Document:

EXHIBIT
      10.2

     

    PROMISSORY
      NOTE

    

    
      	$150,000.00 	
              Houston,
                Texas

            	
              June
                15,
                2007 

            

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, INTERNET AMERICA, INC., a Texas corporation (the
      “Maker”), hereby promises to pay to the order of JOHN N. PALMER (the “Payee”),
      the principal sum of One Hundred Fifty Thousand Dollars ($150,000.00), with
      interest on the unpaid balance thereof from the date hereof until maturity
      at
      the rate or rates hereinafter provided, principal payable at the Maturity Date
      and interest payable monthly by the 15th
      day of
      the preceding month as hereinafter provided in lawful money of the United States
      of America, to Payee at 1671 Lelia Drive, Jackson, MS 39216, or at such other
      place, as from time to time may be designated by the holder of this Promissory
      Note (the “Note”).

    

    As
      herein
      provided the unpaid Principal Amount of this Note, or portions thereof, from
      time to time outstanding, shall bear interest prior to maturity at the
      Applicable Rate, provided that in no event shall the Applicable Rate exceed
      the
      Maximum Rate. Notwithstanding the foregoing, if at any time the Applicable
      Rate
      exceeds the Maximum Rate, the rate of interest payable under this Note shall
      be
      limited to the Maximum Rate, but any subsequent reductions in the Applicable
      Rate shall not reduce the Applicable Rate below the Maximum Rate until the
      total
      amount of interest accrued on this Note equals the total amount of interest
      which would have accrued at the Applicable Rate if the Applicable Rate had
      at
      all times been in effect.

     

    As
      used
      in this Note, the following terms shall have the meanings indicated opposite
      them:

    

    “Applicable
      Rate.” The Applicable Rate shall mean the prime rate of interest plus 3% on
      money of money center banks as published in the Wall Street Journal on the
      date
      of issuance of this Note, fixed for the term of the Note.

    

    “Default
      Rate.” The Default Rate shall be the Maximum Rate.

     

    “Equity
      Raise.” An Equity Raise shall mean any sale by Maker of its equity securities to
      one or more investors in a financing.

    

    “Maturity
      Date.” The Maturity Date shall be the earlier to occur of July 1, 2008 and the
      date on which Maker receives funding in an Equity Raise; provided, however,
      that
      if the amount of the Equity Raise is less than the amount of principal and
      interest outstanding under this Note, then this Note shall be prepaid to the
      extent of the amount of the Equity Raise and the balance of the principal shall
      remain outstanding until maturity on July 1, 2008. 

    

    “Maximum
      Rate.” The maximum interest rate permitted under applicable law, it being
      understood that, if applicable law provides for a ceiling under Chapter 301,
      Subchapter A of the Texas Credit Title (as may be amended from time to
      time), such ceiling shall be the Aweekly”
      ceiling. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Principal
      Amount.” That principal portion of the loan evidenced hereby as is from time to
      time outstanding. 

    

    In
      the
      event of an Equity Raise, Payee shall have the right to accept in lieu of cash
      in payment in full of the principal and unpaid interest due under this Note,
      equity securities of the same type, at the same price and on the same terms
      and
      conditions as are available to the investors in the Equity Raise.
      Maker
      shall provide Payee full information regarding the definitive terms of the
      Equity Raise at least ten calendar days prior to its intended closing. Payee
      shall provide notice to Maker of its election whether or not to participate
      in
      the Equity Raise in full satisfaction of the amounts due hereunder within seven
      calendar days after its receipt of notice from Maker. The closing of the sale
      of
      equity securities to Payee in satisfaction of this Note shall be held at the
      same time as the closing of the Equity Raise. The failure by Payee to elect
      to
      participate in the Equity Raise shall not affect the right to receive payment
      under the Note on the Maturity Date. 

    

    Maker
      shall have the right to prepay this Note, in whole or in part, without premium
      or penalty, and upon the payment of all accrued interest on the amount prepaid
      (and any interest which has accrued at the Default Rate, if applicable, and
      other sums that may be payable hereunder) to the date so fixed.

     

    Interest
      on the Principal Amount will be payable monthly by the 15th
      day of
      the preceding month. Notwithstanding anything to the contrary contained in
      this
      Note, at the option of the holder of this Note and upon notice to the Maker
      at
      any time after the occurrence of a Default, as defined below, from and after
      such notice and during the continuance of such Default, the unpaid principal
      of
      this Note from time to time outstanding and all past due installments of
      interest shall, to the extent permitted by applicable law, bear interest at
      the
      Default Rate, provided that in no event shall such interest rate be more than
      the Maximum Rate. 

     

    A
      “Default” shall have occurred in the event any of the following occurs: (i)
      Payee shall cease to be a Director of Maker for any reason, (ii) a failure
      to
      pay interest or principal when due, (iii) a levy be made under any process
      on,
      or a receiver be appointed for, property of Maker, and such levy or appointment
      shall not be removed or dismissed within thirty (30) days, (iv) (x) Maker shall
      make an assignment for the benefit of creditors or be unable to pay its debts
      generally as they become due; (y) Maker shall petition or apply to any tribunal
      for the appointment of a trustee, receiver, or liquidator of it, or of any
      substantial part of its assets, or shall commence any proceedings relating
      to
      Maker under any bankruptcy, reorganization, compromise, arrangement, insolvency,
      readjustment of debts, conservatorship, moratorium, dissolution, liquidation
      or
      other debtor relief laws of any jurisdiction, whether now or hereafter in
      effect; or (z) any such petition or application shall be filed, or any such
      proceedings shall be commenced, against Maker, and Maker consents thereto or
      the
      same is not dismissed or otherwise discharged within thirty (30) days, or an
      order, judgment or decree shall be entered appointing any such trustee, receiver
      or liquidator, or approving the petition in any such proceedings, or (v) a
      change in control of Maker, which for purposes of this Note shall occur when
      (a)
      any "person" (as such term is used in Section 13(d) of the Securities Exchange
      Act of 1934) becomes a beneficial owner, directly or indirectly, of securities
      of Maker representing 40% or more of the combined voting power of Maker’s then
      outstanding securities; (b) individuals who were members of the Board of
      Directors of Maker immediately prior to a meeting of the stockholders of Maker
      involving a contest for the election of directors do not constitute a majority
      of the Board following such election; (c) the stockholders of Maker approve
      an
      agreement to merge or consolidate, or otherwise reorganize, with or into one
      or
      more entities which are not subsidiaries of Maker, as a result of which less
      than 50% of the outstanding voting securities of the surviving or resulting
      entity are, or are to be, owned by former stockholders of Maker; or (d) the
      stockholders of Maker approve the sale of all or substantially all of Maker’s
      business and/or assets to a person or entity which is not a subsidiary of
      Maker.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    Upon
      the
      occurrence of any Default, Payee shall at its option be entitled to (i)
      accelerate the indebtedness and declare all of the indebtedness immediately
      due
      and payable, and (ii) cumulatively exercise all other rights, options and
      privileges provided by law. 

    All
      interest accruing under this Note shall be calculated on the basis of a 360-day
      year applied to the actual number of days in each month. The Maker shall make
      each payment which it owes hereunder not later than twelve o’clock, noon,
      Houston, Texas, time, on the date such payment becomes due and payable (or
      the
      date any voluntary prepayment is made), in immediately available funds. Any
      payment received by the Payee after such time will be deemed to have been made
      on the next following business day. As used herein, the term “business day”
shall mean a day on which commercial banks are open for business with the public
      in Houston, Texas. 

    

    This
      Note
      is unsecured.

    Payee
      and
      Maker intend in the execution of this Note to contract in strict compliance
      with
      applicable usury law. In furtherance thereof, Payee and Maker stipulate and
      agree that none of the terms and provisions contained in this Note, or in any
      other instrument executed in connection herewith, shall ever be construed to
      create a contract to pay for the use, forbearance or detention of money,
      interest at a rate in excess of the Maximum Rate; neither Maker nor any
      endorsers or other parties now or hereafter becoming liable for payment of
      this
      Note shall ever be obligated or required to pay interest on this Note at a
      rate
      in excess of the Maximum Rate that may be lawfully charged under applicable
      law,
      and the provisions of this paragraph shall control over all other provisions
      of
      this Note and any other instruments now or hereafter executed in connection
      herewith which may be in apparent conflict herewith. Payee, including each
      holder of this Note, expressly disavows any intention to charge or collect
      excessive unearned interest or finance charges in the event the maturity of
      this
      Note is accelerated. If the maturity of this Note shall be accelerated for
      any
      reason or if the Principal Amount is paid prior to the end of the term of this
      Note, and as a result thereof the interest received for the actual period of
      existence of the Loan exceeds the amount of interest that would have accrued
      at
      the Maximum Rate, the Payee or other holder of this Note shall, at its option,
      either refund to Maker the amount of such excess or credit the amount of such
      excess against the Principal Amount and thereby shall render inapplicable any
      and all penalties of any kind provided by applicable law as a result of such
      excess interest. In the event that Payee or any other holder of this Note shall
      contract for, charge or receive any amounts and/or any other thing of value
      which are determined to constitute interest which would increase the effective
      interest rate on this Note to a rate in excess of that permitted to be charged
      by applicable law, all such sums determined to constitute interest in excess
      of
      the amount of interest at the lawful rate shall, upon such determination, at
      the
      option of the Payee or other holder of this Note, be either immediately returned
      to Maker or credited against the Principal Amount, in which event any and all
      penalties of any kind under applicable law as a result of such excess interest
      shall be inapplicable. By execution of this Note, Maker acknowledges that it
      believes the Loan evidenced by this Note to be non-usurious and agrees that
      if,
      at any time, Maker should have reason to believe that the Loan is in fact
      usurious, it will give the Payee or other holder of this Note notice of such
      condition and Maker agrees that the Payee or other holder shall have ninety
      (90)
      days in which to make appropriate refund or other adjustment in order to correct
      such condition if in fact such exists. The term “applicable law” as used in this
      Note shall mean the laws of the state of Texas or the laws of the United States,
      whichever laws allow the greater rate of interest, as such laws now exist or
      may
      be changed or amended or come into effect in the future.

    

    Should
      the indebtedness represented by this Note or any part thereof be collected
      at
      law or in equity or through any bankruptcy, receivership, probate or other
      court
      proceedings or if this Note is placed in the hands of attorneys for collection
      after default, Maker and all endorsers of this Note jointly and severally agree
      to pay to the Payee or other holder of this Note in addition to the principal
      and interest due and payable hereon reasonable attorneys’ and collection
      fees.

     

    Maker
      and
      all endorsers and all other persons obligated or to become obligated on this
      Note severally waive presentment for payment, demand, notice of demand and
      of
      dishonor and nonpayment of this Note, notice of intention to accelerate the
      maturity of this Note, protest and notice of protest, diligence in collecting,
      and the bringing of suit against any other party, and agree to all renewals,
      extensions, modifications, partial payments, with or without notice, before
      or
      after maturity.

    

    MAKER
      HEREBY IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING
      OR
      COUNTERCLAIM BROUGHT UNDER THIS NOTE.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    THIS
      NOTE
      AND THE PARTIES’ RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER SHALL IN ALL
      RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      LAWS
      OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO TEXAS’ PRINCIPLES OF CONFLICTS
      OF LAW) AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
      STATE. MAKER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
      ANY
      TEXAS OR FEDERAL COURT SITTING IN HARRIS COUNTY, TEXAS OVER ANY SUIT, ACTION
      OR
      PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, AND MAKER HEREBY AGREES
      AND
      CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
      UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR
      PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN HARRIS COUNTY, TEXAS MAY
      BE
      MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
      MAKER AT THE PRINCIPAL EXECUTIVE OFFICES OF MAKER, AND SERVICE SO MADE SHALL
      BE
      COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

    

    Signed
      as
      of the 15th day of June, 2007.

     

    
      	 	 	 
	 	MAKER:
	Address for Notice: 	 
	 	 
	10930 W. Sam Houston Pkwy., N. 	INTERNET AMERICA, INC., a Texas
              corporation 
	Suite 200 	 
	Houston, Texas 77064 	 
	 	 
 	 
 
	 	By:  	/s/
              Jennifer S. LeBlanc
	 	
              
Jennifer
              S. LeBlanc, Chief Financial
              Officer

    

     

    
      
         

      

      
        4Unassociated Document

    Exhibit
      4. 1

     

    THE
      WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
      DELIVERABLE UPON EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”) AND MAY
      NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
      REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION
      OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO
      THE
      EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION
      OR
      (B) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE
      COMMISSION RULE 144.

     

    Date: June
      15,
      2007

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    OF

     

    PRO
      ELITE, INC.

     

    (Subject
      to Adjustment)

     

    

     

    THIS
      CERTIFIES THAT, for value received, Mark Burnett (“Holder”),
      is
      entitled, subject to the terms and conditions of this Warrant, to purchase
      up to
      Seventeen Million (17,000,000) shares of common stock, par value $0.0001 per
      share (the “Warrant Shares”), of Pro Elite, Inc., a New Jersey corporation (the
“Company”),
      at an
      exercise price per share equal to $3.00 (the “Purchase Price”), subject to the
      terms and conditions herein. This Warrant is issued pursuant to the binding
      agreement related to a reality show dated as of June 15, 2007 (the “Agreement”)
      between JMBP, Inc. (“MBP”) and the Company. (Capitalized terms not otherwise
      defined herein shall have the meanings set forth in the Agreement.) This Warrant
      is divided into Nine Tranches, each with the number of Warrant Shares as
      described on Schedule A hereto. Both the number of Warrant Shares and the
      Purchase Price are subject to adjustment and change as provided herein. The
      Warrant and any Warrant Shares issued upon exercise of this Warrant are subject
      to forfeiture if a License Agreement is not entered into within the one-year
      period following the Effective Date.

     

    1. CERTAIN
      DEFINITIONS.
      As used
      in this Warrant, the following terms shall have the following respective
      meanings:

     

    “1933
      Act”
shall
      mean the Securities Act of 1933, as amended.

     

    “Change
      of Control”
shall
      mean change in ownership or control of the Company in connection with an
      acquisition of the Company effected through any of the following transactions:
      (i) a merger, consolidation or other reorganization or a sale (or series of
      related sales) of securities by securityholders of the Company as a result
      of
      which securities representing more than 50% of the total combined voting power
      of the Company’s outstanding securities become beneficially owned, directly or
      indirectly, by a person or related group of persons (other than a person or
      related group of persons that, immediately prior to such transaction, directly
      or indirectly controlled, was controlled by, or was under common control with,
      the Company); or (ii) a sale, transfer or other disposition of all or
      substantially all of the Company’s assets to any person or related group of
      persons (other than a person or related group of persons that, immediately
      prior
      to such transaction, directly or indirectly controlled, was controlled by,
      or
      was under common control with, the Company).

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    “Common
      Stock”
shall
      mean the Common Stock of the Company and any other securities at any time
      receivable or issuable upon exercise of this Warrant.

     

    “Common
      Stock Deemed Outstanding”
shall
      mean the number of shares of Common Stock actually outstanding as of a given
      date, plus the number of shares of Common Stock which could be obtained through
      the exercise or conversion of all other outstanding rights, options and
      convertible securities on the day immediately preceding the given
      date.

     

    “Derivative
      Pay-Per-View Event”
means
      a
      pay-per-event in which at least one of the top two fighters appearing in the
      main event of the pay-per-view event is or was a contestant on the
      Series.

     

    "Convertible
      Securities"
      shall
      mean any securities or other obligations issued or issuable by the Company
      or
      any affiliate thereof that are exercisable or exchangeable for, or convertible
      into, Common Stock. 

     

    “Effective
      Date”
shall
      mean June 15, 2007.

     

    “Excluded
      Securities”
shall
      mean securities issued as compensation for bona fide services or in connection
      with acquisitions.

     

    “Expiration
      Date”
for
      a
      particular Tranche of Warrants shall mean the latest to occur of (i) the date
      which is six years from the Effective Date, (ii) the date which is one year
      after the Vesting Date of any such Tranche, and (iii) the date which is one
      year
      after the expiration (assuming exercise of any extension options) of the term
      of
      the License Agreement.

     

    "Options"
      shall
      mean options, warrants or similar rights to purchase Common Stock or Convertible
      Securities. 

     

    “Permitted
      Transferee”
shall
      have the meaning set forth in the Subscription Agreement entered into as of
      the
      date hereof between the Company and the Holder.

     

    “Season”
shall
      mean a season of the Series (consisting of at least 26 episodes aired prime
      time) broadcast on a Network or Cable Broadcaster.

     

    “Vesting
      Date”
shall
      mean, subject to Section 2.5, with respect to any Tranche, the Vesting Date
      set
      forth on Schedule A with respect to that Tranche.

     

    “SEC”
shall
      mean the Securities and Exchange Commission.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    2. EXERCISE
      OF WARRANT

     

    2.1 Payment.
      Subject
      to compliance with the terms and conditions of this Warrant and applicable
      securities laws, this Warrant may be exercised, in whole or in part at any
      time
      or from time to time, during the period beginning on and including the Vesting
      Date for an applicable Tranche and ending on and including the Expiration Date
      for such Tranche by the delivery (including, without limitation, delivery by
      facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1
      (the
“Notice
      of Exercise”),
      duly
      executed by the Holder, at the address of the Company as set forth herein,
      and
      as soon as practicable after such date,

     

    (a) surrendering
      this Warrant at the address of the Company, and 

     

    (b) providing
      payment, by check or by wire transfer, of an amount equal to the product
      obtained by multiplying the number of shares of Common Stock being purchased
      upon such exercise by the then effective Purchase Price (the “Exercise
      Amount”).
      

     

    2.2 Net
      Exercise. 

     

    2.2.1 In
      lieu
      of the payment of the Exercise Price in cash, the Holder may elect to exchange
      all or some of the Warrant for the number of Warrant Shares computed using
      the
      following formula:

     

    X
      =
Y
      (A-B)

                A

     

    Where
      X =
      the number of Warrant Shares to be issued to the Holder.

     

    Y
      = the
      number of Warrant Shares being exercised (as adjusted to the date of such
      calculation).

     

    A
      = the
      Market Price on the date of exercise 

     

    B
      = the
      Exercise Price of the Warrant on the date of exercise 

     

    2.2.2 The
      “Market
      Price”
on
      any
      trading day shall be deemed to be the last reported sale price of a Warrant
      Share on such day, or, in the case no such reported sales take place on such
      day, the last reported sale price on the preceding trading day on which there
      was a last reported sales price, as officially reported by the principal
      securities exchange in which the Warrant Shares are listed or admitted to
      trading or by the Nasdaq Stock Market, or if the Warrant Shares are not listed
      or admitted to trading on any national securities exchange or the Nasdaq Stock
      Market, the last sale price, or if there is no last sale price, the closing
      bid
      price, as furnished by the National Association of Securities Dealers, Inc.
      (such as through the OTC Bulletin Board) or a similar organization 

     

    2.2.3 If
      the
      Market Price cannot be determined pursuant to Section 2.2.2, the parties shall
      endeavor to agree upon a Market Price. If the parties cannot agree on the Market
      Price within 10 days of the date of exercise, the parties shall engage a third
      party experienced in valuing stock of private companies (the “Valuation
      Consultant”)
      to
      determine the Market Value, and the Company shall use its reasonable best
      efforts to cause the Valuation Consultant to complete the valuation within
      15
      days. If the result of such valuation is not acceptable to Holder, Holder in
      his
      sole discretion may rescind his exercise of the Warrant by giving written notice
      to the Company.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    2.3 Common
      Stock Certificates; Fractional Shares.
      As soon
      as practicable on or after the date of an exercise of this Warrant, the Company
      shall deliver to the person or persons entitled to receive the same a
      certificate or certificates for the number of whole shares of Common Stock
      issuable upon such exercise. No fractional shares or scrip representing
      fractional shares of Common Stock shall be issued upon an exercise of this
      Warrant.

     

    2.4 Partial
      Exercise: Effective Date of Exercise.
      In case
      of any partial exercise of this Warrant, the Holder and the Company shall cancel
      this Warrant upon surrender hereof and shall execute and deliver a new Warrant
      of like tenor and date for the balance of the shares of Common Stock purchasable
      hereunder. This Warrant shall be deemed to have been exercised immediately
      prior
      to the close of business on the date of its surrender for exercise as provided
      above. The Company acknowledges that the person entitled to receive the shares
      of Common Stock issuable upon exercise of this Warrant shall be treated for
      all
      purposes as the holder of record of such shares as of the close of business
      on
      the date the Holder is deemed to have exercised this Warrant.

     

    2.5 Change
      of Control.
      Notwithstanding anything herein to the contrary, immediately upon a Change
      of
      Control, all of the Warrants in Tranches One, Two and Three shall become
      immediately vested and exercisable. 

     

    3. TAXES.
      The
      Company shall pay all taxes and other governmental charges that may be imposed
      in respect of the delivery of shares upon exercise of this Warrant; provided,
      however,
      that
      the Company shall not be required to pay any tax or other charge imposed in
      connection with any transfer involved in the delivery of any certificate for
      shares of Common Stock in any name other than that of the Holder of this
      Warrant, and in such case the Company shall not be required to deliver any
      stock
      certificate until such tax or other charge has been paid, or it has been
      established to the Company’s reasonable satisfaction that no tax or other charge
      is due.

     

    4. ADJUSTMENT
      OF PURCHASE PRICE AND NUMBER OF COMMON STOCK.
      The
      number of shares of Common Stock deliverable upon exercise of this Warrant,
      or
      any shares of stock or other securities or property receivable upon exercise
      of
      this Warrant (“Warrant
      Substitutes”)
      and
      the Purchase Price are subject to adjustment upon occurrence of the following
      events:

     

    4.1 Adjustment
      for Stock Splits, Stock Subdivisions or Combinations of Shares of Common
      Stock.
      The
      Purchase Price of this Warrant shall be proportionally decreased and the number
      of shares of Common Stock or Warrant Substitutes deliverable upon exercise
      of
      this Warrant shall be proportionally increased to reflect any stock split or
      subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
      shall be proportionally increased and the number of shares of Common Stock
      or
      Warrant Substitutes deliverable upon exercise of this Warrant shall be
      proportionally decreased to reflect any combination of the Company’s Common
      Stock.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    4.2 Adjustment
      for Dividends or Distributions of Stock or Other Securities or
      Property.
      In case
      the Company shall make or issue, or shall fix a record date for the
      determination of eligible holders entitled to receive, a dividend or other
      distribution with respect to the Common Stock or Warrant Substitutes payable
      in
      (a) securities of the Company or (b) assets (excluding cash dividends paid
      or
      payable solely out of retained earnings), then, in each such case, the
      Registered Holder of this Warrant on exercise hereof at any time after the
      consummation, effective date or record date of such dividend or other
      distribution, shall receive, in addition to the shares of Common Stock (or
      such
      other stock or securities) issuable on such exercise prior to such date, and
      without the payment of additional consideration therefore, the securities or
      such other assets of the Company to which such Holder would have been entitled
      upon such date if such Holder had exercised this Warrant immediately prior
      to
      such making, issuance or record date.

     

    4.3 Reclassification,
      Conversion.
      If the
      Company, by reclassification or conversion of securities or otherwise, shall
      change any of the securities as to which purchase rights under this Warrant
      exist into the same or a different number of securities of any other class
      or
      classes, this Warrant shall thereafter represent the right to acquire such
      number and kind of securities as would have been issuable if this Warrant had
      been exercised immediately prior to such reclassification or conversion or
      other
      change and the Purchase Price therefore shall be appropriately adjusted, all
      subject to further adjustment as provided in this Section 4. 

     

    4.4 Adjustment
      for Capital Reorganization. Merger or Consolidation.
      In case
      of any capital reorganization of the capital stock of the Company (other than
      a
      combination, reclassification, exchange or subdivision of shares otherwise
      provided for herein), or any merger or consolidation of the Company with or
      into
      another corporation, or the sale of all or substantially all the assets of
      the
      Company then, and in each such case, as a part of such reorganization, merger,
      consolidation, sale or transfer, lawful provision shall be made so that the
      Holder of this Warrant shall thereafter be entitled to receive upon exercise
      of
      this Warrant, during the period specified herein and upon payment of the
      Purchase Price then in effect, the number of shares of stock or other securities
      or property of the successor corporation resulting from such reorganization,
      merger, consolidation, sale or transfer that a holder of the shares deliverable
      upon exercise of this Warrant would have been entitled to receive in such
      reorganization, consolidation, merger, sale or transfer if this Warrant had
      been
      exercised immediately before such reorganization, merger, consolidation, sale
      or
      transfer, all subject to further adjustment as provided in this Section 4.
      The
      foregoing provisions of this Section 4.4 shall similarly apply to successive
      reorganizations, consolidations, mergers, sales and transfers and to the stock
      or securities of any other corporation that are at the time receivable upon
      the
      exercise of this Warrant. In all events, appropriate adjustment (as determined
      in good faith by the Company’s Board of Directors) shall be made in the
      application of the provisions of this Warrant with respect to the rights and
      interests of the Holder after the transaction, to the end that the provisions
      of
      this Warrant shall be applicable after that event, as near as reasonably may
      be,
      in relation to any shares or other property deliverable after that event upon
      exercise of this Warrant.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    4.5 Adjustment
      upon Issuance of Common Stock.
      If the
      Company issues or sells, or in accordance with this Section 4 is deemed to
      have issued or sold, any shares of Common Stock (including the issuance or
      sale
      of shares of Common Stock owned or held by or for the account of the Company,
      but excluding shares of Common Stock comprising Excluded Securities for a
      consideration per share (the “New
      Issuance Price”)
      less
      than a price equal to the Exercise Price in effect (the “Applicable
      Price”)
      immediately prior to such issue or sale or deemed issuance or sale (the
      foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the product of (x) the Applicable
      Price and (y) the quotient of (1) the sum of (I) the product of
      the Applicable Price and the number of shares of Common Stock Deemed Outstanding
      immediately prior to such Dilutive Issuance and (II) the consideration, if
      any, received by the Company upon such Dilutive Issuance, divided by
      (2) the product of (I) the Applicable Price multiplied by
      (II) the number of shares of Common Stock Deemed Outstanding immediately
      after such Dilutive Issuance. Upon each such adjustment of the Exercise Price
      hereunder, the number of Warrant Shares shall be adjusted to the number of
      shares of Common Stock determined by multiplying the Exercise Price in effect
      immediately prior to such adjustment by the number of Warrant Shares acquirable
      upon exercise of this Warrant immediately prior to such adjustment and dividing
      the product thereof by the Exercise Price resulting from such adjustment. For
      purposes of determining the adjusted Exercise Price under this Section 4.5,
      the following shall be applicable:

     

    4.5.1 Issuance
      of Options.
      If the
      Company in any manner grants any Options (not including Excluded Securities)
      and
      the lowest price per share for which one share of Common Stock is issuable
      upon
      the exercise of any such Option or upon conversion, exercise or exchange of
      any
      Convertible Securities issuable upon exercise of any such Option is less than
      the Applicable Price, then such share of Common Stock shall be deemed to be
      outstanding and to have been issued and sold by the Company at the time of
      the
      granting or sale of such Option for such price per share. For purposes of this
      Section 4.5.1, the “lowest price per share for which one share of Common
      Stock is issuable upon exercise of such Options or upon conversion, exercise
      or
      exchange of such Convertible Securities” shall be equal to the sum of the lowest
      amounts of consideration (if any) received or receivable by the Company with
      respect to any one share of Common Stock upon the granting or sale of the
      Option, upon exercise of the Option and upon conversion, exercise or exchange
      of
      any Convertible Security issuable upon exercise of such Option. In the event
      of
      the reduction of the exercise price of any such Option (or the conversion,
      exercise or exchange price of any related Convertible Security), the adjustments
      set forth in this Section 4.5 shall be recomputed, taking into account such
      lower price. No further adjustment of the Exercise Price or number of Warrant
      Shares shall be made upon the actual issuance of such Common Stock or of such
      Convertible Securities upon the exercise of such Options or upon the actual
      issuance of such Common Stock upon conversion, exercise or exchange of such
      Convertible Securities. 

     

    4.5.2 Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities (not including
      Excluded Securities) and the lowest price per share for which one share of
      Common Stock is issuable upon the conversion, exercise or exchange thereof
      is
      less than the Applicable Price, then such share of Common Stock shall be deemed
      to be outstanding and to have been issued and sold by the Company at the time
      of
      the issuance or sale of such Convertible Securities for such price per share.
      For the purposes of this Section 4.5.2, the “lowest price per share for
      which one share of Common Stock is issuable upon the conversion, exercise or
      exchange” shall be equal to the sum of the lowest amounts of consideration (if
      any) received or receivable by the Company with respect to one share of Common
      Stock upon the issuance or sale of the Convertible Security and upon conversion,
      exercise or exchange of such Convertible Security. In the event of the reduction
      of the conversion, exercise or exchange price of any Convertible Security,
      the
      adjustments set forth in this Section 4.5 shall be recomputed, taking into
      account such lower price. No further adjustment of the Exercise Price or number
      of Warrant Shares shall be made upon the actual issuance of such Common Stock
      upon conversion, exercise or exchange of such Convertible Securities, and if
      any
      such issue or sale of such Convertible Securities is made upon exercise of
      any
      Options for which adjustment of this Warrant has been or is to be made pursuant
      to other provisions of this Section 4.5, no further adjustment of the Exercise
      Price or number of Warrant Shares shall be made by reason of such issue or
      sale.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    4.5.3 Applicability
      of Section 4.5.
      The
      provisions of Section 4.5 shall extend to the earlier to occur of twelve months
      from the date hereof and the date, if any, when an aggregate of 500,000 shares
      of the Company’s Common Stock trade (based on the sale price thereof) on the
      applicable trading market above $3 (as the number of shares and price may be
      adjusted for any events listed in Sections 4.1, 4.2, 4.3 and 4.4).

     

    5. LOSS
      OR MUTILATION.
      Upon
      receipt of evidence reasonably satisfactory the Company of the ownership of
      and
      the loss, theft, destruction or mutilation of this Warrant, and of indemnity
      reasonably satisfactory to him, and (in the case of mutilation) upon surrender
      and cancellation of this Warrant, the Company will cause to be executed and
      delivered in lieu thereof a new Warrant of like tenor as the lost, stolen,
      destroyed or mutilated Warrant.

     

    6. REPRESENTATION
      AND COVENANT.
      The
      Company hereby covenants that all shares issuable upon exercise of this Warrant,
      when delivered upon such exercise, shall be validly issued, fully paid and
      nonassessable and free and clear of all liens, security interests, charges
      and
      other encumbrances or restrictions on sale and free and clear of all preemptive
      rights, except encumbrances or restrictions arising under federal or state
      securities laws. Further, the Company hereby covenants to reserve such number
      of
      authorized but unissued shares of Common Stock as needed for issuance upon
      exercise of this Warrant.

     

    7. TRANSFER.
      This
      Warrant may not be transferred by the Holder without the prior written consent
      of the Company, provided, however, that Holder may transfer this Warrant, or
      any
      portion of this Warrant, to any Permitted Transferee. In the event of a transfer
      permitted pursuant to this Section 7 or to which the Company has previously
      consented in writing, this Warrant and all rights hereunder may be transferred
      by the Holder upon delivery of the form of Assignment attached hereto as
Exhibit
      2
      (the
“Assignment”),
      duly
      executed by the Holder, surrender of this Warrant properly endorsed at the
      address of the Company and payment of any necessary transfer tax or other
      governmental charge imposed upon such transfer. Upon any partial transfer,
      the
      Holder and Company will cause to be issued and delivered to the Holder a new
      Warrant or Warrants with respect to the portion of this Warrant not so
      transferred. Each taker and holder of this Warrant, by taking or holding the
      same, consents and agrees that when this Warrant shall have been so endorsed,
      the person in possession of this Warrant may be treated by the Company, and
      all
      other persons dealing with this Warrant, as the absolute owner hereof for any
      purpose and as the person entitled to exercise the rights represented hereby,
      any notice to the contrary notwithstanding; provided, however that until a
      transfer of this Warrant is duly registered on the books of the Company, the
      Company may treat the Holder hereof as the owner for all
      purposes.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    8. RESTRICTIONS
      ON TRANSFER.
      The
      Holder, by acceptance hereof, agrees that, absent an effective registration
      statement filed with the SEC under the 1933 Act, covering the disposition or
      sale of this Warrant or the Common Stock issued or issuable upon exercise hereof
      or the Common Stock issuable upon conversion thereof, as the case may be, and
      registration or qualification under applicable state securities laws, such
      Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants
      or Common Stock, as the case may be, unless either (i) the Company has received
      an opinion of counsel, in form and substance reasonably satisfactory to the
      Company, to the effect that such registration is not required in connection
      with
      such disposition or (ii) the sale of such securities is made pursuant to SEC
      Rule 144.

     

    9. COMPLIANCE
      WITH SECURITIES LAWS.
      By
      acceptance of this Warrant, the Holder hereby represents, warrants and covenants
      that he/she/it is an “accredited investor” as that term is defined under Rule
      501 of Regulation D, that any shares of stock purchased upon exercise of this
      Warrant or acquired upon conversion thereof shall be acquired for investment
      only and not with a view to, or for sale in connection with, any distribution
      thereof, that the Holder has had such opportunity as such Holder has deemed
      adequate to obtain from representatives of the Company such information as
      is
      necessary to permit the Holder to evaluate the merits and risks of its
      investment in the Company; that the Holder is able to bear the economic risk
      of
      holding such shares as may be acquired pursuant to the exercise of this Warrant
      for an indefinite period; that the Holder understands that the shares of stock
      acquired pursuant to the exercise of this Warrant or acquired upon conversion
      thereof will not be registered under the 1933 Act (unless otherwise required
      pursuant to exercise by the Holder of the registration rights, if any,
      previously granted to the Holder) and will be “restricted securities” within the
      meaning of Rule 144 under the 1933 Act and that the exemption from registration
      under Rule 144 will not be available for at least one year from the date of
      exercise of this Warrant, and even then will not be available unless a public
      market then exists for the stock, adequate information concerning the Company
      is
      then available to the public, and other terms and conditions of Rule 144 are
      complied with; and that all stock certificates representing shares of stock
      issued to the Holder upon exercise of this Warrant or upon conversion of such
      shares may have affixed thereto a legend substantially in the following
      form:

    
       

      THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
        THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
        AND
        MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
        APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
        THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
        FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
        ISSUER
        OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
        SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
        IS
        IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
        LAWS.

    

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    10. NO
      RIGHTS OR LIABILITIES AS STOCKHOLDERS.
      This
      Warrant shall not entitle the Holder to any voting rights or other rights as
      a
      stockholder of the Company. In the absence of affirmative action by such Holder
      to purchase Common Stock by exercise of this Warrant, no provisions of this
      Warrant, and no enumeration herein of the rights or privileges of the Holder
      hereof shall cause such Holder hereof to be a stockholder of the Company for
      any
      purpose.

     

    11. NOTICES.
      All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be mailed by registered or certified mail, postage prepaid,
      return receipt requested, or by telecopier, or by email or otherwise delivered
      by hand or by messenger, addressed or telecopied to the person to whom such
      notice or communication is being given at its address set forth after its
      signature hereto. In order to be effective, a copy of any notice or
      communication sent by telecopier or email must be sent by registered or
      certified mail, postage prepaid, return receipt requested, or delivered
      personally to the person to whom such notice or communication is being at its
      address set forth after its signature hereto. If notice is provided by mail,
      notice shall be deemed to be given five (5) business days after proper deposit
      with the United States mail or nationally recognized overnight courier, or
      immediately upon personally delivery thereof, to person to whom such notice
      or
      communication is being at such address. If notice is provided by telecopier,
      notice shall be deemed to be given upon confirmation by the telecopier machine
      of the receipt of such notice at the telecopier number provided below. If notice
      is provided by email, notice shall be deemed to be given upon confirmation
      by
      the sender’s email program of the receipt of such notice at the email address
      provided after the signature of the person to whom such notice or communication
      is being. The addresses set forth after the signature hereto may be changed
      by
      written notice complying with the terms of this Section 11. 

     

    12. HEADINGS.
      The
      headings in this Warrant are for purposes of convenience in reference only,
      and
      shall not be deemed to constitute a part hereof.

     

    13. LAW
      GOVERNING.
      This
      Warrant shall be construed and enforced in accordance with, and governed by
      the
      internal laws of the State of California, without giving effect to the
      principles of conflicts of law.

     

    14. NOTICES
      OF RECORD DATE.
      In
      case:

     

    14.1 the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time receivable upon the exercise of this Warrant), for
      the
      purpose of entitling them to receive any dividend or other distribution, or
      any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities or to receive any other right; or

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    14.2 of
      any
      consolidation or merger of the Company with or into another corporation, any
      capital reorganization of the Company, any reclassification of the capital
      stock
      of the Company, or any conveyance of all or substantially all of the assets
      of
      the Company to another corporation in which holders of the Company’s stock are
      to receive stock, securities or property of another corporation; or

     

    14.3 of
      any
      voluntary or involuntary dissolution, liquidation or winding-up of the Company;
      or

     

    14.4 of
      any
      redemption of any outstanding capital stock of the Company; then, and in each
      such case, the Company will mail or cause to be mailed to the Holder of this
      Warrant a notice specifying, as the case may be, (i) the date on which a record
      is to be taken for the purpose of such dividend, distribution or right, or
      (ii)
      the date on which such reorganization, reclassification, consolidation, merger,
      conveyance, dissolution, liquidation, winding-up, redemption or conversion
      is to
      take place, and the time, if any is to be fixed, as of which the holders of
      record of Common Stock (or such stock or securities as at the time are
      receivable upon the exercise of this Warrant) shall be entitled to exchange
      their shares of Common Stock (or such other stock or securities) for securities
      or other property deliverable upon such reorganization, reclassification,
      consolidation, merger, conveyance, dissolution, liquidation or winding-up.
      Such
      notice shall be delivered at least thirty (30) days prior to the date therein
      specified.

     

    15. SEVERABILITY.
      If any
      term, provision, covenant or restriction of this Warrant is held by a court
      of
      competent jurisdiction to be invalid, void or unenforceable, the remainder
      of
      the terms, provisions, covenants and restrictions of this Warrant shall remain
      in full force and effect and shall in no way be affected, impaired or
      invalidated.

     

    16. COUNTERPARTS.
      For the
      convenience of the parties, any number of counterparts of this Warrant may
      be
      executed by the parties hereto and each such executed counterpart shall be,
      and
      shall be deemed to be, an original instrument.

     

    17. SATURDAYS,
      SUNDAYS AND HOLIDAYS.
      If any
      Expiration Date falls on a Saturday, Sunday or legal holiday, such Expiration
      Date shall automatically be extended until 5:00 p.m. on the next business
      day.

     

    [SIGNATURE
      PAGE TO FOLLOW]

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
      authorized officer.

    

     

    
      	 	
              PRO
                ELITE, INC.

               

               

              By:__________________________________

              Name: 

              Title: 

               

            
	 	
              Address
                for Notices:

              12100
                Wilshire Boulevard, Suite 800

              Los
                Angeles, CA 90025

              Fax:

              Email:

            

    

    

    

     

    SIGNATURE
      PAGE TO WARRANT

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Exhibit
      4. 1

     

    SCHEDULE
      A TO WARRANT

     

    
      	
              TRANCHE

            	
              NUMBER
                OF WARRANT SHARES

            	
              VESTING
                DATE*

               

            
	
              One

            	
              2,000,000
                shares

            	
              Effective
                Date

               

            
	
              Two

            	
              2,000,000
                shares

            	
              500,000
                shares to be vested on each of the first, second, third and fourth
                anniversary of the Effective Date.

               

            
	
              Three

            	
              2,000,000
                shares

            	
              The
                date of execution of a License Agreement.

               

            
	
              Four

            	
              1,000,000
                shares

            	
              The
                date that the first episode of the Series is broadcast on a Network
                or
                Cable Broadcaster.

               

            
	
              Five

            	
              1,000,000
                shares

            	
              The
                last day of the first Season.

               

            
	
              Six

            	
              2,000,000
                shares

            	
              The
                last day of the second Season.

               

            
	
              Seven

            	
              4,000,000
                shares

            	
              1,333,333
                shares to be vested on the last day of each of third, fourth and
                fifth
                Seasons, respectively.

               

            
	
              Eight

            	
              2,000,000
                shares

            	
              1,000,000
                shares to be vested on the date of broadcast of each of the first
                two
                Derivative Pay-Per-View Events.

               

            
	
              Nine

            	
              1,000,000
                shares

            	
              500,000
                shares to be vested on the date of broadcast of each of the next
                two
                Derivative Pay-Per-View Events.

               

            

    

     

    *Vesting
      Date of each Tranche subject to acceleration per the definition of “Vesting
      Date.”

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    EXHIBIT
      1

     

    NOTICE
      OF EXERCISE

     

    (To
      be
      executed upon exercise of Warrant)

     

    
      	
              _________________

            	
              WARRANT
                NO. ___

            

    

    

     

    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant Certificate for, and to purchase thereunder,
      securities of Pro Elite, Inc., as provided for therein, and (check the
      applicable box):

     

    
      	 	
               ̈

            	
              Tenders
                herewith payment of the exercise price in full in the form of cash
                or a
                certified or official bank check in same-day funds in the amount
                of
                $____________ for _________ such
                securities.

            

    

     

    Please
      issue a certificate or certificates for such securities in the name of, and
      pay
      any cash for any fractional share to (please print name, address and social
      security number):

     

    
      	
              Name:

            	 	 
	 	 	 
	
              Address:

            	 	 
	 	 	 
	
              Signature:

            	 	 

    

    

    Note:
      The
      above signature should correspond exactly with the name on the first page of
      this Warrant Certificate or with the name of the assignee appearing in the
      assignment form below.

     

    If
      said
      number of shares shall not be all the shares purchasable under the within
      Warrant Certificate, a new Warrant Certificate is to be issued in the name
      of
      said undersigned for the balance remaining of the shares purchasable thereunder
      rounded up to the next higher whole number of shares.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    Exhibit
      4. 1

    EXHIBIT
      2

     

    ASSIGNMENT

     

    
      	
              (To
                be executed only upon assignment of Warrant
                Certificate)

            	
              WARRANT
                NO.___

            

    

     

    For
      value
      received, hereby sells, assigns and transfers unto ________________________
      the
      within Warrant Certificate, together with all right, title and interest therein,
      and does hereby irrevocably constitute and appoint
      ______________________________ attorney, to transfer said Warrant Certificate
      on
      the books of the within-named Company with respect to the number of Warrants
      set
      forth below, with full power of substitution in the premises:

     

    
      	
              Name(s)
                of Assignee(s)

            	 	
              Address

            	 	
              #
                of Warrants

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    And
      if
      said number of Warrants shall not be all the Warrants represented by the Warrant
      Certificate, a new Warrant Certificate is to be issued in the name of said
      undersigned for the balance remaining of the Warrants registered by said Warrant
      Certificate.

     

    Dated:___________________,
      200_

     

    Signature:_____________________

     

    Notice:
      The signature to the foregoing Assignment must correspond to the name as written
      upon the face of this security in every particular, without alteration or any
      change whatsoever.

     

    
      
         

      

      
        14

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