AMENDED AND RESTATED
CONSULTING AGREEMENT
This AMENDED AND RESTATED CONSULTING AGREEMENT
(“Agreement”) is entered into as of July 15, 2008 by
and between ProElite, Inc., a New Jersey corporation, with its
principal office at 12121 Wilshire Boulevard, Suite1001, Los
Angeles, CA 90025 (“PEI”), Gary Shaw, an individual
(“Shaw”), and Gary Shaw Productions MMA, LLC, a New
Jersey limited liability company (“GSP” and
collectively with PEI and Shaw, the “Parties”), with
reference to the following facts:
WHEREAS, Shaw, GSP and Real Sport, Inc., a
subsidiary of PEI, entered into a Consulting Agreement dated as of
October 3, 2006 (the “Initial Agreement”);
WHEREAS, the Parties wish to amend and restate
the Initial Agreement pursuant to which PEI will continue to engage
Shaw’s services by retaining GSP;
NOW, THEREFORE, PEI, GSP and Shaw desire to set
forth in this Agreement the terms and conditions of the continued
engagement by PEI of Shaw and GSP.
ARTICLE
I
CONSULTING ENGAGEMENT; TERM;
DUTIES
1.1 Engagement. Upon the terms and conditions
hereinafter set forth, PEI hereby engages GSP and Shaw to provide
consulting services. The services of Shaw and GSP shall include
those services relating to the business requested in writing from
time to time by PEI’s Chief Executive Officer or at the
direction of its Board of Directors, including, but not limited to,
the following:
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1.1.1
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Advise PEI in
matters pertaining to it business, operations and
industry;
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(b)
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sponsorship
presentations and opportunities,
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(c)
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management and
selection of fighters,
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(d)
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consultation
re: media coverage contracts, including, but not limited to,
distribution and licensing agreements (the
“Services”).
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1.1.3
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GSP and Shaw
shall use their best efforts and abilities faithfully and
diligently to promote PEI’s business interests and to perform
the Services requested.
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1.1.4
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For purposes of
this Agreement, only, the business of PEI shall not include boxing,
or the management or promotion of boxing events. The business of
PEI shall include: (I) Mixed Martial Arts, and the production,
distribution, merchandising, marketing, advertising, promotion
thereof, (ii) online social networking and online depository for
any and all sports and physical activities, (iii) maintenance,
upgrade and servicing of PEI’s websites on the world wide web
related to any and all sports and physical activities, (iv) online
social networking technology & services.
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1.2.1
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Reports. GSP
and Shaw shall use its best efforts and skills to truthfully,
accurately, and promptly make, maintain, and preserve all records
and reports that PEI may, from time to time, request or require,
fully account for all money, records, equipment, materials, or
other property belonging to PEI of which it may have custody, and
promptly pay and deliver the same whenever it may be directed to do
so by the Board.
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1.2.2
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Rules and
Regulations. PEI, GSP and Shaw shall obey all rules, regulations
and special instructions of PEI and all other rules, regulations,
guides, handbooks, procedures, policies and special instructions
applicable to PEI’s business in connection with their duties
hereunder and shall endeavor to improve their ability and knowledge
of PEI’s business in an effort to increase the value of their
services for the mutual benefit of PEI, GSP, and Shaw.
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1.2.3
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Opportunities.
GSP and Shaw shall make all business opportunities of which it
becomes aware that are relevant to PEI’s business available
to PEI, and to no other person or entity or to himself
individually.
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1.2.4
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Communication
with Media. GSP and Shaw shall not communicate with the press or
other media regarding the business of PEI without prior
authorization of the CEO and/or the prior written authorization of
the Board of Directors.
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1.3 Covenants of PEI
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1.3.1
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From its
inception to the present, PEI warrants that it has to the best of
its knowledge truthfully and completely filed all public
disclosures required under all state and federal securities laws of
the United States.
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1.3.2
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PEI represents
and warrants that during the term of this Agreement, PEI shall use
its best efforts to continue to truthfully and completely file all
public disclosures required under all state and federal securities
laws of the United States.
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1.3.3
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PEI shall file
a Form 8-K disclosing the terms of this agreement and the
resignation of Shaw as President and member of the Board of
Directors of PEI.
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ARTICLE
II
COMPENSATION
2.1 Consideration. During the Term (as
hereinafter defined), for all services rendered by GSP and Shaw
hereunder and all covenants and conditions undertaken by the
Parties pursuant to this Agreement, PEI shall pay, as full
consideration for the Services the sum of $250,000 per year
beginning July 1, 2008 and ending September 30, 2009. This
Consulting Fee shall be payable in accordance with the normal
payroll practices of PEI. For purposes of this Agreement, “
Year ” shall mean the twelve-month period beginning on
October 1 and ending on September 30 of the following year. In
addition to the compensation, PEI shall continue to reimburse Shaw
for his actual out-of-pocket monthly health insurance payments.
Shaw shall also be paid any unpaid portion of his 5% raise,
retroactive to October, 2007, which payment shall be due upon any
Change in Control and/or by September 30, 2009, whichever date
occurs first.
2.2 Performance and Review. GSP and Shaw’s
performance will be reviewed on no less than an annual
basis.
ARTICLE
III
TERMINATION OF
ENGAGEMENT
3.1 Term. GSP’s engagement pursuant to this
Agreement shall terminate on the earliest to occur of the
following:
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3.1.1
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September 30,
2009;
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3.1.2
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upon the death
of Shaw (“Death”);
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3.1.3
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upon the
delivery to GSP of written notice of termination by PEI if Shaw
shall suffer a physical or mental disability or illness which
renders Shaw, in the reasonable judgment of the Board, unable to
perform his duties and obligations under this Agreement for either
60 consecutive days or 180 days in any 12-month period
(“Disability”);
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3.1.4
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upon delivery
to GSP of written notice of termination by PEI for Cause;
or
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3.1.5
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upon the
delivery to PEI from GSP of written notice of
termination.
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3.2 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following
meanings:
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3.2.1
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“For
Cause” shall mean, in the context of a basis for termination
of GSP’s engagement by PEI, that:
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(a)
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GSP or Shaw is
convicted of, or pleas nolo contendere (no contest) to,
any crime (whether or not involving PEI) constituting a felony in
the jurisdiction involved;
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(b)
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GSP’s or
Shaw’s willful misconduct in the performance of the duties
hereunder;
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(c)
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GSP’s or
Shaw’s gross negligence in the performance of its or his
duties hereunder or willful and repeated failure or refusal to
perform such duties as may be delegated to GSP by PEI;
or
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(d)
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GSP and/or Shaw
is in material breach of this Agreement.
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With respect to subsections 3.2.1(a), (b) and
(c), PEI shall provide written notice to GSP and Shaw of any such
event with exact details of the claimed event, and GSP and Shaw
shall have thirty (30) calendar days from the date of receipt of
such written notice to prove such claim to be in error or to cure
any such event and to meet with the Board for that
purpose.
3.3 “Good Reason” giving rise to
GSP’s right to terminate this Agreement means if GSP claims
that PEI has materially breached this Agreement, or has committed
material fraud. “Good Reason” shall also include the
failure of PEI to pay any sums due and owing to GSP or Shaw or the
suspension of business operations of PEI. GSP shall have first
provided written notice to PEI of any such claimed material breach
or commission with exact details of the claimed material breach and
PEI shall have had thirty (30) days from the date of receipt of
such written notice to prove such claim to be in error or to cure
any such breach; if curable, and in the event PEI does so cure such
breach within said thirty (30) days, such claimed breach shall not
constitute Good Reason or a breach of this Agreement.
3.3.1 Effect of Termination.
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(a)
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In the event
that this Agreement is terminated by PEI without Cause or by Shaw
for Good Reason, Shaw shall be entitled to any unpaid Base Salary
for the remaining period through September 30, 2009, to Shaw, all
to be promptly paid in one lump sum.
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(b)
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In the event
this Agreement is terminated by GSP or Shaw pursuant to 3.1.5,
neither will receive further compensation for the remaining period
through September 30, 2009.
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(c)
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Shaw shall have
no obligation to offset any payments he receives from PEI following
the termination of this Agreement by any payments he receives from
a subsequent employer.
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3.4 Change in Control. In the event of a
“Change in Control,” as defined below, (I) GSP shall
have the right to terminate this Agreement, (ii) all PEI Shares
granted to Shaw shall be fully vested, and (iii) upon GSP’s
written notice to PEI of its intent to terminate, this Agreement
will be terminated 14 days after receipt of such notice and PEI and
GSP shall have no further obligation or duties to each other,
except as provided in Articles III, IV and V.
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3.4.1
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For purposes of
this Agreement a “Change in Control” shall mean and be
determined to have occurred if (A) any person
(“Person”) (as such term is used in Sections 13(d) and
14(d) of the Securities and Exchange Act of 1934, as amended) (the
“Exchange Act”) is or becomes the beneficial owner
(“Beneficial Owner”) (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of PEI representing more than fifty percent (50 %) of
the combined voting power of the then outstanding securities of
PEI; (B) the sale or other disposition by merger or business
combination of all or substantially all the assets of PEI in a
single or series of related transactions; (C) during any period of
two (2) years, a majority of the members of the Board is replaced
by directors who were not nominated and approved by the Board; or
(D) PEI is combined with or acquired by another company and the
Board shall have determined, either before such event or
thereafter, by resolution, that a Change in Control will occur or
has occurred.
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ARTICLE
IV
INVENTIONS AND TRADEMARK;
CONFIDENTIAL INFORMATION;
NONDISCLOSURE; UNFAIR
COMPETITION; CONFLICT OF INTEREST
4.1 Inventions and Trademark. All ideas,
inventions, trademarks, proprietary information, know-how,
processes and other developments or improvements developed by GSP,
alone or with others, during the Term, that are within the scope of
PEI’s business operations or that relate to PEI’s work
or projects, are the exclusive property of PEI. In that regard, GSP
and Shaw agree to disclose promptly to PEI any and all inventions,
discoveries, trademarks, proprietary information, know-how,
processes or improvements, patentable or otherwise, that it and/or
he may make from the beginning of GSP’s engagement until the
termination thereof, that relate to the business of PEI, whether
such is made so
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