Document:

fsnn_ex1030.htm

EXHIBIT 10.30

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

 

INTERCREDITOR AND SUBORDINATION AGREEMENT dated as of August 28, 2015, by and among MARVIN ROSEN, an individual (“Subordinated Lender”), FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (“Issuer”), each other Credit Party party hereto and OPUS BANK, a California commercial bank, as Administrative Agent (in its capacity as Administrative Agent under the Credit Agreement defined below, the “Agent”).

 

WHEREAS, Fusion NBS Acquisition Corp., a Delaware corporation (“Borrower”), Agent and the Lenders party thereto (together with the lenders from time to time party thereto, the “Lenders”) have entered into the Credit Agreement (as hereinafter defined) pursuant to which, among other things, Lenders have agreed, subject to the terms and conditions set forth in the Credit Agreement, to extend credit to the Borrower;

 

WHEREAS, in accordance with the terms of the Credit Agreement and the other Senior Loan Documents (as hereinafter defined), Issuer has granted Lenders and Agent a first priority lien on, security interest in and right of set-off against any and all right, title and interest of Issuer in and to certain Collateral; and

 

WHEREAS, as an inducement to and as one of the conditions precedent to the agreement of Lenders and Agent to consummate the transactions contemplated by the Credit Agreement and the other Senior Loan Documents, Lenders and Agent require the execution and delivery of this Agreement by Subordinated Lender and Credit Parties.

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Definitions.

 

(a) Capitalized terms used but not defined herein (including, without limitation, in the preamble and recitals above) shall have the meanings given such terms in the Credit Agreement.

 

(b) The following terms shall have the following meanings:

 

“Agent” has the meaning specified in the recitals of this Agreement.

 

“Agreement” means this Intercreditor and Subordination Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as codified under Title 11 of the United States Code, or any successor statutes, and the bankruptcy rules promulgated thereunder, as the same may be in effect from time to time.

 

  

  

  

 

“Collateral” means the collective reference to the “Collateral” (as defined in the Credit Agreement) and any and all other property from time to time subject to Liens or security interests to secure payment or performance of the Senior Obligations.

 

“Credit Agreement” means the Credit Agreement, dated as of August 28, 2015, by and among Borrower, Agent, Lenders and the other parties from time to time party thereto, as such Credit Agreement may be amended, restated, modified or supplemented from time to time, including, without limitation, amendments, modifications, supplements and restatements thereof giving effect to increases, renewals, extensions, refundings, deferrals, restructurings, replacements or refinancings of, or additions to, the arrangements provided in such Credit Agreement (whether provided by one or more of the original Lenders under the Agreement or one or more successor Lenders).

 

“Credit Parties” means Issuer, Borrower, NBS, each other Subsidiary of Issuer and any other Person that at any time is or becomes directly or indirectly liable on or in respect of, or that provides security for, any Senior Obligations, and their successors and permitted assigns.

 

“Enforcement Action” means, with respect to the Subordinated Obligations, any action to collect all or any portion of the Subordinated Obligations, to accelerate or demand payment of all or any portion of the Subordinated Obligations or to enforce any of the rights and remedies of any holder of any of the Subordinated Obligations, either pursuant to the Subordinated Loan Documents, at law, or in equity, including, but not limited to: (i) commencing or pursuing legal proceedings to collect any amounts owed with respect to the Subordinated Obligations; (ii) execution upon, or otherwise enforcing any judgment obtained with respect to, amounts owed on the Subordinated Obligations; or (iii) commencing or pursuing any judicial or non-judicial proceedings with respect to the Subordinated Obligations to foreclose upon, or to acquire title in lieu of foreclosure as to, all or any portion of the assets of Issuer or any other Credit Party.

 

“Insolvency Event” means (i) Issuer or any of its Subsidiaries commencing any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Issuer or any of its Subsidiaries making a general assignment for the benefit of its creditors; (ii) there being commenced against Issuer or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above; (iii) there being commenced against Issuer or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets; (iv) Issuer or any of its Subsidiaries taking any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) Issuer or any of its Subsidiaries generally not paying, or being unable to pay, or admitting in writing its inability to pay, its debts as they become due.

 

  

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“Insolvency Proceeding” means the occurrence or commencement of any proceeding specified in clause (i) or clause (ii) of the definition of “Insolvency Event” in this Agreement.

 

“Issuer” has the meaning specified in the recitals of this Agreement.

 

“Lenders” has the meaning specified in the recitals of this Agreement.

 

“Permitted Subordinated Debt Payments” means regularly scheduled cash payments of interest, at the non-default rate of interest not to exceed a rate of 7% per annum, pursuant to and in accordance with the Subordinated Notes.

 

“Person” shall mean any individual, firm, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

 “Senior Default” means any “Default” or “Event of Default” under the Credit Agreement or any other Senior Loan Document.

 

“Senior Lenders” means Lenders, Agent and each other holder of a Senior Obligation and each of their respective successors and assigns.

 

“Senior Loan Documents” means the collective reference to the Credit Agreement, the other “Loan Documents” (as defined in the Credit Agreement) and all other documents, instruments and agreements that from time to time evidence the Senior Obligations or secure or support payment or performance thereof, as the same may be amended, restated, modified or supplemented from time to time, including, without limitation, amendments, modifications, supplements and restatements thereof giving effect to increases, renewals, extensions, refundings, deferrals, restructurings, replacements or refinancings of, or additions to, the arrangements provided therein (whether provided by one or more Lenders under the Credit Agreement or one or more successor Purchasers).

 

“Senior Obligations” means the “Obligations”, as such term is defined in the Credit Agreement and the “Obligations”, as such term is defined in any Guaranty (as defined in the Credit Agreement), including, without limitation, all principal, interest, fees, expenses, indemnities and reimbursement obligations at any time owed by the Credit Parties to Senior Lender pursuant to the terms of the Senior Loan Documents, in each instance, whether before or after the commencement of an Insolvency Proceeding and without regard to whether or not an allowed claim, and all obligations and liabilities incurred with respect to any refinancing of such obligations, together with any amendments, restatements, modifications, renewals or extensions thereof.

 

“Subordinated Event of Default” means any default or event of default under the Subordinated Notes or other Subordinated Loan Documents.

 

“Subordinated Lender” has the meaning specified in the recitals of this Agreement.

 

  

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“Subordinated Loan Documents” means the collective reference to the Subordinated Notes and any other documents, agreements or instruments that from time to time evidence or otherwise relate to the Subordinated Obligations.

 

“Subordinated Notes” means the letter agreement between Subordinated Lender and Issuer, dated August 28, 2015, providing for, among other things, payment of the promissory note in the original principal amount of $3,922,364.37 issued by Issuer to Subordinated Lender, copies of which are attached as Exhibit A hereto, as in effect as of the date hereof and as amended, supplemented, restated or otherwise modified from time to time as permitted by this Agreement and the Senior Loan Documents, including, without limitation, any notes issued in exchange or substitution therefor.

 

“Subordinated Obligations” means the collective reference to the unpaid principal of and interest on the Subordinated Notes and all other Indebtedness of Issuer or any other Credit Party owing to the Subordinated Lender (including, without limitation, interest accruing at the then applicable rate provided therein after the maturity of the Subordinated Notes and interest accruing at the then applicable rate provided in the Subordinated Notes after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Issuer or any other Credit Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Subordinated Notes, this Agreement, or any other Subordinated Loan Document, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Subordinated Lender that are required to be paid by Issuer or any other Credit Party pursuant to the terms of any other Subordinated Loan Document); provided, however, that Subordinated Obligations shall not include obligations for compensation, employee benefits and reimbursement of related costs incurred in the Ordinary Course of Business, to the extent any of the foregoing constitutes Indebtedness, and to the extent such Indebtedness is permitted by the Credit Agreement.

 

(c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section and paragraph references are to this Agreement unless otherwise specified.

 

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(e) No inference in favor of, or against, any party to this Agreement shall be drawn from the fact that such party has drafted any portion of this Agreement.

 

2. Subordination; Enforcement Action.  Each Credit Party and Subordinated Lender each hereby agrees, for itself and each future holder of the Subordinated Obligations, that:

 

(a) No part of the Subordinated Obligations shall have any claim to any assets of any Credit Party on a parity with or prior to the claim of any of the Senior Obligations.

 

  

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(b) Unless and until the Senior Obligations have been paid in full, without the express prior written consent of Agent, (1) Subordinated Lender shall not, directly or indirectly, take, demand, accept or receive from any Credit Party or any other Person, in cash or other property or by setoff or in any other manner, payment of all or any of the Subordinated Obligations, and (2) no Credit Party shall make, give or permit, directly or indirectly, by setoff, redemption, purchase or in any other manner, any payment of or with respect to, or any collateral or other security for, the whole or any part of the Subordinated Obligations, including, without limitation, any guarantee, letter of credit or similar credit support to support payment of any of the Subordinated Obligations; provided, however, that, subject in all respects to the other terms and provisions hereof, (x) Subordinated Lender may accept and retain, and Issuer may make, Permitted Subordinated Debt Payments so long as no Blockage Period is then in effect, provided that, after giving effect to such payment, the Credit Parties are in compliance on a pro forma basis with the covenants set forth in Section 7.11 of the Credit Agreement, recomputed for the most recent fiscal quarter for which financial statements have been delivered; and (y) Issuer may resume making any Permitted Subordinated Debt Payments, and may make any Permitted Subordinated Debt Payment missed during any Blockage Period, upon the cessation of a Blockage Period.  A “Blockage Period” shall exist from and after the date that any Senior Default shall have occurred, until the earlier to occur of (a) the cure or waiver of such Senior Default, as determined by Agent in its sole discretion and (b) the payment in full of the Senior Obligations.

 

(c) Unless and until the Senior Obligations have been paid in full, without the express written consent of Agent, Subordinated Lender shall not commence any Enforcement Action.

 

(d) The expressions “prior payment in full,” “payment in full,” “paid in full” and any other similar terms or phrases when used herein with respect to the Senior Obligations shall mean (i) the indefeasible payment in full, in immediately available funds, of all of the Senior Obligations and the performance in full of all of the Senior Obligations, (ii) the termination or expiration of all Senior Loan Documents, and (iii) termination of any and all commitments to lend under the Senior Loan Documents.  Senior Obligations shall be considered to be outstanding whenever any loan commitment under any Senior Loan Document is outstanding.

 

(e) Each holder of Senior Obligations, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Obligations in reliance upon the provisions contained in this Agreement.

 

3. Additional Provisions Concerning Subordination.  Without limiting any other term or provision in this Agreement:

 

(a) The Subordinated Lender and each Credit Party hereby agree that upon the occurrence of any Insolvency Event:

 

(i) all Senior Obligations shall be paid in full before any payment or distribution is made with respect to any of the Subordinated Obligations; and

 

(ii) any payment or distribution of assets of any Credit Party of any kind or character, whether in cash, property or securities, to which Subordinated Lender would be entitled except for the provisions hereof, shall be paid or delivered by such Credit Party, or any receiver, trustee in bankruptcy, liquidating trustee, disbursing agent or other Person making such payment or distribution, directly to Agent for application against the Senior Obligations (in accordance with the terms of the applicable Senior Loan Documents), to the extent necessary to pay in full all Senior Obligations, before any payment or distribution shall be made to Subordinated Lender, and (x) Subordinated Lender hereby unconditionally authorizes, empowers and directs all trustees, receivers, custodians, conservators, or any other Persons having authority over the property of any Credit Party to effect delivery of all such payments and distributions to Agent and (y) Subordinated Lender agrees to execute and deliver to Agent such further instruments as may be requested by Agent to confirm the authorization referred to in the foregoing clause (x).

 

  

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(b) Upon the occurrence of any Insolvency Proceeding commenced by or against any Credit Party, Subordinated Lender irrevocably authorizes and empowers Agent to demand, sue for, collect and receive every payment or distribution on account of any of the Subordinated Obligations payable or deliverable in connection with such event or proceeding, until the Senior Obligations are paid in full, and give acquittance therefor;

 

(c) Subordinated Lender irrevocably authorizes and empowers Agent to file claims and proofs of claim in any such Insolvency Proceeding and take such other actions, in its own name, or in the name of the Subordinated Lender or otherwise, as Agent may deem necessary or advisable for the enforcement of the provisions of this Agreement; and, in furtherance thereof, Subordinated Lender shall execute and deliver such powers of attorney, assignments or proofs of claim or other instruments as Agent may request; provided, however, that the foregoing authorization and empowerment imposes no obligation on Agent or any other Senior Lender to take any such action.

 

(d) Except as otherwise expressly permitted by the terms hereof, if any payment or distribution, whether consisting of money, property or securities, shall be collected or received by or come into the custody, control or possession of Subordinated Lender in respect of the Subordinated Obligations, Subordinated Lender shall forthwith deliver the same to Agent for application against the Senior Obligations, in the exact form received, duly endorsed to Agent, if required, in each case to be applied to the payment or prepayment of the applicable Senior Obligations in accordance with the terms of the applicable Senior Loan Documents until such Senior Obligations are paid in full.  Until so delivered, such payment or distribution shall be held in trust by Subordinated Lender as the property of the Senior Lenders, segregated from other funds and property held by Subordinated Lender.

 

4. Subrogation.  Until the Senior Obligations are paid in full, the Subordinated Lender shall not make or assert any claim of subrogation under applicable law or otherwise with respect to the Senior Lenders or the Senior Obligations.  Upon the payment in full of the Senior Obligations, the Subordinated Lender shall be subrogated to the rights of the Senior Lenders to receive payments or distributions of assets of Issuer and each other Credit Party in respect of the Senior Obligations until the Senior Obligations shall be paid in full.  For the purposes of such subrogation, payments or distributions to any Senior Lender of any money, property or securities to which Subordinated Lender would be entitled except for the provisions of this Agreement shall be deemed, as between Issuer and its creditors (other than the Senior Lenders and Subordinated Lender), to be a payment by Issuer to or on account of Subordinated Obligations (it being understood that the provisions of this Agreement are, and are intended solely, for the purpose of defining the relative rights of the Subordinated Lender, on the one hand, and Senior Lenders, on the other hand).

 

  

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5. Consents, Waivers and Covenants of Subordinated Lender.

 

(a) Subordinated Lender consents and agrees that, without the necessity of any reservation of rights against Subordinated Lender, and without notice to or further assent by Subordinated Lender:

 

(i) any demand for payment of any Senior Obligations made by any Senior Lender may be rescinded in whole or in part by such Senior Lender, and any Senior Obligation may be continued, and the Senior Obligations, or the liability of any Credit Party or any guarantor or any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, or any obligation or liability of any Credit Party or any other party under any Senior Loan Document, or any other agreement, may, from time to time, in whole or in part, be amended, restated, renewed, extended, increased, modified, accelerated, compromised, restructured, waived, surrendered, or released by Agent or the other Senior Lenders;

 

(ii) the Credit Agreement, the other Senior Loan Documents and the Senior Obligations may be amended, restated, modified, extended, increased, renewed, restructured, supplemented or terminated, in whole or in part, as Agent or the other Senior Lenders may deem advisable from time to time, and any collateral security at any time held by any Senior Lender for the payment of any of the Senior Obligations may be sold, exchanged, restructured, waived, surrendered or released, in each case all without notice to or further assent by Subordinated Lender, which will remain bound under this Agreement, and Agent and the other Senior Lenders shall have the right to grant waivers or consents to any Credit Party with respect to any of the Senior Obligations or any Senior Loan Document in any manner whatsoever, all without impairing, abridging, releasing or affecting the subordination provided for herein; and

 

(iii) any refinancing of the Obligations may be consummated by any Credit Party.

 

(b) Subordinated Lender waives any and all notice of the creation, renewal, extension, increase, or accrual of any of the Senior Obligations and notice of or proof of reliance by any Senior Lender upon this Agreement.  The Senior Obligations shall be deemed conclusively to have been created, contracted or incurred in reliance upon this Agreement, and all dealings between the Credit Parties and Senior Lenders shall be deemed to have been consummated in reliance upon this Agreement.  Subordinated Lender acknowledges and agrees that each Senior Lender has relied upon the subordination provided for herein in entering into the Senior Loan Documents and in making funds available to Issuer thereunder.  Subordinated Lender waives notice of or proof of reliance on this Agreement and protest, demand for payment and notice of default.

 

  

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(c) The Subordinated Lender hereby consents to the Liens on the Collateral created in favor of Senior Lenders under the Senior Loan Documents, and agrees that the grant, perfection, priority and existence of such Liens does not and shall not constitute a Subordinated Event of Default or any other default under any Subordinated Loan Document.

 

(d) Concurrently with the issuance thereof, the Subordinated Lender shall provide Senior Lenders with a copy of any written notice of any Subordinated Event of Default or similar communication given by Subordinated Lender to Issuer pursuant to or in connection with any of the Subordinated Loan Documents.  Upon demand by Agent, the Subordinated Lender will furnish to Senior Lenders a statement of the indebtedness owing from Issuer to the Subordinated Lender.  Agent may rely without further investigations upon such statements.

 

(e)           Notwithstanding anything in the Subordinated Notes or any other agreement or instrument to the contrary, the Subordinated Lender and Issuer hereby acknowledge and agree that the maturity date of each of the Subordinated Notes shall be no earlier than the date upon which the Senior Obligations are paid in full.

 

6. Negative Covenants of the Subordinated Lender.  Until the payment in full of the Senior Obligations, Subordinated Lender shall not, without the prior written consent of Agent:

 

(a) sell, assign, or otherwise transfer, in whole or in part, the Subordinated Obligations or any interest therein to any other Person (a “Transferee”) or create, incur or suffer to exist any security interest, Lien, charge or other encumbrance whatsoever upon any of the Subordinated Obligations or under any Subordinated Loan Document in favor of any Transferee unless:

 

(i) such action is made expressly subject to this Agreement; and

 

(ii) the Transferee expressly acknowledges to Senior Lenders, by a written agreement in form and substance satisfactory to Agent or by delivery of an executed counterpart of this Agreement or an intercreditor and subordination agreement substantially identical to this Agreement, the subordination provided for herein and agrees to be bound by all of the terms and provisions hereof;

 

(b) permit any of the Subordinated Loan Documents or the Subordinated Obligations to be amended, restated, renewed, restructured, increased, extended, supplemented or otherwise modified in any respect, except Changes that do not adversely affect Senior Lenders’ rights under this Agreement or the Senior Loan Documents or Senior Lenders’ right to payment of the Senior Obligations; and nothing herein shall prohibit the Subordinated Lender from converting into equity of Parent, or prohibit the Company from permitting conversion into equity of Parent, of any Subordinated Obligations;

 

(c) permit or require any Credit Party (other than Issuer) to guarantee, or otherwise become liable in respect of, any of the Subordinated Obligations;

 

(d) permit or require any Credit Party to create any Lien on any of its assets or properties to secure the payment or performance of any of the Subordinated Obligations;

 

  

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(e) commence, or join with any creditors (other than Senior Lenders) in commencing, or otherwise cause, any Insolvency Proceeding;

 

(f) challenge the validity, enforceability, priority of, or any other term or provision of, any Senior Loan Document;

 

(g) challenge the extent, validity, creation, perfection or priority of, any Lien created or purported to be created pursuant to any Senior Loan Document or seek to avoid or subordinate any such Lien; or

 

(h) interfere in any respect with the exercise by any Senior Lender of any right or remedy under any Senior Loan Document or applicable law;

 

provided, however, that a transfer by operation of law to the estate of a deceased Subordinated Lender shall not be a default hereunder; provided, further, that it is the express intent of all parties hereto that such transfer shall be expressly subject to this Agreement, and that the Transferee of the estate expressly acknowledges to Senior Lenders, by a written agreement in form and substance satisfactory to Agent or by delivery of an executed counterpart of this Agreement or an intercreditor and subordination agreement substantially identical to this Agreement, the subordination provided for herein and agrees to be bound by all of the terms and provisions hereof.

 

7. Senior Obligations Unconditional.  All obligations and agreements of the Subordinated Lender hereunder shall be irrevocable, unconditional, continuing and absolute.  All rights and interests of Senior Lenders hereunder, and all agreements and obligations of the Subordinated Lender and any Credit Party, shall remain in full force and effect irrespective of:

 

(a) any lack of validity or enforceability of any Senior Loan Document or if all or any portion of the Senior Obligations and/or the Liens securing same are subordinated, set aside, avoided or disallowed, in each case pursuant to an Insolvency Proceeding or otherwise (as a result of the fraudulent transfer provisions under the Bankruptcy Code, under any State fraudulent conveyance or fraudulent transfer statute, or otherwise);

 

(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Senior Obligations, or any amendment or waiver or other modification, whether by course of conduct or otherwise, of the terms of any Senior Loan Document, including, without limitation, any increase in any of the Senior Obligations resulting from the extension of additional credit to any Credit Party or otherwise;

 

(c) any exchange, release or nonperfection of any Lien upon any Collateral, or any release, amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or any guarantee thereof;

 

(d) the existence of any claim, set-off, defense, counterclaim or other right that Subordinated Lender, any Credit Party or any other Person may have against any Person, including, without limitation, any Senior Lender;

 

  

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(e) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Senior Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Senior Obligations or any obligations of the Credit Parties under the Senior Loan Documents or any other assets of the Credit Parties;

 

(f) any change, restructuring or termination of the corporate or other organizational structure or existence of any Credit Party;

 

(g) any failure of any Senior Lender to disclose to Subordinated Lender any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of Issuer or any of its Affiliates now or hereafter known to any Senior Lender (Subordinated Lender hereby waiving any duty on the part of Senior Lenders to disclose such information); or

 

(h) any other event or circumstance which otherwise might constitute a defense or counterclaim available to, or a discharge of, any Credit Party in respect of any of the Senior Obligations, or of Subordinated Lender or any Credit Party in respect of this Agreement.

 

8. Representations and Warranties.  Subordinated Lender represents and warrants to each Senior Lender that:

 

(a) the Subordinated Notes: (i) have been issued to it for good and valuable consideration; (ii) are owned by Subordinated Lender free and clear of any security interests, Liens, charges or encumbrances whatsoever, other than the interest of Senior Lenders under this Agreement; (iii) are payable solely and exclusively to Subordinated Lender and to no other Person and is payable without deduction for any defense, recoupment, offset or counterclaim, and (iv) constitute the only evidence of the obligations evidenced thereby;

 

(b) Subordinated Lender has the power and authority and the legal right to execute and deliver and to perform its obligations under this Agreement and has taken all necessary action to authorize its execution, delivery and performance of this Agreement;

 

(c) this Agreement has been duly executed and delivered by Subordinated Lender and constitutes a legal, valid and binding obligation of Subordinated Lender, enforceable against Subordinated Lender in accordance with its terms;

 

(d) the execution, delivery and performance of this Agreement will not violate any provision of any requirement of law applicable to Subordinated Lender or contractual obligation of Subordinated Lender and will not result in the creation or imposition of any Lien on any of the properties or revenues of Subordinated Lender pursuant to any requirement of law affecting, or any contractual obligation of, Subordinated Lender, except the interest of Senior Lenders under this Agreement;

 

(e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority or any other Person (including, without limitation, any creditor of Subordinated Lender), is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement; and

 

  

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(f) no pending or, to the best of its knowledge, threatened litigation, arbitration or other proceedings if adversely determined would in any way prevent the performance of the terms of this Agreement; and

 

(g) as of the date hereof, Issuer is indebted to the Subordinated Lender under the Subordinated Loan Documents in the aggregate amount of $1,478,081.

 

9. No Representation by Senior Lenders.  No Senior Lender has made, and no Senior Lender does hereby nor otherwise make to the Subordinated Lender, any representations or warranties, express, or implied, nor does any Senior Lender assume any liability or obligation to or of Subordinated Lender with respect to:

 

(a) the financial or other condition of any Credit Party or any other obligors under any instruments of guarantee with respect to the Senior Obligations;

 

(b) the enforceability, validity, value or collectibility of any of the Senior Obligations or the Subordinated Obligations, any collateral therefor, or any guarantee or security which may have been granted in connection with any of the Senior Obligations or the Subordinated Obligations; or

 

(c) the title or right of any Credit Party or any other Person to transfer any collateral or security.

 

10. Waiver of Claims.  To the maximum extent permitted by law, Subordinated Lender waives any claim it might have against any Senior Lender with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight whatsoever on the part of any Senior Lender or its affiliates, directors, officers, employees, advisors, attorneys or agents with respect to any exercise of any rights or remedies under any of the Senior Loan Documents or any transaction relating to any of the Collateral or any guarantee.  No Senior Lender or any of its affiliates, directors, officers, employees, advisors, attorneys or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or any guarantee or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or realize upon any guarantee upon the request of any Credit Party or Subordinated Lender or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof or any guarantee.

 

11. Additional Provisions Applicable After Insolvency Event or Proceeding.  Without limiting any other term or provision in this Agreement or any Senior Loan Document:

 

(a) The provisions of this Agreement shall continue in full force and effect notwithstanding the occurrence of any Insolvency Event or Insolvency Proceeding.

 

(b) Subordinated Lender agrees that it will not, directly or indirectly (including, without limitation, as a member of any unsecured creditors’ committee), take any action in or relating to any proceeding arising from, as a result of, in connection with or relating to any Insolvency Proceeding to challenge, contest or object in any manner to (i) the extent, validity, creation, enforceability, perfection or priority of any of the Senior Obligations or any Senior Loan Document or any Liens or security interests created under any Senior Loan Document, or any term or provision of this Agreement or Subordinated Lender's obligations, undertakings, acknowledgments and agreements set forth in this Agreement; (ii) any pleading, motion, notice, objection or argument of or made by or on behalf of any holder of any of the Senior Obligations based on, under or in respect of Section 361, 362, 363 or 364 of the Bankruptcy Code, including, without limitation, in respect of permitting the use of any cash or other collateral by, or providing any financing to, any Credit Party under either Section 363 or 364 of the Bankruptcy Code (including, without limitation, any request for adequate protection, or in respect of the sale or other disposition of any property by any Credit Party under Section 363 of the Bankruptcy Code or pursuant to a plan of reorganization or any other arrangement (and Subordinated Lender shall be deemed to have consented to any such sale or disposition and all of the terms applicable thereto); or (iii) the payment of interest, fees, expenses or other amounts to Senior Lenders under Sections 506(b) or 506(c) of the Bankruptcy Code or otherwise.  Subordinated Lender agrees that it will not seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, without the prior written consent of Agent.  Subordinated Lender shall not support or vote in favor of any plan of reorganization (and they shall be deemed to have voted to reject any plan of reorganization) unless such plan (i) pays off, in cash in full, all Senior Obligations or (ii) is accepted by the Senior Lenders.  This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective, during and after the commencement of an Insolvency Proceeding.

 

  

11

  

 

12. Further Assurances.  The Subordinated Lender and each Credit Party, at their own sole cost and expense and at any time from time to time, upon the written request of Agent will promptly and duly execute and deliver such further instruments and documents and take such further actions as Agent reasonably may request for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.  Without limiting the generality of the foregoing, in the event of an assignment pursuant to any Senior Loan Document or in the event of a refinancing of the Senior Obligations, the Subordinated Lender and each Credit Party shall, upon the request of Agent, execute a new intercreditor and subordination agreement upon the same terms as this Agreement to further evidence and confirm that the Subordinated Obligations are and shall remain junior and subordinate in right of payment to the Senior Obligations.

 

13. Reinstatement.  The terms and provisions of this Agreement shall continue to be effective or be reinstated, and the Senior Obligations shall not be deemed to be paid in full, as the case may be, if at any time any payment of any of the Senior Obligations is rescinded or avoided, or must otherwise be returned by any Senior Lender pursuant to any Insolvency Proceeding or otherwise, all as though such payment had not been made.

 

14. Expenses.  Subordinated Lender shall pay or reimburse Senior Lenders, upon demand, for all of its reasonable and documented costs and expenses incurred in connection with the enforcement of any rights and remedies with respect to the Subordinated Lender under this Agreement, including, without limitation, reasonable fees and disbursements of counsel to Senior Lenders.

 

15. Provisions Define Relative Rights.  This Agreement is intended solely for the purpose of defining the relative rights of Senior Lenders, on the one hand, and the Subordinated Lender, on the other, and the obligations of Credit Parties in connection with the foregoing and no other Person shall have any right, benefit or other interest under this Agreement.  Each Credit Party hereby agrees that it will not make any payment on or in respect of any of the Subordinated Obligations, or take any other actions, in contravention of the provisions of this Agreement.

 

  

12

  

 

16. Legend.  Subordinated Lender will cause each Subordinated Note (and each other Subordinated Loan Document as Agent shall request) to bear upon its face the following legend:

 

“ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF AUGUST 28, 2015 (THE “SUBORDINATION AGREEMENT”), AS THE SAME MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., A DELAWARE CORPORATION AND ITS SUBSIDIARIES, OPUS BANK, AS ADMINISTRATIVE AGENT, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THE SUBORDINATED LOAN DOCUMENTS REFERRED TO IN THE SUBORDINATION AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS NOTE, AND EACH HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.”

 

17. Powers Coupled With An Interest.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until the Senior Obligations are paid in full.

 

18. Authority of Senior Lenders.  Each Credit Party and Subordinated Lender acknowledge and agree that the rights and responsibilities of each Senior Lender under this Agreement with respect to any action taken by any Senior Lender or the exercise or non-exercise by any Senior Lender of any option, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall be governed by the Senior Loan Documents and by such other agreements with respect thereto as may exist from time to time among, but, as between Senior Lenders, on the one hand, and the Credit Parties and the Subordinated Lender, on the other hand, each Senior Lender shall be conclusively presumed to be acting with full and valid authority so to act or refrain from acting, and neither any Credit Party nor Subordinated Lender shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

  

13

  

 

19. Notices.

 

(a) All notices, requests and demands to or upon any Senior Lender, any Credit Party or Subordinated Lender under this Agreement to be effective shall be in writing (or by fax or similar electronic transfer confirmed in writing) and shall be deemed to have been duly given or made (i) when delivered by hand or (ii) if given by mail, when deposited in the mails by certified mail, return receipt requested, or (iii) if by fax or similar electronic transfer, when sent and receipt has been confirmed, addressed as follows:

 

If to Agent:                                                           Opus Bank

19900 MacArthur Blvd., 12th Floor

Irvine, CA 92612

Attn: Kevin McBride, Senior Managing Director

Telephone:  949.251.8182

E-mail:  kmcbride@opusBank.com

with a copy to :

                                Schiff Hardin LLP

                                233 South Wacker Drive, Suite 6600

                                Chicago, Illinois 60606

Attention: Sean T. Maloney

Telecopy: (312) 258-5600

Email: smaloney@schiffhardin.com

If to any Credit Party:                                          Fusion Telecommunications International, Inc.

420 Lexington Avenue, Suite 1718

New York, New York 10170

Facsimile: (212) 972-7884

Attention: Gordon Hutchins, Jr., President

with a copy to:                                                      Kelley Drye & Warren LLP

101 Park Avenue

New York, New York 10178

Attention: Jack Miles and Merrill Stone

Facsimile: (212) 808-7897

Email: mstone@kelleydrye.com

(b) If to Subordinated Lender, at its address or transmission number for notices set forth under its signature below.

 

(c) Any Senior Lender, Credit Party or Subordinated Lender may change its addresses and transmission numbers for notices by notice in the manner provided in this Section 19.

 

20. Counterparts.  This Agreement may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be effective as delivery of an original executed counterpart of this Agreement.

 

21. Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

  

14

  

 

22. Integration.  THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT OF SENIOR LENDERS, CREDIT PARTIES AND THE SUBORDINATED LENDER WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THERE ARE NO PROMISES OR REPRESENTATIONS BY ANY SENIOR LENDER, CREDIT PARTIES OR SUBORDINATED LENDER RELATIVE TO THE SUBJECT MATTER HEREOF NOT REFLECTED HEREIN.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

23. Amendments in Writing; No Waiver; Cumulative Remedies.

 

(a) Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by Agent and the Subordinated Lender, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given; provided that any such modification or waiver that directly and adversely affects the obligations of the Credit Parties hereunder and is sought to be enforced against the Credit Parties shall require the consent of the Credit Parties.

 

(b) No failure to exercise, nor any delay in exercising, on the part of any Senior Lender, any right, remedy power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

(c) The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

(d) If Subordinated Lender or any Credit Party violates any of the terms or provisions of this Agreement, in addition to any remedies in law, at equity or otherwise, any Senior Lender may restrain or enjoin such violation in any court of competent jurisdiction and may interpose this Agreement as a defense or counterclaim in any action or proceeding by Subordinated Lender or any Credit Party.

 

24. Section Headings.  The section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

25. Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Credit Party and Subordinated Lender and shall inure to the benefit of Senior Lenders and their respective successors and assigns.

 

26. Governing Law; etc.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

 

27. Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[the remainder of this page intentionally left blank]

 

  

15

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

  AGENT:

	
OPUS BANK, as Administrative Agent

 

 

By:      /s/ Kevin McBride                                  

Name: Kevin McBride

Title:    Senior Managing Director

 

 

  

16

  

 

CREDIT PARTIES:

 

	  	
FUSION NBS ACQUISITION CORP.

 

 

By:  /s/ Gordon Hutchins, Jr.

       Name: Gordon Hutchins, Jr.

       Its:  President and COO

	  	
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

 

 

By:  /s/ Gordon Hutchins, Jr.

       Name: Gordon Hutchins, Jr.

       Its:  President and COO

 

 

	  	
NETWORK BILLING SYSTEMS, L.L.C.

 

 

By:  /s/ Gordon Hutchins, Jr.

       Name: Gordon Hutchins, Jr.

       Its:  Executive Vice President

 

	  	
PINGTONE COMMUNICATIONS, INC.

 

 

By:  /s/ Gordon Hutchins, Jr.

       Name: Gordon Hutchins, Jr.

       Its:  President and COO

 

	  	
FUSION BVX LLC

 

 

By:  /s/ Gordon Hutchins, Jr.

       Name: Gordon Hutchins, Jr.

       Its:  President and COO

 

 

 

 

  

17

  

 

SUBORDINATED LENDER:

 

	 	  

/s/ Marvin Rosen

	 	

Marvin Rosen

 

 

  

18

  

Exhibit A

Subordinated Note

See Attached

 

 

  

19

  

 

UNSECURED PROMISSORY NOTE

 

	 $3,922,364.37	 October 25, 2012

 

For value received, the undersigned maker (“Maker”), whose address is 420 Lexington Avenue, Suite 1718, New York, NY 10170, promises to pay to the order of MARVIN S. ROSEN (“Lender”), whose address is 912 Fifth Avenue, #5A, New York, NY 10035, the principal sum of $3,922,364.37 together with all accrued and unpaid interest from the date of execution of the Note at the rate of 7.0% per annum, compounding annually, upon the unpaid principal balance until the principal balance is paid in full, payable in U.S. Dollars at the Lender’s address set forth above, or at such other address as Lender may designate. The unpaid principal balance of this Note and all accrued but unpaid interest will be due and payable in full on the date that is 60 days following termination of that certain Intercreditor and Subordination Agreement dated October 25, 2012 by and between Fusion Telecommunications International, Inc., Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP, and Praesidian Capital Opportunity Fund III, LP, as agent.

If the Maker defaults in its obligations hereunder, neither the failure of the Lender to promptly exercise its right to declare the outstanding principal and accrued but unpaid interest hereunder to be immediately due and payable, nor the failure to exercise any other right or remedy the Lender may have for default, nor the acceptance by the Lender of late or partial payments shall constitute a waiver of such rights in connections with any future default on the part of the undersigned or any other person who may be liable hereunder.

The Maker agrees to pay all of the Lender’s expenses of collecting and enforcing this Note, including, without limitation, expenses and reasonable fees of legal counsel, court costs and the cost of appellate proceedings.

This Note is to be construed and enforced according to the laws of the state of New York without regard to the conflicts of laws or provisions thereof.

Maker waives any right of exemption and waives presentment, protest and demand, notice of protest, demand, and/or dishonor and nonpayment of this Note.

Maker:

Fusion Telecommunications International, Inc., a Delaware corporation

By:                                                                           

Printed Name: Gordon Hutchins, Jr., as President

Date: October 25, 2012

41907-0025

CH2\17101039.4SECURITIES
EXCHANGE AGREEMENT

 

THIS
SECURITIES EXCHANGE AGREEMENT (the “Agreement”) is dated March 24, 2016, by and between DRAFTDAY FANTASY
SPORTS, INC., a Delaware corporation formerly known as Viggle, Inc. (the “Company”), MGT Sports, Inc., a Delaware
corporation partnership (“MGT Sports”) and MGT Capital Investments, Inc., a Delaware corporation and the parent
corporation of MGT Sports (“Parent,” and collectively with the Company and MGT Sports, the “Parties”).

 

WHEREAS:

 

WHEREAS,
on September 8, 2015, the Company, Parent and MGT Sports entered into an Asset Purchase Agreement (the “Asset Purchase
Agreement”), pursuant to which the Company acquired certain assets comprising the DraftDay Business (as defined in the
Asset Purchase Agreement) in consideration for which, among other things, MGT Sports received a promissory note in the principal
amount of $1,875,000 (the “Note”), which bears interest at a rate of 5% per annum;

 

WHEREAS,
the Note was originally due on March 8, 2016, and is currently in default due to nonpayment by the Company of the principal of
the Note and interest accrued thereunder;

 

WHEREAS,
the Company desires to make a cash payment (the “Interest Payment”) to MGT Sports for the entirety of the accrued
interest due under the Note, which as of the date hereof is $51,302.74, or $260.42 per day;

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act of 1933,
as amended (the “Securities Act”), the Company desires to exchange the Note, and MGT Sports desires to so exchange
the Note, for equity securities in the Company; and

 

WHEREAS,
specifically, subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities
Act, the Company desires to exchange the Note with MGT Sports, and MGT Sports desires to so exchange the Note with the Company,
as follows:

 

	 	a)	A
    portion consisting of 824,207.40 of the outstanding principal of the Note shall be exchanged for 2,747,358 shares (the “Common
    Shares”) of the common stock of the Company, par value $0.001 (“Common Stock”);
	 	 	 
	 	b)	An
    additional portion of outstanding principal of the Note, equal to $110,000, shall be exchanged for 110 shares (the “Preferred
    Shares”) of a newly created class of convertible preferred stock of the Company (the “Preferred Class”),
    which shall be convertible into shares of the Company’s common stock at a rate of 3,333 shares of common stock for one
    share of converted  preferred stock, such that the Preferred Shares will be convertible into an aggregate of 366,630
    shares of the Company’s common stock;
	 	 	 
	 	c)	Conversions
    of the Preferred Shares shall be limited such that any given conversion shall not cause MGT Sport’s aggregate beneficial
    ownership of the shares of Common Stock to exceed 9.99% of the Company’s outstanding common stock;
	 	 	 
	 	d)	The
    remaining portion of outstanding principal of the Note, consisting of a remaining principal amount equal to $940,792.60 (the
    “Remaining Principal”), shall remain outstanding and shall continue to bear interest at a rate of 5% per annum
    and all the terms thereof shall remain unchanged except that the maturity date shall be amended hereby to July 31, 2016. The
    Common Shares, the Preferred Shares,  and the shares of common stock issuable upon conversion of the Preferred Shares
    shall be referred to collectively herein as the “Exchange Securities”.

 

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the Parties agree as follows:

  

    	 	1	 

     

    

 

ARTICLE
I

THE
NOTE EXCHANGE

AND
ISSUANCE OF EQUITY SECURITIES

 

1.1
 Closing. The closing (the “Closing”) of the transactions contemplated by this Agreement shall take
place upon the full execution of this Agreement.

 

1.2
Exchange. At the Closing:

 

(a)
the Company shall make the Interest Payment to MGT Sports in accordance with the wire instructions attached hereto as Exhibit
A;

 

(b)
the Company shall cause its transfer agent to issue the Common Shares to MGT Sports;

 

(c)
the Company shall issue the Preferred Shares to MGT Sports, immediately subsequent to any filing of the Certificate of Designations
for the newly created Preferred Class as may be required by the Secretary of State of Delaware, but no later than March 30, 2016;

 

(c)
the Company shall cause its transfer agent to reserve such number of shares of common stock as may be issuable to MGT Sports upon
conversion of the Preferred Shares;

 

(d)
MGT Sports shall issue a letter to the Company confirming the remaining outstanding principal amount of the Note (collectively,
the “Note Exchange Transactions”).

 

1.3No
Consideration. The Exchange Securities shall be issued to MGT Sports solely in exchange for the cancellation of a portion
of the Note, and MGT Sports shall not pay or be required to pay any additional consideration to the Company in order to effectuate
the issuance of such shares;

 

1.4Delivery.
The Note Exchange Transactions shall be completed as soon as practicable following the Closing Date. As of the Closing Date, the
Note shall be null and void and any and all rights arising thereunder shall be extinguished.

 

1.5Waiver.
Upon execution of this Agreement, any and all Events of Default under the Note (“Events of Default”), and remedies
arising out of Events of Default, each as set forth in the Note, occurring prior to this Agreement, shall be deemed waived without
further recourse by MGT Sports and Parent. Upon completion of the Note Exchange Transactions, MGT and Parent shall release and
discharge the Company from all actions, causes of action, amounts due, owing or accruing, promises and claims whatsoever, in law,
arising from or related to the Note, except to the extent of the Remaining Principal and interest thereon as contemplated thereby.

 

1.6Amendment of the
Note. The Note shall be amended hereby to change the maturity date of the Note to July 31, 2016.

 

ARTICLE
II

REPRESENTATIONS
AND WARRANTIES 

OF
THE COMPANY

 

2.1
Authorization and Binding Obligation. The Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and to complete the Note Exchange Transactions, including the issuance of the Common Shares and
the Preferred Shares, in accordance with the terms hereof. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of
the Exchange Securities and the reservation for issuance of shares of the Company’s common stock issuable upon conversion
of the Preferred Shares, have been duly authorized by the Company’s Board of Directors and no further filing, consent, or
authorization is required by the Company, its Board of Directors or its stockholders. This Agreement has been duly executed and
delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited
by federal or state securities laws.

 

    	 	2	 

     

    

 

2.2
No Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company
of the Note Exchange Transactions contemplated will not (i) result in a violation of the Certificate of Incorporation, as amended,
or other organizational document of the Company or any of its subsidiaries, any capital stock of the Company or any of its subsidiaries
or bylaws of the Company or any of its subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and
applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries
is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably
be expected to have a material adviser effect on the Company or its subsidiaries.

 

2.3
Securities Law Exemptions. Assuming the accuracy of the representations and warranties of MGT Sports contained herein,
the offer and issuance by the Company of the Exchange Securities is exempt from registration pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act.

 

2.4
Issuance of Securities. The issuance of the Common Shares and the Preferred Shares is duly authorized and upon issuance
in accordance with the terms of this Agreement, the Common Shares and the Preferred Shares shall be validly issued, fully paid
and non-assessable and free from all taxes, liens, charges and other encumbrances with respect to the issuance thereof and shall
not be subject to any preemptive, participation, rights of first refusal and other similar rights. Upon conversion of the Preferred
Shares in accordance with the terms thereof, and subject to the 9.99% maximum ownership limitation, the common stock issuable
upon such exercise, when issued, will be validly issued, fully paid and non-assessable and free from all preemptive or similar
rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, and MGT Sports shall be entitled to all
rights accorded to a holder of such shares of common stock.

 

2.5
Transfer Taxes. On the Closing Date, all share transfer or other taxes (other than income or similar taxes) which are
required to be paid in connection with the issuance of the Exchange Securities will be, or will have been, fully paid or provided
for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

2.6
Disclosure. The Company confirms that neither it nor any other person acting on its behalf has provided MGT Sports
or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its subsidiaries, other than the existence of the transactions contemplated by this
Agreement. The Company understands and confirms that MGT Sports may rely on the foregoing representations in effecting transactions
in securities of the Company.

 

2.7No
Integrated Offering. Except as set forth on Schedule 2.7, the Company has not sold or issued,
nor will sell or issue any securities that would be integrated with the offering of the Exchange Securities contemplated by this
Agreement pursuant to the Securities Act and the rules and regulations or the interpretations thereunder of the Securities and
Exchange Commission. Other than as disclosed on Schedule 2.7 hereto, the Company will not make, directly or indirectly,
any offers or sales of any security under circumstances that would require the transactions contemplated by this Agreement to
be approved by the Company’s shareholders under applicable shareholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are
listed or designated.

 

    	 	3	 

     

    

 

2.8SEC
Reports; Financial Statements.

 

(a)
The Company has filed all registration statements, prospectuses, forms, reports, definitive proxy statements, schedules and other
documents and filings required to be filed by it under the Securities Act or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as the case may be (the “SEC Reports”), since January 1, 2015; provided
that the Company’s Form 10-Q for the quarter ended December 31, 2015 was filed late. None of the Company’s subsidiaries
is required to file periodic reports with the Securities and Exchange Commission pursuant to the Exchange Act. Each SEC Report
(i) as of the time it was filed (or if subsequently amended, when amended), complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, except with regard to timeliness, and (ii) did not, at the time
it was filed (or if subsequently amended or superseded by an SEC Report, then, on the date of such subsequent filing), contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

(b)
The Company’s consolidated financial statements (including, in each case, any notes thereto) contained in the Form 10-K
for the fiscal year ended June 30, 2015 (the “Company Consolidated Financial Statements”) were prepared in
accordance with generally accepted accounting principles as in effect in the United States of America (“GAAP”),
applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or as may have
been required by regulatory accounting principles applicable to the Company or the Bank) or, in the case of interim consolidated
financial statements, where information and footnotes contained in such financial statements are not required to be in compliance
with GAAP), and in each case such Company Consolidated Financial Statements fairly presented, in all material respects, the consolidated
financial position, results of operations, cash flows and shareholders equity of the Company and its consolidated subsidiaries
as of the respective dates thereof and for the respective periods covered thereby (subject, in the case of unaudited financial
statements, to normal year-end adjustments which were not and which are not expected to be, individually or in the aggregate,
material to the Company and its consolidated subsidiaries taken as a whole).

 

(c)
Except as set forth in the Company’s filings with the SEC, including without limitation, the risk factors contained therein,
and except as and to the extent set forth on the consolidated balance sheet of the Company as of June 30, 2015 (the “Company
2015 Balance Sheet”), between June 30, 2015 and the date hereof neither the Company nor any of its consolidated subsidiaries
has incurred any debts, liabilities or obligations (whether accrued, absolute, contingent, liquidated or otherwise, whether due
or to become due) of a nature that would be required to be reflected on a balance sheet or in notes thereto prepared in accordance
with GAAP consistently applied, except for liabilities or obligations (i) that, in the aggregate, are adequately provided for
in the Company 2015 Balance Sheet, or (ii) incurred in the ordinary course of business between June 30, 2015 and the date hereof
that would not, individually or in the aggregate, have any material adverse effect on (x) the business, financial condition, results
of operations or assets of the Company and its subsidiaries taken as a whole, or (y) the ability of the Company to consummate
the transactions contemplated by this Agreement.

 

2.9Exchange
Act Registration, NASDAQ.

 

(a)
The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the NASDAQ Capital Market, and other
than as disclosed on Schedule 2.9 hereto, the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ Capital
Market, nor has the Company received any notification that the Securities and Exchange Commission or the NASDAQ Capital Market
is contemplating terminating such registration or listing.

 

    	 	4	 

     

    

 

ARTICLE
III

REPRESENTATIONS
AND WARRANTIES 

OF
MGT SPORTS

 

As
a material inducement to the Company to enter into this Agreement and consummate the exchange, MGT Sports represents, warrants
and covenants with and to the Company as follows:

 

3.1Authorization
and Binding Obligation. MGT Sports and Parent, each have the requisite legal capacity, power and authority to enter into,
and perform under, this Agreement. MGT Sports has the requisite legal capacity, power and authority to purchase the Exchange Securities.
Each of the execution, delivery and performance of this Agreement by MGT Sports and Parent, and the consummation by MGT Sports
of the Note Exchange Transactions, have been duly authorized by all requisite corporate action on the part of MGT Sports and Parent,
as applicable, and no further consent or authorization is required. This Agreement has been duly authorized, executed and delivered
by MGT Sports and Parent, and constitutes the legal, valid and binding obligations of MGT Sports and Parent, enforceable against
MGT Sports and Parent in accordance with its terms, except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities laws.

 

3.2
Beneficial Owner. With respect to the Note, (i) MGT Sports owns, beneficially and of record, good and marketable title
to the Note, free and clear of any taxes or encumbrances; (ii) the Note is not registered under the Securities Act and, therefore,
cannot be resold unless registered under the Securities Act or in a transaction exempt from or not subject to the registration
requirements of the Securities Act; (iii) MGT Sports has not entered into any agreement or understanding with any person or entity
to dispose of the any portion of the Note; and (iv) at the Closing, MGT Sports will convey to the Company good and marketable
title to the Note in its entirety, free and clear of any security interests, liens, adverse claims, taxes or encumbrances.

 

3.3Accredited
Investor. MGT Sports is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the Securities
Act, and MGT Sports was not organized for the specific purpose of acquiring the Exchange Securities.

 

3.4Experience
of Investor. MGT Sports, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Exchange Securities, and has evaluated the merits and risks of such investment. MGT Sports is able to bear the economic risk of
an investment in such securities and, at the present time, is able to afford a complete loss of such investment.

 

3.4Purchase
Entirely for Own Account. The Exchange Securities will be acquired for the MGT Sports’s own account, not as nominee
or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act, and MGT Sports
has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities
Act without prejudice, however, to such MGT Sports’s right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed
a representation or warranty by MGT Sports to hold the Exchange Securities for any period of time. MGT Sports is not a broker-dealer
or agent of a broker-dealer required to be registered with the Securities and Exchange Commission under Section 15 of the Securities
Exchange Act of 1934 (the “Exchange Act”), nor an entity or individual engaged in a business that would require
it to be so registered.

 

3.5Disclosure
of Information. MGT Sports has access to and has reviewed the Company’s filings with the Securities and Exchange Commission,
at WWW.SEC.GOV, including the “Risk Factors” contained therein. MGT Sports has had the opportunity to ask questions
of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the
Exchange Securities. Neither such inquiries nor any other due diligence investigation conducted by MGT Sports shall modify, amend
or affect MGT Sports’s right to rely on the Company’s representations and warranties contained in this Agreement.

 

3.6Restricted
Securities. MGT Sports understands that the Exchange Securities are characterized as “restricted securities” as
that term is defined under Rule 144 of the Securities Act, and have not been registered under the Securities Act or any applicable
state securities law, and may not be resold without registration under the Securities Act or the existence of an exemption therefrom.
MGT Sports represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. MGT Sports agrees and acknowledges that, in connection with
the transfer of any portion of, or all of, such securities, the Company may require MGT Sports to provide the Company an opinion
of counsel selected by MGT Sports and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Exchange Securities
under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of an investor under this Agreement.

 

    	 	5	 

     

    

 

3.7Legends.
MGT Sports agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Exchange Securities,
or certificates evidencing such securities, in the following form:

 

THIS
SECURITY NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF
WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

MGT
Sports agrees also to the imprinting of any legend required by the “blue sky” laws of any state to the extent such
laws are applicable to the securities to be so legended. Certificates evidencing such securities shall not contain any legend
(including the legend set forth in this Section 3.7 hereof): (i) while a registration securities pursuant to Rule 144, or (iii)
if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission), as reasonably determined by the Company.

 

3.8Proceedings.
No proceedings relating to the Note are pending or, to the knowledge of MGT Sports, threatened before any court, arbitrator or
administrative or governmental body that would adversely affect MGT Sports’s right and ability to surrender and exchange
the Note.

 

3.9Tax
Consequences. MGT Sports acknowledges that the purchase of Exchange Securities, may involve tax consequences to MGT Sports,
and that the contents of this Agreement do not contain tax advice. MGT Sports acknowledges that it has not relied and will not
rely upon the Company with respect to any tax consequences related to the exchange of the Note. MGT Sports assumes full responsibility
for all such consequences and for the preparation and filing of any tax returns and elections which may or must be filed in connection
with such Note.

 

3.10
Reliance on Exemptions. MGT Sports understands that the securities being offered and exchanged hereunder are being
offered and exchanged in reliance on specific exemptions from the registration requirements of United States federal and state
securities laws, and that the Company is relying in part upon the truth and accuracy of, and MGT Sports’s representations,
and compliance with, the representations, warranties, agreements, acknowledgments and understandings of MGT Sports set forth herein
in order to determine the availability of such exemptions and the eligibility of MGT Sports to acquire the Exchange Securities.

 

ARTICLE
IV

COVENANTS
AND OTHER AGREEMENTS

 

4.1
Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Note may be tacked
onto the holding period of the Exchange Securities, and the Company agrees not to take a position contrary to this Section 4.1.

 

4.2Redemption
of the Preferred Shares. The Company and MGT Sports agree that the Company shall have the right, at any time, to redeem the
Preferred Shares in whole or in part, for cash, at an amount equal to 110% of the stated value of such shares at the time such
redemption is requested.

 

    	 	6	 

     

    

 

4.3Expenses.
Each Party agrees to pay for its own expenses related to the research, preparation and review of the transactions contemplated
by this Agreement.

 

4.4
Limitation on Conversion of Preferred Shares. The Company and MGT Sports agree that the Company shall not issue such number
of the shares of Common Stock issuable upon conversion of Preferred Shares pursuant to this Agreement to the extent that after
giving effect to such Conversion, MGT Sports (together with MGT Sports’s affiliates) would beneficially own in excess of
9.99% of the Common Stock outstanding immediately after giving effect to such conversion, based on information provided by MGT
Sports to the Company. MGT Sports acknowledges that as a result of this restriction, the number of shares that may be issued upon
the conversion may change depending upon changes in the outstanding shares of Common Stock. Any portion of Preferred Shares not
converted due to the above limitations will remain as Preferred Shares.

 

4.5Acceptance
of MGT Sport’s Counsel’s 144 Opinion. The Company covenants that it shall give specific authorization to its transfer
agent and its legal counsel that the transfer agent may accept MGT Sports’s legal counsel’s 144 opinion with regard
to sale of the Common Shares or any shares of Common Stock underlying any of the Equity Securities as long as MGT Sports holds
any Equity Securities; provided that the transfer agent shall be instructed to contact the Company for approval of all opinions
before giving effect to the removal of any restrictive legends therefrom. The Company shall be allowed two (2) business days to
review an opinion and if no objection is affirmatively raised then the Company’s approval shall be deemed given.

 

ARTICLE
V

CONDITIONS
TO COMPANY’S OBLIGATIONS HEREUNDER

 

The
obligations of the Company to MGT Sports hereunder are subject to the satisfaction of each of the following conditions, provided
that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion
by providing the Investor with prior written notice thereof:

 

5.1
MGT Sports shall have duly executed this Agreement and delivered the same to the Company.

 

5.2
The representations and warranties of MGT Sports shall be true and correct in all material respects as of the date when made
and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date which shall be true and correct as of such specified date), and MGT Sports shall each have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by MGT Sports at or prior to the Closing Date.

 

5.3No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

ARTICLE
VI

CONDITIONS
TO THE OBLIGATIONS 

OF
MGT SPORTS HEREUNDER

 

The
obligations of MGT Sports hereunder are subject to the satisfaction of each of the following conditions (except to the extent
such condition is expressly conditional to a specific closing, in which case such condition shall only apply to such specific
closing), provided that these conditions are for the sole benefit of MGT Sports and may be waived by MGT Sports at any time in
its sole discretion by providing the Company with prior written notice thereof:

 

6.1
The Company shall have duly executed and delivered this Agreement and provided it to MGT Sports.

 

6.2
Each and every representation and warranty of the Company shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as
of a specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by
the Company at or prior to the Closing Date.

 

    	 	7	 

     

    

 

6.3
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for
the Note Exchange Transactions, including but not limited to filing the Certificate of Designations for the Preferred Class as
may be required to be filed with the Secretary of State of the State of Delaware.

 

6.4The
Company shall have issued an instruction letter to its transfer agent to issue the Common Shares and the Preferred Shares to MGT
Sports.

 

6.5The
Company shall have delivered an irrevocable letter of instruction to its transfer agent to reserve for issuance to MGT Sports
such number of shares of the Company’s common stock as may be issuable upon conversion of the Preferred Shares;

 

6.6
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by this Agreement.

 

ARTICLE
VI

MISCELLANEOUS

 

7.1
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City and County of New York, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

7.2
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.
This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic
Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered
to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of
any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.
No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement
or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract,
and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

 

7.3
Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

    	 	8	 

     

    

 

7.4Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

7.5
Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor,
the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement,
contains the entire understanding of the Parties with respect to the matters covered herein and, except as specifically set forth
herein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Parties, and any amendment
to this Agreement made in conformity with the provisions of this Section shall be binding upon the Parties. No provision hereof
may be waived other than by an instrument in writing signed by the Party against whom enforcement is sought.

 

7.6Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications shall be:

 

	 	If
    to the Company:	DraftDay
    Fantasy Sports, Inc.
	 	 	902
    Broadway, 11th Floor
	 	 	New
    York, NY 1010
	 	 	Telephone:
    212.231.0092 
	 	 	Attention:
    General Counsel 
	 	 	Email:
    tom@wetpaint.com 
	 	 	 
	 	If
    to the Investor:	MGT
    Sports, Inc.
	 	 	500
    Mamaroneck Avenue, Suite 320
	 	 	Harrison,
    NY 10528
	 	 	ATTN:
    Robert B. Ladd, President and CEO
	 	 	Phone:
    (914)630-7430
	 	 	Email:
    rladd@mgtci.com
	 	 	 
	 		With
    a copy to: 
	 	 	 
	 	 	Sichenzia
    Ross Friedman Ference LLP
	 	 	61
    Broadway, 32nd Floor
	 	 	New
    York, New York 10006
	 	 	Telephone:
    (212) 930-9700
	 	 	Email:
    jkaplowitz@srrff.com
	 	 	Attention:
    Jay Kaplowitz, Esq.

 

to
its address and email address set forth above, or to such other address and/or email address and/or to the attention of such other
person as the recipient party has specified by written notice given to each other Party five (5) days prior to the effectiveness
of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) electronically generated by the sender’s email program containing the time, date, recipient email address and copy of
the message or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by email
or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

    	 	9	 

     

    

 

7.8
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective
successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written
consent of MGT Sports. MGT Sports may assign some or all of its rights hereunder without the consent of the Company, except as
may be inconsistent with the terms of this Agreement.

 

7.9Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty.

 

[signature
page follows]

 

    	 	10	 

     

    

 

IN
WITNESS WHEREOF, the Investor and the Company have caused their respective signature pages to this Agreement to be duly executed
as of the date first written above.

 

	 	COMPANY:
	 	 
	 	DRAFTDAY
    FANTASY SPORTS, INC.
	 	 
	 	By:	/s/
    Tom McLean
	 	Name:
    	Tom
    McLean 
	 	Title:
    	General
    Counsel
	 	 
	 	MGT
    SPORTS, INC.
	 	 
	 	By:
    	/s/
    Robert Ladd
	 	Name:
    	Robert
    Ladd
	 	Title:
    	President
    and Chief Executive Officer
	 	 	 
	 	PARENT:	 
	 	 	 
	 	MGT
    CAPITAL INVESTMENTS, INC.
	 	 
	 	By:	/s/
    Robert Ladd
	 	Name:	Robert
    Ladd
	 	Title:	President
    and Chief Executive Officer

 

    	 	11

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