For all this talk of ProElite’s death, there hasn’t been an official statement from the company stating that they’re ceasing operations. I’m sure that’s coming, but yesterday we just had to take the word of everyone who was fired. Today though, we get some very firm proof that things are done: Showtime is fucking off, and they want their money back.
ITEM 2.04 Triggering Events that Accelerate or Increase a Direct Financial
(a) Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On October 16, 2008, the Company received a Notice of Default and Reservation of Rights dated October 15, 2008 from Showtime Networks (“Showtime”). Showtime claimed in the notice that the Company has violated a debt covenant under a Senior Secured Note Purchase Agreement dated June 18, 2008, and related Security Agreement dated September 10, 2008, as amended by Amendment No. 1 thereto dated September 10, 2008, and related promissory notes, each as may be amended from time to time (the “Loan Agreements”), requiring the Company to maintain at least $550,000 of unrestricted funds with a nationally recognized financial institution. Approximately $6.3 million is outstanding under the Loan Agreements, which is secured by substantially all of the Company’s assets. The notice states that Showtime may, within three business days, exercise rights and remedies set forth in clauses (a) through (e) of Section 6.1 of the Security Agreement. These rights and remedies include: (a) exercising any and all rights as beneficial and legal owner of the Company’s assets; (b) selling or assigning the Company’s assets in whole or in part; (c) granting a license or franchise to use the Company’s assets in whole or in part; (d) suing, demanding, collecting or receiving in Showtime’s name and money property or receivable on account of or in exchange for the Company’s assets; or (e) exercising all voting, consensual or other powers of ownership pertaining to the Company’s assets as if Showtime were the sole and absolute owner thereof. The notice is attached hereto as Exhibit 2.8
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors;
(b) Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 16, 2008, Ken Hershman tendered his resignation from the Board of Directors. Mr. Hershman is an executive officer of Showtime and was Showtime’s designee on the Company’s Board of Directors.
On October 17, 2008, Edward Hannah resigned from the Board of Directors.
In short, the dude Showtime left on ProElite’s board to represent their interests has resigned, and Showtime is calling in their 6.5 million dollar loan since ProElite’s bank account droped below the agreed amount of $550,000. The most interesting part of all this was where they say the money owed was secured by “substantially all of the Company’s assets” … does this really mean ALL the company’s assets? As in Showtime gets to take everything of value from ProElite (contracts, sub-promotions, etc) and ProElite is left as nothing more than a name and a pile of debt? That would be interesting to say the least.
Thanks to jackal Mad_As_Hell for the heads up on this filing.