SENIOR SECURED NOTE PURCHASE AGREEMENT
SENIOR
SECURED NOTE PURCHASE
AGREEMENT
THIS
SENIOR
SECURED
NOTE
PURCHASE AGREEMENT (this “Agreement”)
is
made and entered into as of June __, 2008, among PROELITE, INC., a New Jersey
corporation (the “Company”),
and
Showtime Networks, Inc. (“Purchaser”).
RECITALS
WHEREAS,
the Company has authorized the sale to Purchaser of a Senior Secured Note in
the
form of Exhibit
A
hereto
in the principal amount of $3,500,000 (as amended, supplemented or otherwise
modified from time to time, the “Note”);
WHEREAS,
the Company wishes to issue Purchaser a warrant in the form of Exhibit
B
hereto
(as amended, restated, modified and/or supplemented from time to time, a
“Warrant”)
to
purchase One Hundred Thousand (100,000) shares of the Common Stock (subject
to
adjustment as set forth therein) in connection with Purchaser’s purchase of the
Note;
WHEREAS,
Purchaser desires to purchase the Note and Warrant on the terms and conditions
set forth herein; and
WHEREAS,
the Company desires to issue and sell the Note and Warrant to Purchaser on
the
terms and conditions set forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Agreement
to Sell and Purchase.
Pursuant to the terms and conditions set forth in this Agreement, concurrently
with the execution herewith, the Company shall sell to Purchaser, and Purchaser
shall purchase from the Company, the Note and Warrant
for an
aggregate purchase price of $3,000,000.
2. Closing,
Delivery and Payment.
2.1 Closing.
Subject
to the terms and conditions herein, the closing of the transactions contemplated
hereby (the “Closing”)
shall
take place on the date hereof at such time or place as the Company and the
Purchasers may mutually agree.
2.2 Delivery.
(a) At
the
Closing the Company will deliver to Purchaser (i) the Note, and (2)
the
Warrant.
(b) At
the
Closing Purchaser will deliver to the Company $3,000,000 by wire
transfer.
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to Purchaser as follows:
3.1 Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. The Company has the
corporate power and authority to own and operate its properties and assets
and,
insofar as it is or shall be a party thereto, to (1) execute and deliver (i)
this Agreement, (ii) the Note, (iii) the Warrant and (iv) the Security Agreement
dated as of the date between the Company and Purchaser (as amended, supplemented
or otherwise modified from time to time, the “Security
Agreement”); (the
preceding clauses (ii) through (iv), collectively, the “Related
Agreements”);
(2)
issue the shares of the common stock issuable upon exercise of such Warrant
(the
“Warrant
Shares”);
and
(3) carry out the provisions of this Agreement and the Related Agreements and
to
carry on its business as presently conducted. The Company is duly qualified
and
is authorized to do business and is in good standing as a foreign corporation
in
all jurisdictions in which the nature or location of its activities and of
its
properties (both owned and leased) makes such qualification necessary, except
for those jurisdictions in which failure to do so has not, or could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise), properties, operations or prospects of the Company (a “Material
Adverse Effect”).
3.2 Authorization;
Binding Obligations.
All
corporate action on the part of the Company necessary for the authorization
of
this Agreement and the Related Agreements, the performance of all obligations
of
the Company hereunder and under the other Related Agreements at the Closing,
and
the authorization, sale, issuance and delivery of the Notes has been taken
or
will be taken prior to the Closing. This Agreement and the Related Agreements,
when executed and delivered, will be valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms,
except:
(a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights;
and
(b) as
limited by general principles of equity that restrict the availability of
equitable or legal remedies.
3.3 SEC
Reports.
The
Company has filed all proxy statements, reports and other documents required
to
be filed by it (the “Exchange
Act Filings”)
under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Each
Exchange Act Filing was, at the time of its filing, in substantial compliance
with the requirements of its respective form and none of the Exchange Act
Filings, nor the financial statements (and the notes thereto) included in the
Exchange Act Filings, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.4 Liabilities.
The
Company does not have any liabilities, except liabilities incurred in the
ordinary course of business and liabilities disclosed in any of the Exchange
Act
Filings made prior to the date of this Agreement.
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3.5 Changes.
Except
as set forth on Schedule
3.5
or as
disclosed in any Exchange Act Filings:
(a) Since
March 31, 2008 (the “Balance
Sheet Date”),
the
Company has not: (i) declared or paid any dividends, or authorized or made
any
distribution upon or with respect to any class or series of its capital stock;
(ii) incurred any indebtedness for money borrowed or any other liabilities
(other than ordinary course obligations) individually in excess of $50,000
or in
excess of $100,000 in the aggregate; (iii) made any loans or advances to any
person or entity not in excess, individually or in the aggregate, of $100,000,
other than in the ordinary course of business; or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the sale of its
assets in the ordinary course of business.
(b) Since
the
Balance Sheet Date, there has not been any change in the business, assets,
liabilities, condition (financial or otherwise), properties, operations or
prospects of the Company, which individually or in the aggregate has had, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
3.6 Title
to Properties and Assets; Liens, Etc.
Except
as set forth on Schedule
3.6,
the
Company has good and marketable title to its properties and assets, and good
title to its leasehold interests, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge (each for the foregoing, a “Lien”),
other
than the following (each a “Permitted
Encumbrance”):
(a) those
in
favor of the Purchaser;
(b) those
in
favor of Showtime Network, Inc. arising pursuant to that certain promissory
note
dated December 17, 2007 in the principal amount of $1,822,086;
(c) those
resulting from taxes which have not yet become delinquent;
(d) minor
Liens which do not materially detract from the value of the property subject
thereto or materially impair the operations of the Company, so long as in each
such case, such Liens have no effect on the Lien priority of the Purchaser,
in
such property;
(e) those
that have otherwise arisen in the ordinary course of business of the Company,
so
long as they have no effect on the Lien priority of the Purchaser in any of
the
Collateral (as defined in the Security Agreement); and
(f) Liens
on
all or any portion of the Collateral (as defined in the Security Agreement)
which secure Additional Indebtedness; provided, however, that (i) any such
Lien
shall be granted pursuant to a security agreement in form and substance
satisfactory to the Purchaser and (ii) prior to the granting of any such Lien,
each holder of such Additional Indebtedness shall enter into an intercreditor
agreement with the Purchaser, in form and substance satisfactory to the
Purchaser.
All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company which are material to the business of the Company
or any of its subsidiaries are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. Except
as set forth on Schedule
3.6,
the
Company is in compliance with all material terms of each lease to which it
is a
party or is otherwise bound.
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3.7 Patriot
Act.
The
Company certifies that, to the best of Company’s knowledge, the Company has not
been designated, and is not or shall not be owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224. The Company hereby acknowledges
that Purchaser seeks to comply with all applicable laws concerning money
laundering and related activities. In furtherance of those efforts, the Company
hereby represents, warrants and covenants that, to the best of the Company’s
knowledge: (i) none of the cash or property that the Company will pay to
Purchaser or will contribute to Purchaser has been or shall be derived from,
or
related to, any activity that is deemed criminal under United States law; and
(ii) no contribution or payment by the Company to Purchaser, to the extent
that
they are within the Company’s control shall cause Purchaser to be in violation
of the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company
shall
promptly notify the Purchaser if any of these representations, warranties or
covenants ceases to be true and accurate regarding the Company or any of its
subsidiaries. The Company shall provide Purchaser all additional information
regarding the Company that Purchaser reasonably determines to be necessary
to
ensure compliance with all applicable laws concerning money laundering and
similar activities.
4. Representations
and Warranties of Purchaser.
Purchaser hereby represents and warrants to the Company as follows (such
representations and warranties do not lessen or obviate the representations
and
warranties of the Company set forth in this Agreement):
4.1 Requisite
Power and Authority.
Purchaser has all necessary power and authority under all applicable provisions
of law to execute and deliver this Agreement and the Related Agreements and
to
carry out their provisions. All corporate action on Purchaser’s part required
for the lawful execution and delivery of this Agreement and the Related
Agreements have been or will be effectively taken prior to the Closing. Upon
their execution and delivery, this Agreement and the Related Agreements will
be
valid and binding obligations of the Purchaser, enforceable in accordance with
their terms, except:
(a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights;
and
(b) as
limited by general principles of equity that restrict the availability of
equitable and legal remedies.
4.2 Investment
Representations.
Purchaser understands that the Note, the Warrant and the Warrant Shares are
being offered and sold pursuant to an exemption from registration contained
in
the Securities Act of 1933, as amended (the “Securities
Act”)
based
in part upon Purchaser’s representations contained in this Agreement, including,
without limitation, that such Purchaser is an “accredited investor” within the
meaning of Regulation D under the Securities Act. Purchaser confirms that it
has
had an opportunity to ask questions and receive answers from the Company
regarding the Company’s business, management and financial affairs and the terms
and conditions of the Note, the Warrant and the Warrant Shares.
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4.3 Acquisition
for Own Account.
Such
Purchaser is acquiring the Note, the Warrant and the Warrant Shares for such
Purchaser’s own account for investment only, and not as a nominee or agent and
not with a view towards or for resale in connection with their
distribution.
4.4 Accredited
Investor.
Such
Purchaser represents that it is an accredited investor within the meaning of
Regulation D under the Securities Act.
4.5 Legends.
(a) The
Note
shall bear substantially the following legend:
“THIS
NOTE HAS
NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE
SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (B) AN
EXEMPTION FROM SUCH REGISTRATION.
THIS
NOTE
IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR THE PURPOSES OF SECTION 1271 ET
SEQ.
OF THE INTERNAL REVENUE CODE. THE COMPANY WILL PROMPTLY MAKE AVAILABLE TO THE
HOLDERS, UPON REQUEST, THE ISSUE PRICE, THE AMOUNT OF THE OID, THE ISSUE DATE,
AND THE YIELD TO MATURITY OF THE NOTE.”
(b) The
applicable Warrant Shares shall bear a legend which shall be in substantially
the following form until such shares are covered by an effective registration
statement filed with the SEC or such legend is no longer required:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT
AND
APPLICABLE STATE LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION.”
(c) The
applicable Warrant shall bear substantially the following legend:
“THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR
THE
UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION.”
5
4.6 Patriot
Act.
Purchaser certifies that, to the best of Purchaser's knowledge, Purchaser has
not been designated, and is not or shall not be owned or controlled, by a
“suspected terrorist” as defined in Executive Order 13224. Purchaser hereby
acknowledges that the Company seeks to comply with all applicable laws
concerning money laundering and related activities. In furtherance of those
efforts, Purchaser hereby represents, warrants and covenants that, to the best
of the Purchaser’s knowledge: (i) none of the cash or property that Purchaser
will pay to the Company or will contribute to the Company has been or shall
be
derived from, or related to, any activity that is deemed criminal under United
States law; and (ii) no contribution or payment by Purchaser to the Company,
to
the extent that they are within Purchaser’s control shall cause the Company to
be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. Purchaser shall promptly notify the Company if any of these
representations, warranties or covenants ceases to be true and accurate
regarding Purchaser or any of its subsidiaries. Purchaser provide the Company
all additional information regarding Purchaser that the Company reasonably
determines to be necessary to ensure compliance with all applicable laws
concerning money laundering and similar activities.
5. Covenants
of the Company.
The
Company covenants and agrees with Purchaser as follows:
5.1 Use
of
Funds.
The
Company shall use the proceeds of the sale of the Note and Warrant for general
working capital purposes only.
5.2 Required
Approvals.
Without
the prior written consent of the Purchaser (which consent shall not be
unreasonably withheld or delayed) the Company shall not:
(a) (i)
directly or indirectly declare or pay any dividends, (ii) issue any preferred
stock that is mandatorily redeemable prior to the date that occurs 91 days
after
the Maturity Date (as defined in each Note) or (iii) redeem any of its preferred
stock or other Equity Interests;
(b) liquidate
or dissolve the Company;
(c) (i)
create, incur, assume or suffer to exist any Lien (other than Permitted
Encumbrances) or Indebtedness (exclusive of trade debt and debt incurred to
finance the purchase of equipment in each case incurred the ordinary course
of
business) whether secured or unsecured other than (w) the Company’s obligations
owed to Purchaser, (x) Indebtedness existing as of the date hereof and any
refinancings or replacements thereof on terms no less favorable to the
Purchasers than the Indebtedness being refinanced or replaced and in a principal
amount not in excess of the principal amount of the Indebtedness being
refinanced or replaced, (y) any Indebtedness incurred in connection with the
purchase of assets (other than equipment) in the ordinary course of business,
or
any refinancings or replacements thereof on terms no less favorable to the
Purchasers than the Indebtedness being refinanced or replaced, so long as any
lien relating thereto shall only encumber the fixed assets so purchased and
no
other assets of the Company or any of its subsidiaries and the principal amount
thereof shall not exceed the principal amount of the Indebtedness being
refinanced or replaced ; and (z) up to $3,500,000 of additional Indebtedness
(the “Additional
Indebtedness”),
provided that (A) Purchaser shall have the right to approve or disapprove,
in
its sole discretion, any prospective provider of Additional Indebtedness, and
(B) any and all Additional Indebtedness incurred shall be purchasable by
Purchaser or the Company at any time, regardless of maturity date or default
and
without any penalty or premium, at the outstanding amount of the Additional
Indebtedness plus any interest accrued thereon and shall provide that Purchaser
shall have the sole power to exercise remedies upon a default of any Additional
Indebtedness, or (ii) assume, guarantee, endorse or otherwise become directly
or
contingently liable in connection with any obligations of any other person
or
entity, except the endorsement of negotiable instruments by the Company thereof
for deposit or collection or similar transactions in the ordinary course of
business or guarantees of Indebtedness of subsidiaries of the Company otherwise
permitted to be outstanding pursuant to this clause (c);
6
As
used
in this Section 5.2, the following terms have the following
meanings:
“Capitalized
Lease Obligations”
means,
at any time, with respect to any Capital Lease, any lease entered into as part
of any sale/leaseback transaction of any Person or any synthetic lease, the
amount of all obligations of such Person that is (or that would be, if such
synthetic lease or other lease were accounted for as a Capital Lease)
capitalized on a balance sheet of such Person prepared in accordance with
generally accepted accounting principles consistently applied (“GAAP”).
“Capital
Lease”
means,
with respect to any Person, any lease of, or other arrangement conveying the
right to use, any property (whether real, personal or mixed) by such Person
as
lessee that has been or should be accounted for as a capital lease on a balance
sheet of such Person prepared in accordance with GAAP.
“Contractual
Obligation”
means,
with respect to any Person, any provision of any indenture, mortgage, deed
of
trust, contract, undertaking, agreement or other instrument to which such Person
is a party or by which it or any of its property is bound or to which any of
its
property is subject.
“Equity
Interests”
shall
mean, with respect to any Person, any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests,
member interests, units, participations or other equivalents of or interest
in
(regardless of how designated) equity of such Person, whether voting or
nonvoting, including common stock, preferred stock, convertible securities
or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC (or any successor thereto)
under the Exchange Act).
“Guaranty
Obligation”
means,
as applied to any Person, any direct or indirect liability, contingent or
otherwise, of such Person for any Indebtedness, lease, dividend or other
obligation (the “primary obligation”) of another Person (the “primary obligor”),
if the purpose or intent of such Person in incurring such liability, or the
economic effect thereof, is to guarantee such primary obligation or provide
support, assurance or comfort to the holder of such primary obligation or to
protect or indemnify such holder against loss with respect to such primary
obligation, including (a) the direct or indirect guaranty, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of any primary
obligation, (b) the incurrence of reimbursement obligations with respect to
any
letter of credit or bank guarantee in support of any primary obligation, (c)
the
existence of any Lien, or any right, contingent or otherwise, to receive a
Lien,
on the property of such Person securing any part of any primary obligation
and
(d) any liability of such Person for a primary obligation through any
Contractual Obligation (contingent or otherwise) or other arrangement (i) to
purchase, repurchase or otherwise acquire such primary obligation or any
security therefor or to provide funds for the payment or discharge of such
primary obligation (whether in the form of a loan, advance, stock purchase,
capital contribution or otherwise), (ii) to maintain the solvency, working
capital, equity capital or any balance sheet item, level of income or cash
flow,
liquidity or financial condition of any primary obligor, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance
by
any other party to any Contractual Obligation, (iv) to purchase, sell or lease
(as lessor or lessee) any property, or to purchase or sell services, primarily
for the purpose of enabling the primary obligor to satisfy such primary
obligation or to protect the holder of such primary obligation against loss
or
(v) to supply funds to or in any other manner invest in, such primary obligor
(including to pay for property or services irrespective of whether such property
is received or such services are rendered); provided, however, that “Guaranty
Obligations” shall not include (x) endorsements for collection or deposit in the
ordinary course of business and (y) product warranties given in the ordinary
course of business. The outstanding amount of any Guaranty Obligation shall
equal the outstanding amount of the primary obligation so guaranteed or
otherwise supported or, if lower, the stated maximum amount for which such
Person may be liable under such Guaranty Obligation.
7
“Indebtedness”
of
any
Person means, without duplication, any of the following, whether or not matured:
(a) all indebtedness for borrowed money (including, without limitation, all
principal, interest, fees and charges relating thereto), (b) all obligations
evidenced by notes, bonds, debentures or similar instruments, (c) all
reimbursement and all obligations with respect to (i) letters of credit, bank
guarantees or bankers’ acceptances or (ii) surety, customs, reclamation or
performance bonds (in each case not related to judgments or litigation) other
than those entered into in the ordinary course of business, (d) all obligations
to pay the deferred purchase price of property or services, other than trade
payables incurred in the ordinary course of business, (e) all obligations
created or arising under any conditional sale or other title retention
agreement, regardless of whether the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or
sale
of such property, (f) all Capitalized Lease Obligations, and (g) all Guaranty
Obligations for obligations of any other Person constituting Indebtedness of
such other Person; provided, however, that the items in each of clauses (a)
through (g) above shall constitute “Indebtedness”
of
such
Person solely to the extent, directly or indirectly, (x) such Person is liable
for any part of any such item, (y) any such item is secured by a Lien on such
Person’s property or (z) any other Person has a right, contingent or otherwise,
to cause such Person to become liable for any part of any such item or to grant
such a Lien.
8
“Person”
means
any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, governmental authority or other
entity.
5.3 Authorization
and Reservation of Shares.
The
Company shall at all times have authorized and reserved a sufficient number
of
shares of Common Stock to provide for the exercise of the Warrant.
5.4 Minimum
Bank Balance
The
Company shall, at all times maintain at least $550,000 of unrestricted funds
with a nationally recognized financial institution.
6. Covenants
of the Purchaser.
Purchaser covenants and agrees with the Company as follows:
6.1 Confidentiality.
No
Purchaser will disclose, nor will it include in any public announcement, the
name of the Company, unless expressly agreed to by the Company or unless and
until such disclosure is required by law or applicable regulation, and then
only
to the extent of such requirement.
6.2 Limitation
on Acquisition of Common Stock of the Company.
Notwithstanding anything to the contrary contained in this Agreement, any
Related Agreement or any document, instrument or agreement entered into in
connection with any other transactions entered into by the Purchaser and the
Company (and/or subsidiaries or affiliates of the Company), the Purchaser
(and/or subsidiaries or affiliates of the Purchaser) shall not acquire stock
in
the Company (including, without limitation, pursuant to a contract to purchase,
by exercising an option or warrant, by converting any other security or
instrument, by acquiring or exercising any other right to acquire, shares of
stock or other security convertible into shares of stock in the Company, or
otherwise, and such contracts, options, warrants, conversion or other rights
shall not be enforceable or exercisable) to the extent such stock acquisition
would cause any interest (including any original issue discount) payable by
the
Company to a Non-U.S. Purchaser not to qualify as “portfolio interest” within
the meaning of Section 871(h)(2) or Section 881(c)(2) of the Internal Revenue
Code, by reason of Section 871(h)(3) or Section 881(c)(3)(B) of the Internal
Revenue Code, as applicable, taking into account the constructive ownership
rules under Section 871(h)(3)(C) of the Internal Revenue Code (the “Stock
Acquisition Limitation”).
The
Stock Acquisition Limitation shall automatically become null and void with
respect to the Purchaser, without any notice to the Company, on and after the
first date upon which the Purchaser and each of its Affiliates which qualify
as
a Non-U.S. Purchaser no longer owns any indebtedness (including, without
limitation, principal, interest, fees and charges) of the Company.
7. Miscellaneous.
7.1 Expenses.
Each
party shall pay all the costs and expenses that it incurs in connection with
the
negotiation, execution, delivery and performance of this Agreement; provided,
however, that the Company shall reimburse Purchaser for amounts paid to outside
counsel (but not to exceed $30,000) in connection with the negotiation,
execution and delivery of this Agreement, the Related Agreements, or any other
agreements with respect to the issuance of Additional Indebtedness; and
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7.2 Governing
Law.
THIS
AGREEMENT AND THE RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. Each party hereto hereby irrevocably consents, for itself
and
its legal representatives, partners, successors and assigns, to the exclusive
jurisdiction of the Courts of the State of California for the limited purpose
of
any action or proceeding to interpret or enforce this Agreement, and further
agrees that any action arising solely from or relating solely this Agreement
shall be instituted and prosecuted only in the courts of the State of California
located in the County of Los Angeles, and hereby waives any rights it may have
to personal service of summons, complaint or other process in connection
therewith, and agrees that service may be made by registered or certified mail
to such party at its principal headquarters.
7.3 Severability.
Wherever possible each provision of this Agreement and the Related Agreements
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or any Related Agreement
shall be prohibited by or invalid or illegal under applicable law such provision
shall be ineffective to the extent of such prohibition or invalidity or
illegality, without invalidating the remainder of such provision or the
remaining provisions thereof which shall not in any way be affected or impaired
thereby.
7.4 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by Purchaser and the closing of the transactions
contemplated hereby to the extent provided therein. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by
the
Company hereunder solely as of the date of such certificate or instrument.
All
indemnities set forth herein shall survive the execution, delivery and
termination of this Agreement and the Note and the making and repayment of
the
obligations arising hereunder, under the Note and under the other Related
Agreements.
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7.5 Successors.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the successors, heirs, executors and
administrators of the parties hereto and shall inure to the benefit of and
be
enforceable by each person or entity which shall be a holder of the Note or
the
Warrant Shares from time to time, other than the holders of Common Stock which
has been sold by any Purchaser pursuant to Rule 144 or an effective registration
statement. Purchaser may assign any or all of the Obligations (as defined in
the
Security Agreement) to any person or entity and any such assignee shall succeed
to all of such Purchaser’s rights with respect thereto; provided that the
Purchaser shall not be permitted to assign its rights hereunder or under any
Related Agreement to a direct competitor of the Company unless an Event of
Default (as defined in each Note) has occurred and is continuing. The Company
may not assign any of its rights or obligations hereunder without the prior
written consent of the Purchaser. All of the terms, conditions, promises,
covenants, provisions and warranties of this Agreement shall inure to the
benefit of each of the undersigned, and shall bind the representatives,
successors and permitted assigns of the Company.
7.6 Entire
Agreement.
This
Agreement, the Related Agreements, the exhibits and schedules hereto and thereto
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any
representations, warranties, covenants and agreements except as specifically
set
forth herein and therein.
7.7 Amendment
and Waiver.
This
Agreement may be amended or modified only upon the written consent of the
Company and the Purchaser.
7.8 Delays
or Omissions.
It is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement or the Related Agreements, shall impair any such right, power
or
remedy, nor shall it be construed to be a waiver of any such breach, default
or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. All remedies, either under this
Agreement or the Related Agreements, by law or otherwise afforded to any party,
shall be cumulative and not alternative.
7.9 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given:
(a) upon
personal delivery to the party to be notified;
(b) when
sent
by confirmed facsimile if sent during normal business hours of the recipient,
if
not, then on the next business day;
(c) three
(3)
business days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or
(d) one
(1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.
11
All
communications shall be sent as follows:
|
If
to the Company, to:
|
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
|
|
with
a copy to:
|
Christensen,
Glaser, Fink, Jacobs,
Weil
& Xxxxxxx, LLP
00000
Xxxxxxxxxxxxx Xxxx., 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxx
Facsimile:
(000) 000-0000
|
|
If
to Purchaser:
|
Showtime
Networks, Inc.
0000
Xxxxxxxx
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Facsimile:
(000) 000-0000
|
|
with
a copy to:
|
CBS
Corporation
00
X. 00xx
Xx.
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Facsimile:
(000) 000-0000
|
or
at
such other address as the Company or Purchaser may designate by written notice
to the other parties hereto given in accordance herewith.
7.10 Attorneys’
Fees.
In the
event that any suit or action is instituted to enforce any provision in this
Agreement or any Related Agreement, the prevailing party in such dispute shall
be entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement and/or such Related Agreement, including, without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
7.11 Titles
and Subtitles.
The
titles of the sections and subsections of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
7.12 Signatures;
Counterparts.
This
Agreement may be executed by facsimile or electronic signatures and in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one agreement.
12
7.13 Broker’s
Fees.
Except
as set forth on Schedule
7.13
hereof,
each party hereto represents and warrants that no agent, broker, investment
banker, person or firm acting on behalf of or under the authority of such party
hereto is or will be entitled to any broker’s or finder’s fee or any other
commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 7.12 being untrue.
7.14 Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Agreement and the Related Agreements and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Agreement or any
Related Agreement to favor any party against the other.
[Balance
of page intentionally left blank; signature page follows]
13
IN
WITNESS WHEREOF, the parties hereto have executed this SENIOR SECURED NOTE
PURCHASE AGREEMENT as of the date set forth in the first paragraph
hereof.
|
PURCHASER:
|
||||
|
SHOWTIME
NETWORKS, INC.
|
||||
|
By:
|
/s/
Xxxxxxx Xxxxxxxx
|
By:
|
/s/
Xxx Xxxxxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxxxx
|
Name:
Xxx Xxxxxxxxx
|
|||
|
Title:
CEO
|
Title:
Senior Vice President and
Treasurer
|
|||
Signature
Page for Purchase Agreement
EXHIBIT
A
FORM
OF SENIOR
SECURED
NOTE
Exhibit
A
EXHIBIT
B
FORM
OF WARRANT
Exhibit
B
