) the number
of
Additional Shares by (y) a fraction, (i) the numerator of which shall be the
number of ENT Shares held by such Party on the date the Company issues a notice
which details its intention to issue additional ENT Shares, the total number
of
ENT Shares proposed to be issued and the bona fide cash price or, in reasonable
detail, other consideration for which the Company proposes to issue such ENT
Shares, and (ii) the denominator of which shall be the number of ENT Shares
outstanding prior to the issuance of such Additional Shares. In the event that
one of the Parties declines to exercise its right of first refusal, the
remaining two Parties shall each have the right to purchase 50% of such
declining Party’s pro rata share of the Additional Shares.
10
(3) In
the
event the Company wishes to raise additional capital through the issuance of
additional ENT Shares prior to January 1, 2010 at 12:01 A.M., Republic of Korea
time, the Company shall first receive prior written approval of all Parties
to
this Agreement, provided that CJM shall not unreasonably withhold its approval.
9.2.8. Shares
owned by KP.
In the
event that KP offers any of his shares of capital stock of the Company (the
“KP
Shares”)
for
sale, assignment, encumbrance, pledge, gift, conveyance in trust, transfer
by
bequest, devise or descent, or other transfer of disposition of any kind
(“Transfer”),
KP
shall send a notice of such Transfer to PE and CJM, and PE and CJM shall have
the right to purchase all or any part of the KP Shares offered for Transfer,
provided that such right between PE and CJM shall be on a pro rata basis based
on each Party’s equity interest in the Company, assuming full Conversion of the
CJM Shares.
ARTICLE
X
Closing
Conditions
10.1. Conditions
to the Company’s Obligations to Close.
The
obligations of the Seller to consummate the transactions provided for hereby
are
subject to the satisfaction, before or on the date of the Closing (the
“Closing
Date”),
of
each of the conditions set forth below in this Section 10.1,
any of
which may be waived by Seller.
10.1.1. Representations,
Warranties and Covenants.
(i) All
representations and warranties of PE contained in this Agreement, shall be
true
and correct at and as of the Closing Date, and (ii) PE shall have performed
and satisfied all agreements and covenants, required hereby to be performed
by
it before or on the Closing Date.
10.1.2. No
Actions or Court Orders.
There
shall not be any court decision, order or injunction by any court or other
governmental body that makes the purchase and sale of the PE Shares contemplated
hereby illegal or otherwise prohibited.
10.1.3. Ancillary
Agreements.
PE
shall have executed and delivered all agreements contemplated hereunder to
which
the PE is a party.
10.1.4. Closing
Deliverables.
PE
shall have delivered, or caused to be delivered, to the Company those items
set
forth in Sections
1.1 and 1.4
hereof.
10.2. Conditions
to PE’s Obligations to Close.
The
obligations of PE to consummate the transactions provided for hereby are subject
to the satisfaction, before or on the Closing Date, of each of the conditions
set forth below in this Section 10.2,
any of
which may be waived by PE.
10.2.1. Representations,
Warranties and Covenants.
(i) All
representations and warranties of KP and the Company contained in this
Agreement, shall be true and correct at and as of the Agreement Date and at
and
as of the Closing Date, and (ii) KP and the Company shall have performed and
satisfied all agreements and covenants, required hereby to be performed by
it
before or on the Closing Date.
11
10.2.2. No
Actions or Court Orders.
No
action by any governmental body or other person shall have been instituted
or
threatened which questions the validity or legality of the transactions
contemplated hereby and which could reasonably be expected to damage the PE,
or
the Company if the transactions contemplated hereby are consummated. There
shall
not be any regulation or court order that makes the purchase and sale of the
ENT
Shares contemplated hereby illegal or otherwise prohibited.
10.2.3. Ancillary
Agreements.
KP and
the Company shall have executed and delivered all agreements contemplated
hereunder to which it is a party.
10.2.4. Consents.
All
permits, consents, approvals and waivers from any entity shall have been
obtained, except to the extent that the failure to obtain such permits,
consents, approvals and waivers could not reasonably be expected to materially
damage the PE after the Closing.
10.2.5. No
Material Adverse Change.
There
shall have been no material adverse change to the business of the
Company.
10.2.6. Closing
Deliverables.
The
Seller shall have delivered, or caused to be delivered, to the PE those items
set forth in Section 1.3
and Article II
hereof.
10.2.7. Due
Diligence Confirmation.
PE has
confirmed to its reasonable satisfaction due diligence of the
Company.
ARTICLE
XI
Miscellaneous
11.1. Indemnification.
The
parties shall indemnify and hold harmless the other party and its subsidiaries
and their respective officers and directors from and against all claims
resulting from or arising out of (i) any inaccuracy in or breach of any of
the
representation or warranties of the party (ii) any breach or nonfulfilment
of
any covenants or agreements by the party and (iii) any liability or obligation
of the party herein.
11.2. Notices
11.3. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person or received by
telegraphic or other electronic means (including facsimile, telecopy, telex,
and
e-mail) with confirmation of transmission by the transmitting equipment or
when
delivered by overnight courier, or if mailed, five days after being deposited
in
the United States mail, certified or registered mail, first-class postage
prepaid, return receipt requested, to the parties at the addresses or facsimile
numbers set forth on Appendix A
hereto.
Any party from time to time may change its physical address, e-mail address,
or
facsimile number for the purpose of receipt of notices to that party hereunder
by giving notice specifying a new physical address, e-mail address, or facsimile
number to the other Persons listed on Appendix A
in
accordance with the provisions of this Section 11.2,
which
will not constitute an amendment under Section 11.9.
12
11.4. Confidentiality.
The
Parties shall not disclose this “Agreement” or the terms or existence of the
proposed transaction except to their legal, tax and accounting advisors with
a
need to know such information. In the event that any Party is requested or
required pursuant to written or oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process to disclose any confidential information, such Party
will notify the other Parites promptly of the request or requirement so that
the
notified Parties may seek an appropriate protective order or waive compliance
with the provisions of this Section 11.3.
If, in
the absence of a protective order or the receipt of a waiver hereunder, such
Party is, on the advice of counsel, compelled to disclose any confidential
information to any tribunal or else stand liable for contempt, such Party may
disclose the confidential information to the tribunal; provided,
however,
that
the disclosing Party shall use his, her, or its reasonable best efforts to
obtain, at the reasonable request of the other nondisclosing Parties, an order
or other assurance that confidential treatment will be accorded to such portion
of the confidential information required to be disclosed as the Party or Parties
shall designate. The foregoing provisions shall not apply to any confidential
information that is generally available to the public immediately prior to
the
time of disclosure unless such confidential information is so available due
to
the actions of any Party.
11.5. Severability.
Any
provision of this Agreement which may be prohibited by or otherwise held invalid
shall be ineffective only to the extent of such prohibition or invalidity and
shall not be invalidate or otherwise render ineffective any or all of the
remaining provisions of this Agreement.
11.6. Entire
Agreement.
This
Agreement and the Documents, set forth the entire agreement between among the
Parties hereto, fully supersedes any and all prior agreements or understandings
between the parties hereto pertaining to the subject matter hereof, and no
change in, modification of or addition, amendment or supplement to this
Agreement shall be valid unless set forth in writing and signed and dated by
both of the parties hereto subsequent to the execution of this
Agreement.
11.7. Taxes.
In the
event any tax becomes due by reason of this Agreement, such tax shall be borne
by the party upon whom such tax is imposed by applicable law.
11.8. Binding
Effect.
This
Agreement and the respective rights and obligations of the parties hereunder
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, legal representatives and permitted assigns.
11.9. Modification.
This
Agreement may not be modified, amended, changed, discharged or terminated,
except in writing signed by the party against whom enforcement of any such
modification, amendment, change, discharge or termination is
sought.
11.10. Headings.
The
section headings used in this Agreement are intended solely for convenience
of
reference and shall not in any way or manner amplify, limit, modify or otherwise
be used in the interpretation of any of the provisions of this
Agreement.
11.11. Dispute
Resolution.
11.11.1. All
controversies, claims and disputes arising out of or in connection with this
Agreement shall be settled by mutual consultation between the parties in good
faith as promptly as possible, but failing an amicable settlement, shall be
settled exclusively by Xxxxx Xxxxxxx Xxxxxxxx Xxxxx.
00
11.11.2. This
Agreement, the respective rights, obligations and remedies of the parties
hereunder, the interpretation hereof, and all disputes, controversies and claims
arising out of or related to this Agreement, shall be governed by and construed
in accordance with the laws of Korea.
[Signature
page follows]
14
IN
WITNESS WHEREOF,
each
party agrees that it has the authority to enter into this Investment Agreement
and accordingly the Parties have executed this Agreement as of this ___ day
of
August 2007.
|
ENTLIAN
CORPORATION
|
|
|
By:
/s/
Xxxx Xxxxx Xxxx
Xxxxxxxxx
Xxxx, President
|
By:
/s/
Xxxx Xxxxx Xxxx
Kwanghyun
Park, an individual
|
|
|
|
|
By:
/s/ Xxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Chief Operating Officer
|
|
|
CJ
MEDIA Inc.
By:
/s/
X.X. Xxxx
X.X.
Xxxx, Chief Executive Officer
|
|
15
SCHEDULE
A
THE
“BUSINESS”
The
Company and SMC brands, trademarks and service marks;
Past,
present and future the Company and SMC programming library and video assets
in
all forms of media;
Past,
present and future the Company and SMC fighter and talent
contracts;
Past,
present and future the Company and SMC third-party media contracts;
All
future the Company and SMC royalties and receivables;
Present
and future the Company and SMC venue contracts and agreements;
All
other
future and present contracts and agreements associated with the Company and
SMC.
16
EXHIBIT
A
BW
AGREEMENT
17
EXHIBIT
B
EMPLOYMENT
AGREEMENT WITH XXXXX XXXX PARK
18
EXHIBIT
C
FORM
OF LOCK-UP AGREEMENT
August
___, 2007
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx0000
Xxx
Xxxxxxx, XX 00000
Attention:
Chief Financial Officer
Gentlemen:
In
connection with the issuance by ProElite, Inc. (the “Company”)
of
shares of its common stock, par value $0.0001 pursuant to that Investment
Agreement dated as of August __, 2007 between the Company, Entlian Corporation
(“ETN”),
CJ
Media Inc. (“CJM”)
and
Kwanghyun Park (“KP”),
the
undersigned hereby agree that, during the period beginning on the date hereof
(the “Effective
Date”)
and
ending on the date that is 18 months after the date the Company receives
notification by the Securities and Exchange Commission that the registration
statement required to be filed by the Company pursuant to that certain
Registration Rights Agreement between the Company and the investors of the
Company’s private placement offering on June 30, 2007 (the “Registration
Statement”)
has
been declared effective (the
“Lock-Up
Period”),
the
undersigned will not: (1) sell, transfer, assign, pledge or hypothecate any
Covered Securities or (2) subject the Covered Securities to any hedging, short
sale, derivative, put, or call transactions that would result in the effective
economic disposition of the Covered Securities by any person (the “Lock-Up”).
Notwithstanding
the foregoing:
1. The
Lock-Up shall not apply during the period that the sales price per share of
common stock is at least $15.00, provided (A) the Registration Statement has
been declared effective by the Securities and Exchange Commission and is then
still effective and (B) the shares of the Company’s common stock are then listed
on the Nasdaq Stock Market or the American Stock Exchange.
2. The
Lock-up Agreement shall not apply to any private transfer of all or portion
of
the Covered Securities provided the transferee agrees to be bound by the terms
hereof.
The
obligations of the undersigned that are contained in this letter agreement
also
apply (i) to all Covered Securities that the undersigned may receive as a
stock dividend or other distribution on the Covered Securities and (ii) to
all other securities of the Company that the undersigned may receive in a
recapitalization or similar transaction in exchange for Covered Securities
acquired by the undersigned.
The
undersigned consent to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of the Covered
Securities except in compliance with the preceding provisions of this Lock-Up
Agreement. The undersigned also consents to the placement of legend on any
and
all stock certificates that evidence the Covered Securities which are the
subject of this Lock-Up Agreement.
19
|
Very
truly yours,
|
|
|
Entlian
Corporation
By:
/s/
Xxxx Xxxxx Xxxx
Xxxxxxxxx
Xxxx, President
|
|
|
/s/
Xxxx Xxxxx Xxxx
Kwanghyun
Park, an individual
|
|
|
ACCEPTED:
By:
_________________________________
|
|
20
SCHEDULE
A
THE
“BUSINESS”
The
Company and SMC brands, trademarks and service marks;
Past,
present and future the Company and SMC programming library and video assets
in
all forms of media;
Past,
present and future the Company and SMC fighter and talent
contracts;
Past,
present and future the Company and SMC third-party media contracts;
All
future the Company and SMC royalties and receivables;
Present
and future the Company and SMC venue contracts and agreements;
All
other
future and present contracts and agreements associated with the Company and
SMC.
21
APPENDIX
A
NOTICE
ADDRESSES
if
to the
Company, to:
Entlian
Corporation
2nd
Fl.
Hanmaru Xxxx. 000-0 Xxxxxx-xxxx
Xxxxxxx-xx,
Xxxxx
Xxxxx
Attention:
President
Facsimile:
82-2-565-0998
Email:
xxx@xxxxxxxx.xxx
If
to KP,
to:
2nd
Fl.
Hanmaru Xxxx. 000-0 Xxxxxx-xxxx
Xxxxxxx-xx,
Xxxxx
Xxxxx
if
to
CJM, to:
CJ
Media
Inc.
CJ
Media
Inc.
00-0,
Xxxxxx-xxxx Xxxxxxx-xx
Xxxxx,
000-000
Xxxxx
Attention:
Senior VP
Facsimile:
00-0-0000-0000
Email:
xxxxx@xx.xxx
if
to
PE,
to:
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx0000
Xxx
Xxxxxxx, XX 00000
Xxxxxx
Xxxxxx
Attention:
Xxxxxxx Xxxxx
Facsimile:
(000) 000-0000
Email:
Xxxxxxx.Xxxxx@xxxxxxxx.xxx
with
a
copy to:
Xxxx
& Xxxxx PC
0000
Xxxxxxx Xxxx Xxxx
Xxxxx
0000
Xxx
Xxxxxxx, XX 00000-0000
United
States
Attention:
Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000)
000-0000
Email: xxxxxxxxx@xxxxxxxxx.xxx
22
