Document:

fncx_ex1012.htm

EXHIBIT 10.12

 

Gateway Industries, Inc.

590 Madison Avenue, 32nd Floor

New York, NY  10022

SUBSCRIPTION AGREEMENT

 

Ladies and Gentlemen:

Gateway Industries, Inc., a Delaware corporation (the “Company”), is conducting a private offering (the “Offering”) of up to 120 million shares of common stock, $0.001 par value per share, of the Company (the “Shares”) at a purchase price of $0.03 per Share to a limited number of investors, including Robert F.X. Sillerman (“Mr. Sillerman”), who are “accredited investors” within the meaning of Rule 501(a), as promulgated under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 506 of Regulation D under the Securities Act.  The minimum investment is $3,000.  The Company is seeking to raise up to $3,600,000 in the Offering. To the extent the accredited investors to whom the Offering is being made purchase less than all of the Shares, Mr. Sillerman has agreed to purchase all of such unsold Shares at the same purchase price. As a condition to the Offering, the Company will increase its authorized shares of common stock to 300,000,000 shares and will complete a one for ten reverse split of the outstanding shares of common stock of the Company held by the current stockholders of the Company (the “Recapitalization”). Upon completion of the Recapitalization and this Offering (together, the “Transaction”), the investors, including Mr. Sillerman, will own approximately 99% of the Company and control it.

Upon completion of the Transaction, Mr. Sillerman, who has extensive experience in all facets of the entertainment industry, intends to develop an entertainment and consumer enterprise which he has been incubating since June 2010.  As part of the Transaction, Mr. Sillerman will contribute his intellectual property to the Company and the Company will assume an obligation to reimburse him for the costs he has incurred in furtherance thereof.

Mr. Sillerman was most recently Chairman and Chief Executive Officer of CKX, Inc. (NASDAQ: CKXE), a company he founded, which owns the rights to the name, image and likeness of Elvis Presley and Muhammad Ali, the operations of Graceland, and proprietary rights to the IDOLS and So You Think You Can Dance television brands, including the American Idol series in the United States and local adaptations of the IDOLS and So You Think You Can Dance television show formats.  Before CKX, Mr. Sillerman was the founder, principal shareholder and Executive Chairman of SFX Entertainment, the world’s largest producer, promoter and presenter of diversified live entertainment, which was acquired by Clear Channel Communications in August 2000.  In 1992, Mr. Sillerman founded SFX Broadcasting, an owner and operator of over 80 radio stations, of which he was the principal shareholder and Executive Chairman. The Company intends to harness Mr. Sillerman’s experience in the entertainment industry along with internet and wireless technology to create an entertainment and consumer enterprise.

The Company intends to use the proceeds from the Offering to fund its immediate working capital requirements, including executive salaries, and to develop the new business, which will capitalize on Mr. Sillerman’s vision of the convergence of digital media and entertainment.  The Company has no current operations and is inactive.  Upon completion of the Transaction, it is anticipated that the Company will change its name to Function X Inc. and that its shares will continue to be quoted on the Pink Sheets.  The Shares to be issued in the Offering will be restricted securities under the Securities Act and cannot be resold unless pursuant to registration or an exemption from registration under the Securities Act.  The Offering of the 120 million Shares will not be consummated unless and until all of the Shares have been subscribed for and the investors, including Mr. Sillerman, control approximately 98% of the outstanding shares of common stock of the Company after the Offering.  As a result, this subscription agreement and the Purchase Price (as defined in Section 3 below), whether in cash or notes, will be deposited in an escrow account at Kramer Levin Naftalis & Frankel LLP, to be released upon the satisfaction of the conditions of the Recapitalization.

  

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1.           Subscription. Subject to the terms and conditions of this subscription agreement (“Subscription Agreement”), the undersigned (individually or collectively and whether a natural person or otherwise, as the case may be, referred to as “Purchaser”) hereby agrees to be legally bound to purchase the number of Shares set forth on the signature page hereof. Purchaser hereby irrevocably tenders this Subscription Agreement for the purchase of such Shares.  Purchaser further sets forth statements herein upon which the Company may rely to determine the suitability of the Purchaser as a purchaser of such Shares.

The Purchaser understands and agrees that by the execution hereof, the Purchaser agrees to expressly make the representations and warranties set forth in Section 5 below.

2.           Conditions to Subscription.  The Purchaser understands and agrees that this subscription is made subject to the following terms and conditions:

(a)           This subscription shall be deemed to be accepted by the Company only when it is signed by the Company;

(b)           You may not revoke, cancel or terminate this subscription unless the Company cancels or terminates the Offering;

(c)           The Company has the right to accept or reject this subscription in whole or in part; and

(d)           You have executed and delivered this Subscription Agreement and hereby agree to tender the Purchase Price (as defined below) within five (5) calendar days of receipt of written notice from the Company advising you to do so.

3.           Payment.  The purchase price for the Shares being subscribed for hereunder (“Purchase Price”) is payable within five (5) calendar days of receipt of written notice from the Company advising you to do so by (i) wire transfer as set forth below, (ii) certified or cashier’s check, (iii) money order or (iv) execution and delivery of a 5-year interest bearing promissory note in the form attached hereto as Exhibit A (the “Promissory Note”).  Payment of the Purchase Price also may be made by delivering a combination of (x) immediately available funds as contemplated under foregoing clauses (i), (ii) or (iii) and  (y) the Promissory Note.

4.           Rejection of Subscription. If this subscription is rejected by the Company in its sole and absolute discretion or because the Company terminates or cancels the Offering, the Company shall promptly return the Purchase Price received from the Purchaser without interest thereon or deduction therefrom, and this Subscription Agreement shall thereafter be of no further force or effect.

  

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5.           Representations and Warranties. Purchaser hereby represents and warrants to, and agrees with, the Company as follows:

(a)           (i)           Purchaser has received and has read and fully understands this Subscription Agreement.

(ii)           Purchaser or its advisor(s) have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Company, the Offering and the Recapitalization and all such questions have been answered to the full satisfaction of the Purchaser.

(iii)           No oral or written representations have been made other than as stated in this Subscription Agreement, and no oral or written information furnished to the Purchaser or its advisor(s) in connection with the Offering was in any way inconsistent with the information stated in this Subscription Agreement.

(iv)           If Purchaser is a natural person, Purchaser resides and is domiciled in the state in which its address is specified below, has reached the age of majority in the state in which Purchaser resides, has adequate means of providing for Purchaser’s current financial needs and contingencies, is able to bear the substantial economic risks of an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, and could afford a complete loss of such investment.

(v)           If Purchaser is a partnership, trust, or other entity, (i) it is authorized and qualified to become a member of, and authorized to make the purchase of the Shares offered by, the Company; (ii) it has not been formed for the purpose of acquiring the Shares; (iii) the person signing this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so and (iv) its principal executive offices are located in the state in which its address is specified below.

(vi)           Purchaser has such knowledge and experience in financial, tax and business matters so as to enable it to utilize the information made available to it in connection with the Offering, to evaluate the merits and risks of an investment in the Shares and to make an informed decision with respect thereto; Purchaser acknowledges that there is a significant risk of loss of all or a portion of the Purchaser’s investment in the Shares.

(vii)           Purchaser is acquiring the Shares for its own account, for investment purposes only, and not with a view for distribution.

  

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(b)           Purchaser is an “accredited investor” within the meaning of Rule 501(d), as promulgated under the Securities Act because Purchaser meets the requirements of one of the subparagraphs listed below (please insert your initials in the appropriate place next to the description applicable to you or the entity which you represent):

     (i)  A natural person who had individual income of more than $200,000 in each of the most recent two years or joint income with his/her spouse in excess of $300,000 in each of the most recent two years and who reasonably expects to reach that same income level for the current year;  ________

     (ii)  A natural person whose individual net worth, or joint net worth with his spouse, is in excess of $1,000,000 (excluding the value of your primary residence)1;  ________

     (iii)  A trust, with total assets in excess of $5,000,000, which is not formed for the purpose of acquiring the securities offered hereby and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the securities;  ________

     (iv)  A director or executive officer of the Company;  ________

     (v)  An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (i.e. certain charitable organizations), corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;  ________

     (vi)  An entity which is (A) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; (B) any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; (C) an insurance company as defined in Section 2(13) of the Securities Act; (D) an investment company registered under the Investment Company Act of 1940; (E) a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; (F) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; (G) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; (H) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), the investment decisions of which are made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser; (I) an employee benefit plan with total assets in excess of $5,000,000; or (J) a self-directed employee benefit plan with investment decisions made solely by persons that are accredited investors;  ________

     (vii)  A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;  ______

     (viii)  An entity in which all of the equity owners meet the requirements of at least one of the above subparagraphs;  ________

___________

1 In calculating net worth, you should include all of your assets (other than your primary residence) whether liquid or illiquid, such as cash, stock, securities, personal property and real estate based on the fair market value of such property MINUS all debts and liabilities (other than a mortgage or other debt secured by your primary residence).

In the event that the amount of any mortgage or other indebtedness secured by your primary residence exceeds the fair market value of the residence and the mortgagee or other lender has recourse to you personally for any deficiency, that excess liability should also be deducted from your net worth.

 

  

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(c)           Purchaser’s overall commitment to investments which are not readily marketable is reasonable in relation to its net worth.

(d)           (i)  Purchaser has full power and authority to execute and deliver this Subscription Agreement and, if applicable, the Promissory Note, (ii) the execution and delivery by Purchaser of this Subscription Agreement and, if applicable, the Promissory Note and the performance by it of its obligations hereunder and thereunder have been authorized by all necessary action of the Purchaser, (iii) this Subscription Agreement and, if applicable, the Promissory Note have been duly and validly executed and delivered by Purchaser and constitute legal, valid and binding obligations of Purchaser, and (iv) each of this Subscription Agreement and, if applicable, the Promissory Note is enforceable against Purchaser in accordance with its terms.

(e)           Purchaser acknowledges and understands that an investment in the Company will involve substantial risks.  Purchaser further acknowledges and understands that the following list of risk factors does not purport to be a complete enumeration or explanation of the risks involved in an investment in the Company and additional risks or uncertainties may adversely affect the Company or the value of an investment in the Company:

(i)           Mr. Sillerman, as the beneficial owner of a majority of the Company’s outstanding common stock, will be the controlling stockholder of the Company and have the ability to exert significant control over the Company’s management and affairs requiring stockholder approval, including the approval of significant corporate transactions and the ability to elect and remove directors.  The actions taken by Mr. Sillerman as a controlling stockholder of the Company may not necessarily be aligned with the interests of the other stockholders of the Company.  In addition, Mr. Sillerman will be entitled to engage in activities separate from the Company, which activities could involve conflicts or potential conflicts between the interests of the Company and such separate activities.

(ii)           Upon completion of the Transaction, the Company will be a development stage company and its prior operating history will not be germane to future operations.  The Company has been inactive since 2006.  The Company’s prospects must be evaluated in light of the risks and uncertainties frequently encountered by a company in the early stage of development. The entertainment and consumer segments in which the Company intends to operate are highly competitive and makes these risks and uncertainties particularly pronounced.  The Company may not succeed in developing a viable business and may never become profitable.

(iii)           The Company has significant capital requirements to develop its business and will need to raise additional capital for the foreseeable future, which may be accomplished through equity and/or debt financings. There can be no assurance that the Company will be able to raise such capital when needed or on terms and conditions acceptable to the Company, or at all.  To the extent the Company raises additional capital by issuing equity securities; the Company’s stockholders will experience dilution in their ownership of the common stock of the Company.

  

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(iv)            The Recapitalization may not be completed. In such event, the Offering will be terminated.  The Company has made certain representations with respect to potential liabilities and has completed audited financial statements for 2008, 2009 and 2010.  Nevertheless, the Company may have other unanticipated or unknown liabilities which may have a material adverse effect on the Company and its stockholders.

(v)           The loss of the services of Mr. Sillerman or one or more key members of management or other key employees of the Company could have a material adverse effect upon the Company’s business, operating results or financial condition.  In addition, the future success of the Company will depend in large part upon its ability to attract and retain additional qualified management and personnel.  There can be no assurance that the Company will be successful in attracting and retaining such personnel, and the failure to do so would have a material adverse effect on the Company’s business, operating results and financial condition.

(vi)            The Shares have not been registered under the Securities Act or any state securities laws.   The Shares are highly illiquid.  The Shares to be issued in the Offering will not be registered under the Securities Act or any state securities laws and, thus, will not be freely tradable or eligible for resale under Rule 144 promulgated under the Securities Act until one year after the Company files its “Form 10 information” with the Securities and Exchange Commission and unless the Company has filed all required periodic reports and materials under the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or such shorter period the Company was required to file such reports and materials).   In addition, if you pay the Purchase Price for the Shares with the Promissory Note, you may not rely on Rule 144 to resell your Shares until at least six (6) months after you have paid the Promissory Note in full. An active public market for the Company’s common stock may not develop or be sustained. In addition, the number of unrestricted shares of the Company in the public float will represent only a small percentage of the shares of Company common stock outstanding upon completion of the Transaction.

(vii)           The Company, upon completion of the Transaction, does not anticipate paying dividends on its common stock in the foreseeable future.  In addition, the terms of future debt financings may prohibit the payment of cash dividends on the common stock.

 

  

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(f)           Purchaser acknowledges:

	
(i)  

	
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and, if applicable the Promissory Note, in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or other entity for whom the Purchaser is executing this Subscription Agreement, and such individual, ward, partnership, trust, estate, corporation, or other entity has full right and power to perform pursuant to this Subscription Agreement and, if applicable, the Promissory Note and make an investment in the Company;

	
(ii)  

	
Purchaser consents to the placement of the following legend on any certificate or other document evidencing the Shares:

THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREFROM. THESE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED THEREUNDER; and

(iii)           The representations, warranties, and agreements of Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares.

6.           Prohibitions on Cancellation, Termination, Revocation, Transferability, and Assignment. Purchaser hereby acknowledges and agrees that, except as may be specifically provided herein, or by applicable law, Purchaser is not entitled to cancel, terminate, or revoke this Subscription Agreement, and this Subscription Agreement shall survive his death or disability.  Purchaser further agrees that it may not transfer or assign its rights under this Subscription Agreement.

7.           Indemnification. Purchaser agrees to indemnify and hold harmless the Company and its officers, directors, managers, employees, agents, affiliates, and counsel against any and all loss, liability, claim, damage, and expense whatsoever (including, but not limited to, any and all expenses reasonably incurred in investigating, preparing, or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty by Purchaser hereunder or any breach or failure by Purchaser to comply with any covenant or agreement made by Purchaser herein or in any other document furnished by Purchaser to any of the foregoing in connection with this transaction.

8.           Modification. Neither this Subscription Agreement nor any provisions hereof shall be waived, amended or modified except by an instrument in writing signed by the party against whom any such waiver, amendment or modification is sought.

  

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9.           Notices. All notices hereunder shall be sufficient upon receipt for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax, or other electronic transmission service to the appropriate address or number (a) if to the Company, at the address set forth above, or (b) if to Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9).

10.           Gender.  All pronouns contained herein and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the parties hereto may require.

11.           Counterparts.  This Subscription Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all of the parties, notwithstanding that all parties are not signatories to the same counterpart.  Execution and/or delivery by facsimile or electronic means shall constitute an original signature for all purposes.

12.           Applicable Law. The internal laws of the State of New York (without giving effect to any choice or conflict of law provision or rule (whether of the State of York or any other jurisdiction) that would cause the application of laws of any other jurisdiction) shall govern all matters arising out of or relating to this Subscription Agreement, including its validity, interpretation, construction, performance and enforcement.  Any action or proceeding arising out of or relating to this Subscription Agreement must be brought in the courts of the State of New York, New York County, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York.  Each of the parties knowingly, voluntarily and irrevocably submits to the exclusive jurisdiction of each such court in any such action or proceeding and waives any objection it may now or hereafter have to venue or to convenience of forum. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT, OR ANY TRANSACTIONS CONTEMPLATED HEREBY.  EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT IN ACCORDANCE WITH THIS SECTION AND FURTHER WAIVES ANY CLAIM BASED ON FORUM NON CONVENIENS.

13.         Disclosure Notices.

FOR ILLINOIS RESIDENTS ONLY: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS BASED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

FOR NEW YORK RESIDENTS ONLY: THIS SUBSCRIPTION AGREEMENT HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

FOR RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

[SUBSCRIPTION PAGE FOLLOWS]

 

  

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SUBSCRIPTION PAGE

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this _____ day of February, 2011.

 

	Shares being purchased:	 	 	 
	Purchase Price (total number of Shares multiplied by $0.03): 	 	$	 	 

 

Wire Transfer Purchase Price to :

Bank:      Citibank, N.A.

666 Fifth Avenue

New York, NY 10103

ABA :     021000089

Account #: 9985290786

Account Name: Kramer Levin Escrow Account

Reference:  Gateway Subscription

TYPE OF OWNERSHIP (INITIAL ONE)

 

	____ 	
INDIVIDUAL OWNERSHIP 

(one signature required)

	____ 	
TENANTS BY THE ENTIRETY

(two signatures required)

	 	 	 	 
	____ 	
TENANTS IN COMMON

(two signatures required)

	____ 	
JOINT TENANTS W/RIGHT OF SURVIVORSHIP

(two signatures required)

	 	 	 	 
	____ 	
PARTNERSHIP

(Please include a copy of the statement of partnership 

of partnership agreement authorizing signature).

	____ 	
TRUST 

(Please include name of trust, name of trustee, date trust was formed 

and copy of the trust agreement or other authorization)

	 	 	 	 
	 	CORPORATION	 	LIMITED LIABILITY COMPANY

 

________________________________________

Please print exact name (registration) that Purchaser

desires on records of the Company

_________________________________________

Street Address                                           Suite or Apt.

_________________________________________

City                                State                    Zip Code

_________________________________________

Telephone

_________________________________________

Fax Number

_________________________________________

Social Security or Taxpayer I.D. Number

_________________________________________

State of Organization, if applicable

 

  

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INDIVIDUALS

If the subscriber is an INDIVIDUAL, complete the following and sign in the space provided:

 

	Date___________, 2011	 
	 	Signature of Purchaser
	 	 
	 	 
	 	Name (please type or print)
	 	 
	 	 
	 	Signature of Spouse or Co-Owner if funds are to be invested as joint tenants by the entirety, joint tenants with right of survivorship or tenants in common.
	 	 
	 	 
	 	Name (please type or print)

 

  

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PARTNERSHIPS

If the subscriber is a PARTNERSHIP, complete the following and sign in the space provided:

The undersigned hereby represents and warrants that the undersigned is a general partner of the partnership named below (“Partnership”), and has been duly authorized by the Partnership to acquire the Shares and that he has all requisite authority to acquire such Shares.

The undersigned represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Partnership and he is authorized by such Partnership to execute this Subscription Agreement.

 

 

	Date__________, 2011	 
	 	Name of Partnership
	 	(Please type or print)
	 	 
	 	

By:_________________________________

	 	

Name:_______________________________

	 	

Title:________________________________

 

  

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TRUSTS

If the subscriber is a TRUST, complete the following and sign in the space provided:

The undersigned hereby represents and warrants that he is duly authorized by the terms of the trust instrument (“Trust Instrument”) for the (“Trust”) set forth below to acquire the Shares and the undersigned, as trustee, has all requisite authority to acquire the Shares for the Trust.

The undersigned, as trustee, executing this Subscription Agreement on behalf of the Trust, represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Trust and he is authorized by such Trust to execute this Subscription Agreement.

 

 

	____________, 2011	 
	Date	Name of Trust
	 	(Please type or print)
	 	 
	 	By:________________________________
	 	Name:_____________________________
	 	Title:______________________________

 

  

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CORPORATIONS

If the subscriber is a CORPORATION, complete the following and sign in the space provided:

The undersigned hereby represents and warrants that the undersigned is an executive officer of the Corporation named below (“Corporation”), and has been duly authorized by the Corporation to acquire the Shares and that he has all requisite authority to acquire such Shares  for the Corporation.

The undersigned represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Corporation and he is authorized by such Corporation to execute this Subscription Agreement.

 

	____________, 2011	 
	Date	Name of Corporation
	 	(Please type or print)
	 	 
	 	By:________________________________
	 	Name:_____________________________
	 	Title:______________________________

 

  

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LIMITED LIABILITY COMPANIES

If the subscriber is a LIMITED LIABILITY COMPANY, complete the following and sign in the space provided:

The undersigned hereby represents and warrants that the undersigned is an executive officer or manager of the Limited Liability Company named below (“LLC”), and has been duly authorized by the LLC to acquire the Shares and that he has all requisite authority to acquire such Shares for the LLC.

The undersigned represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that LLC and he is authorized by such LLC to execute this Subscription Agreement.

 

 

	____________, 2011	 
	Date	Name of Limited Liability Company
	 	(Please type or print)
	 	 
	 	By:________________________________
	 	Name:_____________________________
	 	Title:______________________________

 

  

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COMPANY’S ACCEPTANCE

This Subscription Agreement is only accepted as so acknowledged in writing by the Company.

ACCEPTED as to ____________________ Shares:

Gateway Industries, Inc.

 

By:______________________________

Name:___________________________

Title: ___________________________

Date:____________________, 2011

MIA1816353603

 

  

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EXHIBIT A

 

TO

 

SUBSCRIPTION AGREEMENT

 

PROMISSORY NOTE

 

	$[_________.__]	[______] [__], 2011

 

FOR VALUE RECEIVED, [_______________], a ____________(the “Payor”), hereby unconditionally promises to pay to the order of Gateway Industries, Inc., a Delaware corporation (the “Payee”), in lawful money of the United States of America in immediately available funds, the principal sum of [________________] Dollars and [___________] ($[___________.__]), together with interest thereon, compounded annually, from the date hereof through maturity at the annual rate equal to the long-term Applicable Federal Rate in effect as of the date hereof, as published by the Internal Revenue Service (calculated on the actual number of days elapsed and an assumed year of 360 days) (the “Stated Rate”).  This principal amount, together with interest accrued thereon at the Stated Rate commencing on the date hereof, shall be due and payable in full on [____ ____, 2016] (the “Scheduled Maturity Date”).

 

This Promissory Note (“Note”) is issued by Payor to Payee to evidence Payor’s obligation under that certain Subscription Agreement dated [____________], 2011 by and between Payor and Payee to pay Payee the purchase price for the shares of common stock of Payee purchased by Payor from Payee on the date hereof pursuant to the terms and subject to the conditions of such Subscription Agreement.

 

The principal and accrued interest balance of this Note may be prepaid in whole or in part at any time without a premium or penalty of any kind.

 

If any Acceleration Event (as defined below) shall occur for any reason then and in any such event, in addition to all rights and remedies of the Payee under this Note, applicable law or otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and concurrently, the Payee may, at its option, declare due any or all of the Payor’s obligations, liabilities and indebtedness owing to the Payee under this Note whereupon the then unpaid balance hereof shall immediately be due and payable, together with all expenses of collection hereof, including, but not limited to, attorneys’ fees and legal expenses (for this purpose, the Payor shall pay all trial and appellate attorneys’ fees, costs and expenses, paid or incurred by the Payee in connection with collection of this Note).  If the foregoing unpaid balances, expenses and collection costs are not paid upon demand upon the occurrence of an Acceleration Event (collectively, the “Unpaid Amounts”), such Unpaid Amounts shall bear interest until paid in full at the Stated Rate plus 5.00% per annum or the maximum interest rate then permitted under applicable law (whichever is less) (the “Default Rate”).  From and after maturity of this Note (whether upon the Scheduled Maturity, or by acceleration or otherwise, the Unpaid Amounts shall bear interest until paid in full at the Default Rate. For purposes hereof, “Acceleration Event” means the first to occur of the following: (i) if any principal or accrued interest or other amount owning under this Note is not paid when due and such default continues unremedied for fifteen (15) days after written notice provided by Payee to Payor, (ii) Payor having made an assignment for the benefit of creditors, filed a petition in bankruptcy, applied to or petitioned any tribunal for the appointment of a custodian, receiver, intervener or trustee for Payor, or commenced any proceeding for any arrangement or readjustment of its debts, (iii) any such petition or application having been filed or proceeding having commenced against Payor and Payor not having interposed a defense thereto within the time permitted under applicable law, (iv) the sale or other disposition of all or substantially all of Payor’s assets, (v) the dissolution of Payor, (vi) the death of Payor or (vii) the failure by Payor to perform any other covenant, agreement or condition contained in this Note and such default continues unremedied for thirty (30) days after written notice thereof is given to Payor by Payee; provided, however, in the event such default is curable but is not reasonably capable of cure within said 30-day period, Payor shall have such additional time as required to cure any such default so long as Payor is diligently undertaking the cure of such default.

 

  

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The Payor (i) waives diligence, demand, presentment, protest and notice of any kind, except for any notice expressly required by the provisions of this Note, and (ii) agrees that it will not be necessary for the Payee to first institute suit in order to enforce payment of this Note.

 

The validity, interpretation and enforcement of this Note and any dispute arising in connection herewith or therewith shall be governed by the internal laws of the State of New York  (without giving effect to principles of conflicts of law).

 

The Payor irrevocably consents and submits to the exclusive jurisdiction of the state courts of the State of New York located in the County of New York and the United States District Court whose district covers such county, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Note.

 

EACH OF PAYOR AND PAYEE HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS NOTE, AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY.

 

The Payor may not assign this Note and/or delegate any of its obligations hereunder without the written consent of the Payee.  This Note is not secured by any collateral of any nature.  Neither this Note nor all or any portion of the Payee’s rights and interests herein may be negotiated, assigned, pledged, hypothecated or otherwise transferred by Payee.

 

The Payor shall be solely responsible for any necessary tax or assessment relating to this Note; provided, however, that the Payor shall not be responsible for Payee’s tax obligations arising from receipt of funds set forth herein.

 

If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions hereof shall in no way be affected thereby.

 

The waiver by the Payee of the Payor’s prompt and complete performance of, or default under, any provision of this Note shall not operate nor be construed as a waiver of any subsequent breach or default, and the failure by the Payee to exercise any right or remedy which it may possess hereunder or under applicable law shall not operate nor be construed as a bar to the exercise of any such right or remedy upon the occurrence of any subsequent breach or default.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Payor has executed this Promissory Note the day and year first written above.

 

	 	_______________________________	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	_____________________	 
	 	Title:	_____________________	 
	 	 	 	 

MIA1816353603

 

 

 

18fncx_ex1013.htm

EXHIBIT 10.13

 

REGISTRATION RIGHTS AGREEMENT

 

 

This Registration Rights Agreement (this “Agreement”) is made and entered into this 29th day of September, 2011, by and between Function(x) Inc., a Delaware corporation (the “Company”), and Mobile Messaging Solutions (MMS), Inc., a California corporation (the “Holder”).

 

W I T N E S S E T H

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated September 29, 2011, the Company issued 200,000 shares (the “Registrable Securities”) of common stock, $0.001 par value per share of the Company (the “Common Stock”) to the Holder; and

 

WHEREAS, the Company desires to grant, and the Holder desires to receive certain rights with respect to the registration of the Registrable Securities under the Securities Act of 1933, as amended (the “Securities Act”).

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and other good and valuable consideration, the parties hereto hereby agree as follows:

 

  

1

  

 

1. Piggy Back Registration Rights.

 

(a) If at any time when there is not an effective registration statement covering the Registrable Securities pursuant to this Agreement, the Company shall determine to prepare and file with the Securities and Exchange Commission (the “Commission”) a registration statement (other than the registration statement on Form S-1 (File No. 333-174481) currently pending with the Commission) relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to the Holder of Registrable Securities written notice of such determination and, if within twenty (20) days after receipt of such notice, or within such shorter period of time as may be specified by the Company in such written notice as may be necessary for the Company to comply with its obligations with respect to the timing of the filing of such registration statement, the Holder shall so request in writing (which request shall specify the Registrable Securities intended to be disposed of by the Holder), the Company will cause the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holder, to the extent requisite to permit the disposition of the Registrable Securities so to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities being registered pursuant to this Section 1(a) for the same period as the delay in registering such other securities. The Company shall include in such registration statement all or any part of such Registrable Securities the Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 1(a) that are eligible for sale pursuant to Rule 144 of the Securities Act without volume limitations or restrictions.  In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Registrable Securities in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Registrable Securities would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the Holder, then (x) the number of Registrable Securities of the Holder included in such registration statement shall be reduced, if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of the Holder shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Registrable Securities; provided, however, that if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Registrable Securities intended to be offered by the Holder than the fraction of similar reductions imposed on such other persons or entities (other than the Company).

 

(b) In the event of a registration pursuant to the provisions of this Section 1, the Company shall use its best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Holder may reasonably request; provided, however, that the Company shall not by reason of this Agreement be required to qualify to do business in any state in which it is not otherwise required to qualify to do business or to file a general consent to service of process.

 

  

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(c) The Company shall keep effective any registration or qualification contemplated by this Agreement and shall, from time to time, amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document, and communication for such period of time as shall be required to permit the Holder to complete the offer and sale of the Registrable Securities covered thereby.  Notwithstanding the preceding sentence, the Company shall in no event be required to keep any such registration or qualification in effect for a period in excess of six (6) months from the date on which the Holder is first free to sell such Registrable Securities; provided, however, that, if the Company is required to keep any such registration or qualification in effect with respect to securities other than the Registrable Securities beyond such period, the Company shall keep such registration or qualification in effect as it relates to the Registrable Securities for so long as such registration or qualification remains or is required to remain in effect in respect of such other securities.

 

(d) In the event of a registration pursuant to the provisions of this Section 1, the Company shall furnish to the Holder such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), such reasonable number of copies of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Securities Act and the rules and regulations promulgated thereunder, and such other documents, as the Holder may reasonably request to facilitate the disposition of the Registrable Securities included in such registration.

 

(e) In the event of a registration pursuant to the provision of this Section 1, the Company and the Holder shall enter into a cross-indemnity agreement and a contribution agreement, each in customary form, with each underwriter, if any, and, if requested, enter into an underwriting agreement containing conventional representations, warranties, allocation of expenses, and customary closing conditions, with any underwriter who acquires any Registrable Securities.

 

(f) The Company agrees that, until all the Registrable Securities have been sold under a registration statement or pursuant to Rule 144 promulgated under the Securities Act, it shall keep current in filing all reports, statements and other materials required to be filed with the Commission to permit holders of the Registrable Securities to sell such securities under Rule 144 promulgated under the Securities Act.

 

(g) The Company may grant piggy back registration rights to other persons so long as such rights are pari passu or subordinate to the rights of the Holder and nothing herein contained shall prohibit the Company from granting to any person demand registration rights.

 

  

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2. Indemnification and Contribution.

 

(a) Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless the Holder, its directors, officers, agents and employees, each person or entity who controls the Holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling persons or entities, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and attorneys' fees) and expenses (collectively, “Losses”), as incurred, arising out of any untrue or alleged untrue statement of a material fact contained in a registration statement covering the Registrable Securities, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding the Holder or such other Indemnified Party (as defined below) furnished in writing to the Company by the Holder expressly for use therein.  The Company shall notify the Holder promptly of any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened (a “Proceeding”) of which the Company is aware in connection with the transactions contemplated by this Agreement.

 

(b) Indemnification by Holders.  The Holder shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each person or entity who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling persons or entities, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred, arising solely out of or based solely upon any untrue statement of a material fact contained in a registration statement applicable to the Registrable Securities, any prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by the Holder or other Indemnifying Party to the Company specifically for inclusion in a registration statement applicable to the Registrable Securities or such prospectus.

 

(c) Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or asserted against any person or entity entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify the person or entity from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

  

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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel (which shall be reasonably acceptable to the Indemnifying Party) that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within thirty (30) business days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

 

(d) Contribution.  If a claim for indemnification under Section 2(a) or 2(b) is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Party on the one hand and the Indemnified Party on the other from the offering of the Registrable Securities.  If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault, as applicable, of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 2(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

  

5

  

 

3. General.

 

(a) Amendments and Waivers.  No amendment or waiver of any term or provision of this Agreement shall be effective unless in writing signed by both parties.  The waiver by any party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.

 

(b) Notices.  Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date received by hand delivery, overnight delivery, facsimile transmission or registered mail, postage prepaid, addressed as follows:

 

to the Company:

 

 

Function(x) Inc.

902 Broadway

New York, New York 10010

Attn:  Chief Executive Officer

Telephone No. (212) 231-0092

Facsimile No. (212) 750-3034

 

and to the Holder:

 

Mobile Messaging Solutions (MMS), Inc.

175 Portland Street, 3rd Floor

Boston, MA 02114

Attn:  Chief Executive Officer

Telephone No. (617) 973-4150

Facsimile No. (617) 973-4151

 

with a copy to:

 

	
  

	
Alan Sege, Esq.

	
  

	
6601 Center Drive, West, Suite 700

	
  

	
Los Angeles, CA 90045

	
  

	
Telephone No. (310) 383-6521

	
  

	
Facsimile No. (310) 496-0848

  

6

  

 

The Company and the Holder, by written notice given in accordance with this Section 3(b), may change the address to which such notice or other communications are to be sent.

 

 

(c) Company Representations.  The Company represents and warrants to the Holder that:

 

(i) The Company has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby;

 

(ii) The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company;

 

(iii) This Agreement has been duly executed and delivered by the Company and (assuming the due authorization, execution and delivery hereof by the Holder) constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles;

 

(iv) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, result in any violation or default (with or without notice or lapse of time, or both) under, (i) any provision of the charter or organizational documents of the Company, (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation by which the Company is bound or to which any of its properties or assets is subject, other than, in which any of its properties or assets is subject, other than, in the case of clause (ii), any such violation or default that would not reasonably be expected to have a material adverse effect on the financial condition or operations of the Company, taken as a whole, and would not impair the ability of the Company to perform its obligations under this Agreement; and

 

(v) No filing or registration with, or authorization, consent or approval of, any governmental authority is required by or with respect to the Company in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby, except as otherwise expressly provided herein.

 

  

7

  

 

(d) Holder Representations.  The Holder represents and warrants to the Company that:

 

(i) The Holder has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby;

 

(ii) This Agreement has been duly executed and delivered by the Holder and (assuming the due authorization, execution and delivery hereof by the Company) constitutes a valid and binding obligation of the Holder, enforceable against the Holder in accordance with its terms, except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles;

 

(iii) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, result in any violation of or default (with or without notice or lapse of time, or both) under (i) any provision of the charter or organizational documents of the Holder, (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation by which the Holder is bound or to which any of its properties or assets is subject, other than, in which any of its properties or assets is subject, other than, in the case of clause (ii), any such violation or default that would not reasonably be expected to have a material adverse effect on the financial condition or operations of the Holder, taken as a whole, and would not impair the ability of the Holder to perform its obligations under this Agreement;;

 

(iv) No filing or registration with, or authorization, consent or approval of, any governmental authority is required by or with respect to the Holder in connection with the execution and delivery by the Holder of this Agreement or the consummation by the Holder of the transactions contemplated hereby, except as otherwise expressly provided herein.

 

(e) The rights granted under this Agreement may be assigned or otherwise conveyed by the Holder, in compliance with federal and applicable state securities laws, to any transferee or assignee who, after such assignment or transfer, holds at least 75,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations).  For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of a transferee or assignee who is (A) a shareholder, partner, retired partner, member, retired member or beneficiary of the Holder; (B) a spouse or child of a shareholder, partner, retired partner, member, retired member or beneficiary of the Holder; (C) a trust for the benefit of the persons set forth in (A) or (B) or for the issue of the persons set forth in (A) or (B); and (D) an entity (corporation, partnership, limited liability company or other juridical entity) of which at least 75 percent in interest is owned or controlled, directly or indirectly through other entities, or by one or more of the persons set forth in (A), (B) or (C), shall be aggregated together with the corporation, partnership or limited liability company as the case may be.

 

  

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(f) Miscellaneous.

 

(i) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and the respective successors and assigns of the parties hereto.

 

(ii) ii.           This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes any and all previous agreements among them relating to the subject matter hereof, whether written, oral or implied.

 

(iii) This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York, without giving effect to the conflicts of law principles thereof.

 

(iv) The Section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation hereof.

 

(v) This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

(vi) Should any term or condition of this Agreement be determined by a court of competent jurisdiction to be unenforceable for any reason, including, without limitation, violation of statute or public policy, such provision shall, if possible, be reformed by the parties hereto, or if the parties cannot agree, by the appropriate court of competent jurisdiction to comply with applicable legal requirements in a matter that is as close in its intent and effect to the original provision as possible or, if such reformation cannot be accomplished shall be stricken without affecting the validity of any other term or condition of this Agreement.

 

(vii) Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	 	FUNCTION(X) INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 
	 	MOBLE MESSAGING SOLUTIONS (MMS), INC.	 
	 	 	 	 
	 	By: 	 	 
	 	

Name:

	 	 
	 	

Title:

	 	 

 

 

10

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