Document:

Exhibit

SECURITY AGREEMENT
 
This SECURITY AGREEMENT, dated as of July [   ], 2016 (as amended, restated or otherwise modified from time to time, this “Agreement”) made by Function(x) Inc. (formerly known as DraftDay Fantasy Sports, Inc.)., a Delaware corporation, wetpaint.com, Inc., a Delaware corporation, and Choose Digital Inc., a Delaware corporation  (each a “Company” or a “Grantor” and collectively, the “Companies” or the “Grantors”), in favor of holders of the Company’s Senior Secured 10% Convertible Debentures (the “Debentures”) signatory hereto, their endorsees, transferees and assigns (each a “Secured Party” and collectively, the “Secured Parties”).

RECITALS
 
WHEREAS, pursuant to the Purchase Agreement (as defined in the Debentures), the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Debentures;

     WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the Debentures, each Grantor has agreed to execute and deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party, a security interest in all or substantially all of the assets and personal property of the Grantors to secure all of the Grantors’ payment obligations under the Debentures to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Debentures; and

WHEREAS, each of the Grantors have determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest of, such Grantor.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Secured Parties to perform its obligations under the Debentures, each of the Grantors agrees with the Secured Parties, as follows:
 
SECTION 1. Definitions.
 
(a) Reference is hereby made to the Debentures for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto which are defined in the Debentures or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York or such other applicable jurisdiction (the “Code”), and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute.
 
(b) As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
 
“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
  
“Copyright Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright.
 
“Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by a Grantor, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
 
“Event of Default” shall have the meaning set forth in Section 8 of the Debentures.
 
“Intellectual Property” means the Copyrights, Trademarks and Patents.
 
“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.
 
“Lien” means any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights).
 
“Patent Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent.
 
“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
 
“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or governmental authority.
 
“Pledged Companies” means each direct Subsidiary of a Company that has issued Pledged Interests.
  
“Pledged Interests” means all of the Grantors’ right, title and interest in and to all of the Capital Stock now or hereafter owned by such Grantor, regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the Capital Stock, the right to receive any certificates representing any of the Capital Stock, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.
 
“Pledged Operating Agreements” means all of the Grantors’ rights, powers, and remedies under the limited liability company operating agreements of each of the Pledged Companies that are limited liability companies, as may be amended, restated, supplemented, or otherwise modified from time to time.
 
“Pledged Partnership Agreements” means all of the Grantors’ rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships, as may be amended, restated, supplemented, or otherwise modified from time to time.
 
“Trademark Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by a Grantor and now or hereafter covered by such licenses.
 
“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by a Grantor, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of a Grantor relating to the distribution of products and services in connection with which any of such marks are used.
 
SECTION 2. Grant of Security Interest.  As collateral security for all of the “Obligations” (as defined in Section 3 hereof), each Grantor hereby pledges and assigns to the Secured Parties, and grant to the Secured Parties a continuing security interest in, all of the following personal property and assets of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:
 
(a) all Accounts;
 
(b) all Chattel Paper (whether tangible or electronic);
 
         (c) all Documents;
 
(d) all Equipment;
 
(e) all Fixtures;
 
(f) all General Intangibles (including, without limitation, all Payment Intangibles);
 
(g) all Goods;
 
(h) all Instruments (including, without limitation, Promissory Notes and each certificated Security);
 
(i) all Inventory;
 
(j) all Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Interests, Pledged Operating Agreements and Pledged Partnership Agreements);
 
(k) all Copyrights, Patents and Trademarks, and all Licenses;
 
(l) all Letter-of-Credit Rights;
 
(m) all Supporting Obligations; and
 
(n) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;
 
in each case, howsoever each Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise). Notwithstanding anything herein to the contrary, the security interest created by this Agreement, and the term “Collateral,” shall expressly exclude any Capital Stock of (a) any foreign Subsidiary (except for Capital Stock consisting of more than 65% of the voting power of all classes of Capital Stock entitled to vote of any first-tier foreign Subsidiary), (b) DraftDay Gaming Group, Inc. and (c) 100,000 shares of common stock of Perk.com, Inc.; provided, in each case, that Collateral shall include all Proceeds, including all Cash Proceeds and Noncash Proceeds, thereof. Notwithstanding anything herein to the contrary, the security interest created by this Agreement shall not extend to, and the term “Collateral” shall not include, (a) any lease, license, contract, property rights or agreement to which a Grantor is a party (or to any of its rights or interests thereunder) if the grant of such security interest would constitute or result in either (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement; (b) any Intellectual Property registrations owned and applications for Intellectual Property registrations to be owned, jointly by such Grantor and a Person other than such Grantor, including all renewals and extensions thereof, all rights to recover for past, present or future infringements thereof and all other rights whatsoever accruing thereunder or pertaining thereto; (c) assets owned by such Grantor on the date hereof or hereafter acquired that are subject to a Lien if the contract or other agreement in which such Lien is granted (or the documentation providing for such Lien) validly prohibits the creation of any other Lien on such assets; (d) any intent-to-use Trademark application to the extent and for so long as creation by such Grantor of a security interest therein would result in the loss by such Grantor of any material rights therein; and (e) in the case of any Collateral that consists of general or limited partnership interests in a general or limited partnership, the security interest hereunder shall be deemed to be created only to the maximum extent permitted under the applicable organizational instrument pursuant to which such partnership is formed; and in no event shall such Grantor be required to take any actions to perfect the security interest in any of its assets (including Intellectual Property) located outside the United States. Each Grantor hereby irrevocably authorizes the Secured Parties and their counsel and other representatives, at any time and from time to time, to file or record financing statements, amendments to financing statements, and, with notice to such Grantor, other filing or recording documents or instruments with respect to the Collateral in such form and in such offices as the Secured Parties determine appropriate to perfect the security interests created under this Agreement, and such financing statements and amendments to financing statements may describe the Collateral covered thereby as “all assets of debtor, whether now existing or hereafter acquired, together with all proceeds thereof” or words of similar effect. No affiliate of Robert Sillerman shall: (i) have a security interest in any asset not covered by the security interest granted to the Secured Parties herein, or (ii) have filed a security instrument other that of the type to be filed on behalf of the Secured Parties pursuant to this Agreement. 
 
     SECTION 3. Security for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for, so long as the Debentures are outstanding, the payment by any of the Grantors, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it under the Debentures (the “Obligations”).
 
SECTION 4. Representations and Warranties.  Each Grantor represents and warrants as of the date of this Agreement as follows:
 
(a) Schedule I hereto sets forth (i) the exact legal name of such Grantor, and (ii) the state of incorporation, organization or formation and the organizational identification number of such Grantor in such state.
 
(b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, is required for the grant by such Grantor of the security interest purported to be created hereby in the Collateral, except (A) for the filing under the Code as in effect in the applicable jurisdiction of the financing statements described in Schedule II hereto, all of which financing statements have been or will be duly filed and are or will be in full force and effect, (B) with respect to Commodity Contracts, for the execution of a control agreement with the commodity intermediary with which such commodity contract is carried, (C) with respect to the perfection of the security interest created hereby in the United States Intellectual Property and Licenses, for the recording of an appropriate Assignment for Security, substantially in the form of Exhibit A hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (D) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (E) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights, for the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect in the applicable jurisdiction, (F) with respect to any action that may be necessary to obtain control of Collateral constituting Commodity Contracts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, and (G) the Secured Parties having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral.
  
(c) This Agreement creates in favor of the Secured Parties a valid and enforceable security interest in the Collateral, as security for the Obligations (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies).
 
(d) Such Grantor has delivered to the Secured Parties all Collateral constituting Certificated Securities and Instruments along with blank endorsements thereof; provided, however, that if any such Certificated Securities have been pledged and delivered prior to the date of this Agreement, then such Certificated Securities shall only be delivered to the Secured Parties after the prior pledge has been released.
 
(e) Such Grantor does not have any Commercial Tort Claim for an alleged claim in excess of $100,000.
 
SECTION 5. Covenants as to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Secured Parties shall otherwise consent in writing:
 
(a) Further Assurances.  Each Grantor shall at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that the Secured Parties may reasonably request in order to: (i) perfect and protect the security interest purported to be created hereby; or (ii) enable the Secured Parties to exercise and enforce its rights and remedies hereunder in respect of the Collateral.
 
(b) Insurance. Each Grantor shall, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.  To the extent requested by the Secured Parties at any time and from time to time, each such policy shall name the Secured Parties as additional insured parties and/or loss payees, as applicable, thereunder (without any representation or warranty by or obligation upon the Secured Parties) as their interests may appear.  Each Grantor shall, if so requested by the Secured Parties, deliver to the Secured Parties original or duplicate policies of such insurance and, as often as the Secured Parties may reasonably request, a report of a reputable insurance broker with respect to such insurance.
 
(c) Provisions Concerning the Accounts and the Licenses.  Each Grantor shall give the Secured Parties at least 5 days’ prior written notice of any change in the Grantor’s name, identity, organizational structure or jurisdiction of incorporation, organization or formation.
 
         (d) Intellectual Property.  If applicable, each Grantor shall duly execute and deliver the applicable Assignment for Security in the form attached hereto as Exhibit A.  Each Grantor (either itself or through licensees) shall take all action necessary to maintain all of the material Intellectual Property in full force and effect, and such Grantor shall not do any act or knowingly omit to do any act whereby any material Intellectual Property may become invalidated; provided, however, such Grantor shall have no obligation to use or to maintain any Intellectual Property (i) it determines in its reasonable discretion that such application or registration of such Intellectual Property is no longer material or useful to its business or operations, or that pursuit or maintenance of such application or registration is no longer reasonable, prudent or beneficial to it or its operations, (ii) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (iii) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (iv) that is substantially the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement. Each Grantor shall furnish to the Secured Parties from time to time upon its reasonable (but not more frequently than on a quarterly basis) request statements and schedules identifying and describing the material Intellectual Property and material Licenses in connection with the Intellectual Property and Licenses, all in reasonable detail and promptly upon request of the Secured Parties.
 
(e) Notices of Additional Collateral. Each Grantor shall promptly notify the Secured Parties upon acquiring any Collateral constituting Certificated Securities, Instruments, Uncertificated Securities, Securities Accounts, Securities Entitlements, Commodities Accounts, Electronic Chattel Paper, Letter-of-Credit Rights or Commercial Tort Claims.
 
(f) Additional Perfection Steps with respect to Certificated Securities and Instruments. Grantor shall take all actions necessary to: (i) establish the Secured Parties’ “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Collateral constituting Certificated Securities; and (ii) deliver any portion of the Collateral constituting Instruments to the Secured Parties along with blank endorsements thereof.
 
(g) Additional Perfection Steps with respect to Certain other Collateral. If an Event of Default occurs and is continuing, each Grantor shall, upon the Secured Parties’ request, (i) establish the Secured Parties’ “control” (within the meanings of Section  9-106 of the UCC) over any portion of the Collateral constituting Uncertificated Securities, Securities Accounts, Securities Entitlements or Commodities Accounts; (ii)  upon the Secured Party’s request, establish the Secured Parties’“control” (within the meanings of Section 9-105 of the UCC) over any portion of the Collateral constituting Electronic Chattel Paper; and (iii) upon Secured Parties’ request, establish the Secured Parties’s “control” (within the meanings of Section 9-107 of the UCC) over any portion of the Collateral constituting Letter-of-Credit Rights.
 
(h) Commercial Tort Claims.  Each Grantor hereby covenants and agrees that with respect to any Commercial Tort Claim for an alleged claim in excess of $100,000 hereafter arising, it shall notify the Secured Parties in writing and deliver updated applicable schedules, identifying such new Commercial Tort Claims.
 
         
SECTION 6. Remedies Upon Event of Default. If any Event of Default shall have occurred and be continuing upon prior written notice to the Company:
 
(a) The Secured Parties may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Parties’ offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Parties may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Secured Parties may deem commercially reasonable.  Each Grantor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Secured Parties shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Secured Parties shall be made without warranty, (ii) the Secured Parties may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.
 
(b) Any cash held by the Secured Parties as Collateral and all Cash Proceeds received by the Secured Parties in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall be applied by the Secured Parties against all or any part of the Obligations in such order as the Secured Parties shall elect. Any surplus of such cash or Cash Proceeds held by the Secured Parties and remaining after the satisfaction in full of all of the Obligations shall be paid over to the Company or to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.
 
(c) In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Parties are legally entitled, each Grantor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Debentures for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Parties to collect such deficiency.
 
 (d) The Secured Parties may perform any and all of their duties and exercise their rights and powers hereunder by or through, or delegate any and all such rights and powers to, any one or more agents appointed by the majority in interest (based on then-outstanding principal amounts of Debentures at the time of such determination) of the Secured Parties.
 
SECTION 7. Notices, Etc. All notices and other communications provided for hereunder (a) shall be given in the form and manner set forth in the Debentures and (b) shall be delivered (i) in the case of notice or other communications to the Grantors, by delivery of such notice to the Grantors at their address, facsimile number or e-mail address specified in the Debentures or at such other address, facsimile number or e-mail address as shall be designated by a Company in a written notice to the Secured Parties in accordance with the provisions thereof or (ii) in the case of notice or other communications to the Secured Parties, by delivery of such notice to the Secured Parties to its address, facsimile number or e-mail address set forth in the Purchase Agreement (as defined in the Debentures).

SECTION 8. Miscellaneous.
 
(a) Upon satisfaction in full of the Obligations, (i) this Agreement and the security interests created hereby shall automatically terminate and all rights to the Collateral shall revert to the Grantors, and (ii) the Secured Parties shall, upon the Grantors’ request and at the Grantors’s expense, (A) return to the Grantors such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
 
(b) 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 Grantor irrevocably submits to the non- exclusive jurisdiction of the state and federal courts sitting in the State 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 Grantor 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 TO, 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.
 
 
(c) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. Any party delivering an executed counterpart of this Agreement by facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.
 
(d) 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).
 
(e) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.
 
(f) The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.
 
         (g) 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. For clarification purposes, the Recitals are part of this Agreement.
 
(h) Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and  “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).
 
(i) THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT BETWEEN THE PARTIES SOLELY WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATER HEREOF. No provision of this Agreement may be amended other than by an instrument in writing signed by the Grantors and the Secured Parties. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 
 

IN WITNESS WHEREOF, the Grantors have caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.
 

 
	
		
	 
	GRANTOR:
 
FUNCTION(X) INC.
 
By: __________________________
Name:
Title:

GRANTOR:
 
WETPAINT.COM, INC.
 
By: __________________________
Name:
Title:

GRANTOR:
 
CHOOSE DIGITAL INC.
 
By: __________________________
Name:
Title:

   

[SIGNATURE PAGES OF THE SECURED PARTIES FOLLOW]

IN WITNESS WHEREOF, the undersigned have caused this Security Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Investor: ______________________________                                        

Signature of Authorized Signatory of Investor:      
Name of Authorized Signatory:      

Title of Authorized Signatory:      

SCHEDULE I
 
	
			
	Name of Grantor
	State of Organization
	Organizational Identification Number

	Sillerman Investment Company III, LLC
	Delaware
	5605996

	Sillerman Investment Company IV, LLC
	Delaware
	5690869

	Sillerman Investment Company VI, LLC
	Delaware
	5948275

 
 

SCHEDULE II
 
UCC-1 FINANCING STATEMENTS

	
				
	State of Filing
	Date of Filing
	Debtor
	Secured Party

	New York
	4/14/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company VI, LLC

	Delaware
	4/1/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company VI, LLC

	New York
	2/10/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company III LLC

	New York
	2/10/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company IV LLC

	Delaware
	2/10/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company III LLC

	Delaware
	2/10/2016
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company IV LLC

	Delaware
	2/8/2016*
	DraftDay Fantasy Sports Inc.
	Sillerman Investment Company IV LLC

	New York
	2/4/2016
	Wetpaint.com, Inc.
	Sillerman Investment Company VI LLC

	New York
	2/4/2016
	Choose Digital Inc.
	Sillerman Investment Company VI LLC

* Amendment to previously filed UCC-1 Financing Statement to remove assets sold to Perk.com, Inc.
 
 

EXHIBIT A
 

 
Form of Assignment for Security for filing with the United States Patent and Trademark Office or the United States Copyright Office attached.Exhibit

REGISTRATION RIGHTS AGREEMENT

REGISTRATION    RIGHTS    AGREEMENT    (this    “Agreement”),    dated    as    of
July [  ], 2016,   between   Function(x) Inc. (formerly known as DraftDay Fantasy Sports,   Inc.),   a   Delaware corporation  (the “Company”), and the investors whose signature appear on the signature page hereto (each the “Investor”).

This Agreement is made pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of the date hereof, between the Company and the Investor, among others.

The parties accordingly agree as follows:

ARTICLE I DEFINITIONS.

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.  As used in  this Agreement, the following terms shall have the following meanings:

1.1
    “Commission” means the Securities and Exchange Commission.

		
	1.2

	“Common  Stock”  means  shares  of  the  Company’s  common  stock,  par value

$0.001 per share.

		
	1.3

	“Company” is defined in the Preamble.

1.4
    “Conversion Shares” means the shares of Common Stock issued or issuable upon conversion of the Debentures (including any Additional Debentures) and the interest that may accrue thereon through the Maturity Date (as defined in the Debentures).

1.5
    “Effective Date” means the date on which the Commission declares a Registration Statement effective.

1.6
    “Effectiveness Deadline” means a date no later than ninety (90) days following the Filing Deadline.

1.7
    “Effectiveness Period” means the period commencing on the Effective Date and ending on the earlier of the date when all of the Registrable Securities covered by such Registration Statement have been sold or otherwise no longer meet the definition of Registrable Securities.

		
	1.8

	“Event” is defined in Section 2.4.

		
	1.9

	“Event Date” is defined in Section 2.4.

1.10
    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and  any successor statute.

1.11
    “Filing Deadline” means a date no later than thirty days following the  date of this Agreement.

1.12
    “Holder” or “Holders” means the Investor and any other person holding Registrable Securities or any of their respective affiliates or transferees to the extent any of them hold Registrable Securities, other than those purchasing Registrable Securities in a market transaction.

		
	1.13

	“Indemnified Party” is defined in Section 6.3.

		
	1.14

	“Indemnifying Party” is defined in Section 6.3.

1.15
    “Debenture” means the 10% convertible debenture due 2017 issued on the date hereof pursuant to the Purchase Agreement.

1.16
    “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

1.17
    “Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

		
	1.18

	“Purchase Agreement” is defined in the Preamble.

1.19
    “Registrable Securities” means the (i) the Conversion Shares, (ii) the Warrant Shares, and (iii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing, provided, that any of the foregoing securities shall cease to be Registrable Securities upon the earliest to occur of the following: (A) a sale pursuant to an effective Registration Statement (b) a sale pursuant to Rule 144 (in which case, only such security sold shall cease to be a Registrable Security); or (C) eligibility for sale without current public information requirements and volume or manner of sale restrictions.

1.20
    “Registration Statement” means each registration statement required to be filed hereunder, including the Prospectus therein, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. Notwithstanding the foregoing, Registration Statement excludes a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity.

1.21
    “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

1.22
    “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

		
	1.23

	“Securities Act” means the Securities Act of 1933, as amended, and any successor

statute.

1.24
    “Trading Market” means any of the Over The Counter Bulletin Board, NASDAQ Capital Market, the NASDAQ Global Market, the Nasdaq Global Select Market, the NYSE  MKT or the New York Stock Exchange.

1.25
    “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants (including any Additional Warrants).

1.26
    “Warrants” means the Common Stock Purchase Warrants issuable pursuant to the Purchase Agreement.

ARTICLE II AUTOMATIC REGISTRATION.

2.1
    Registration. The Company shall, on or prior to the Filing Deadline, prepare and file with the Commission a Registration Statement (the “Initial Registration Statement”)  covering the Registrable Securities for a selling stockholder resale offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement shall be on Form  S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). The Company shall use its commercially reasonable efforts to cause the Initial Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in no event later than the Effectiveness Deadline, and to remain effective continuously throughout the Effectiveness Period. The Company shall promptly notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) business day of the Effective Date. The Company shall, by 9:30 a.m. New York City time on the first business day after the Effective Date, file a final Prospectus with the Commission, as required by Rule 424(b) of the Securities Act. Notwithstanding the registration obligations set forth in this Article 2, in the event the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof, (ii) use its best efforts to file amendments to the Registration Statement as required by the Commission and/or (iii) withdraw the Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the  Registrable  Securities  in  accordance  with  the  Commission  guidance.  In  the  event    the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (ii) or (iii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or Commission guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”).

2.2
    Liquidated Damages. If: (i) a Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) a Registration Statement is not declared effective by the Commission (or otherwise does not become effective) for any reason on or prior to the Effectiveness Deadline or (iii) after its Effective Date, (A) such Registration Statement ceases for any reason (including, without limitation, by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities for which it is required to be effective or (B) the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities, in the case of (A) and (B), for more than an aggregate of twenty (20) Trading Days (which need not be consecutive) during any 12 month period (other than during an Allowable Grace Period (as defined in Section  2.3)),
(iv) a Grace Period (as defined in Section 2.3 of this Agreement) exceeds the length of an Allowable Grace Period, or (v) the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) as a result of which the Holders who are not affiliates are unable to sell Registrable Securities without restriction under Rule 144 (or any successor thereto) (any such failure or breach in clauses (i) through (v) above being referred to as an “Event,” and, for purposes of clauses (i), (ii) or (v), the date on which such Event occurs, or for purposes of clause (iii), the date on which such thirty (30) Trading Day period is exceeded, or for purposes of clause (iv) the date on which such Allowable Grace Period is exceeded, being referred to as an “Event Date”), then in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the  applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall (i) pay to the Holder an amount in cash, as liquidated damages and not as a penalty (“Liquidated Damages”), equal to one and one-half percent (1.5%) of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities held by such Holder on the Event Date, and (ii) deliver to the Holders such number of shares of Common Stock as equals the amount of Liquidated Damages, divided by the average closing bid price of the Common Stock for the five Trading Days immediately preceding the Event Date (or the monthly anniversary of the Event Date for subsequent months). The parties agree that (1) notwithstanding anything to  the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be payable with respect to any period after the expiration of the Effectiveness Period (it being understood that  this sentence shall not relieve the Company of any Liquidated Damages accruing prior to the Effectiveness Period), and in no event shall the aggregate amount of Liquidated  Damages payable to a Holder exceed, in the aggregate, twelve percent (12%) of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement and (2) in no event shall the Company be liable in any 30-day period for Liquidated Damages under this Agreement in excess of 1.5% of the aggregate purchase price paid by the Holders pursuant to the Purchase  Agreement. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date. The Company shall not be liable for Liquidated Damages under this Agreement as to any Registrable Securities which are not permitted by the Commission to be included in a Registration Statement due solely to the Commission’s guidance on Rule 415 from the time that it is determined that such Registrable Securities are not permitted to be registered until such time as the provisions of this Agreement as to the Remainder Registration Statements required to be filed hereunder are triggered, in which case the provisions of this Section 2.4 shall once again apply. In such case, the Liquidated Damages shall be calculated to only apply to the percentage of Registrable Securities which are permitted in accordance with Rule 415 to be included in such Registration Statement.

2.3
    Material Non-Public Information. Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the Commission, the Company may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Company, in the best interests of the Company (a “Grace Period”); provided, however, the Company shall promptly (i) notify the Holders in writing of the existence of material non-public information giving rise to a Grace Period (provided that the Company shall not disclose the content of such material non-public information to the Holders) or the need to file a post-effective amendment, as applicable, and the date on which such Grace Period will begin, and (ii) notify the Holders in writing of the date on which the Grace Period  ends; provided, further, that no single Grace Period shall exceed twenty five (25) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed an aggregate of fifty (50) days (each Grace Period complying with this provision being an “Allowable Grace Period”).  In the event the Company does disclose the content of  such material non-public information that is the subject of subpart (i) above to  any Holder without its consent, the Company shall make public disclosure of such material nonpublic information within two (2) Trading Days of such disclosure and no Grace Period shall apply.   For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the Holders receive the notice referred to in clause (i) above and shall end on and include the later of the date the Holders receive the notice referred to in clause (ii) above and the date referred to in such notice; provided, however, that no Grace Period shall be longer than an Allowable Grace Period.

2.4
    Underwriter Status. Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Liquidated Damages pursuant to Section 2.2 in the event the staff of the Commission (the “Staff”) or the Commission seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the Commission do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investor participating therein (or as otherwise may be acceptable to the Investor) without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Shelf Registration Statement by the Investor until such time as the Staff and the Commission shall so permit such Shelf Registration Statement to become effective as aforesaid. In addition, in the event that the Staff or the Commission requires the Investor seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an ”underwriter” in order to permit such Shelf Registration Statement to become effective, and the Investor does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of the Investor, until such time as the Staff or the Commission does not require such identification or until the Investor accepts such identification and the manner thereof. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Investor shall have the right to require, upon delivery of a written request to the Company signed by the Investor, the Company to file a registration statement within thirty (30) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the Commission) for resale by the Investor in a manner acceptable to the Investor, and the Company shall following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable Securities held by the Investor have been registered and sold; (ii) all Registrable Securities may be resold by the Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) the Investor agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to the Investor as to all Registrable Securities held by such Investor and that have not theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by the Investor as contemplated above).

ARTICLE III COMPANY REGISTRATION

3.1
    Notice of Registration. If at any time or from time to time the Company shall determine to register any of its Common Stock exclusively for cash, either for its own account or the account of security holders, other than (i) a registration on Form S-8 or otherwise relating solely to employee benefit plans, (ii) a registration on Form S-4, (iii) a registration on any other form which does not permit secondary sales, or (iv) a registration on any other form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, the Company shall:

(a)
    promptly give to each Holder written notice thereof; and

(b)
    include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all Registrable Securities which are then not registered pursuant to a then effective Registration Statement, and have not been excluded from a Registration Statement pursuant to Commission comments, as are  specified in a written request or requests, actually received by the Company within 20 days after receipt of such written notice from the Company, by any Holder.

3.2
    Underwritten Offerings. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3.1. In such event the right of any Holder to registration pursuant to Section 3.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in  the underwriting to the extent provided herein. All Holders proposing to distribute their  securities through such underwriting shall (together with the Company and the other holders

distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. The foregoing shall include, without limitation, such powers of attorney and escrow agreements as the underwriters may require. Notwithstanding any other provision of Article III, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration, it being understood that the shares proposed to sold by the  Company in such underwriting shall be given priority and shall not be subject to any such limitation vis-a-vis the Registrable Securities. The Company shall so advise all Holders and  other holders distributing their securities through such underwriting, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders and such other holders in proportion, as nearly as practicable, to the  respective amounts of Registrable Securities held by such Holders and such other holders at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

The Registrable Securities so excluded or withdrawn shall also be excluded or withdrawn from registration, and neither such Registrable Securities nor any securities convertible into or exchangeable or exercisable for Common Stock shall be sold in any public sale or other distribution, without the prior written consent of the Company or such underwriters, for such period of time before and after (not to exceed thirty (30) days before and one hundred eighty (180) days after) the effective date of the registration statement relating thereto as the underwriters may require.

3.3
    Company Termination of Registration. The Company reserves the right to terminate any registration under this Article III at any time and for any reason without liability to any Holder.

ARTICLE IV REGISTRATION PROCEDURES

4.1
    Registration Procedures. If and whenever the Company is required by the provisions of Articles II or III hereof to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

(a)
    prepare and file with the Commission a Registration Statement with respect to such Registrable Securities, respond as promptly as possible to any comments received from the Commission, and use its commercially reasonable efforts to cause such Registration Statement to become and remain effective for the Effectiveness Period with respect thereto, and the Investor shall have the opportunity to object to any information pertaining to itself that is contained therein and the Company will make the corrections reasonably requested by the Investor with respect to such information prior to filing any Registration Statement or amendment thereto or any Prospectus or any supplement thereto;

(b)
    prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of  all Registrable Securities covered by such Registration Statement and to keep such Registration Statement effective until the expiration of the Effectiveness Period applicable to  such Registration Statement;

(c)
    furnish to the Investor such number of copies of the Registration  Statement and the Prospectus included therein (including each preliminary Prospectus and any amendments and supplements to the Registration Statement and the Prospectus) and such other documents as the Investor reasonably may request to facilitate the public sale or disposition of the Registrable Securities covered by such Registration Statement;

(d)
    use its commercially reasonable efforts to register or qualify the Investor’s Registrable Securities covered by such Registration Statement under the securities or “blue sky” laws of such jurisdictions within the United States as the Investor may reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable the Investor to consummate the disposition in such jurisdiction of the Registrable Securities, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

(e)
    list the Registrable Securities covered by such Registration Statement with any securities exchange on which the Common Stock of the Company is then listed and, if the Common Stock is not then listed, list the Registrable Securities on Nasdaq or a national  securities exchange selected by the Company;

(f)
    immediately notify the Investor at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, at the request of the Investor, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statement therein not misleading;

(g)
    make available for inspection by the Investor and any attorney, accountant or other agent retained by the Investor, all publicly available, non-confidential financial and  other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Investor;

(h)
    provide a transfer agent and registrar for all such Registrable Securities  not later than the effective date of such Registration Statement;

(i)
    if requested, cause to be delivered, immediately prior to the effectiveness of the Registration Statement, letters from the Company’s independent certified public accountants addressed to the Investor (unless the Investor does not provide to such accountants the appropriate representation letter required by rules governing the accounting  profession) stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable rules and regulations adopted by the Commission thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with primary or secondary underwritten public offerings, as the case may be; and

(j)
    at all times after the Company has filed a Registration Statement with the Commission pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and  the Exchange Act and the rules and regulations adopted by the Commission thereunder, and take such further action as the Investor may reasonably request, all to the extent required to enable the Investor to be eligible to sell Registrable Securities pursuant to Rule 144 (or any similar rule then in effect).

ARTICLE V REGISTRATION EXPENSES.

5.1
    Registration Expenses. All expenses relating to the Company’s compliance with Articles II and III hereof, including, without limitation, all registration, filing and listing application fees, costs of distributing any prospectuses and supplements thereto, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of FINRA, transfer taxes, fees of transfer agents and registrars, fees of, and disbursements incurred by, one counsel for the Holders (collectively, the “Registration Expenses”) shall be borne by the Company. The obligation of the Company to  bear the Registration Expenses shall apply irrespective of whether a registration, becomes effective, is withdrawn or suspended, is converted to another form of registration  and  irrespective of when any of the foregoing shall occur.

5.2
    Selling Expenses. All underwriting discounts and selling commissions applicable to the sale of Registrable Securities, and any fees and disbursements of any counsel to the Holders beyond those included in Registration Expenses (collectively, the “Selling Expenses”) shall be borne by the Holders in proportion to the aggregate selling price of the Registrable Securities of each Holder to be so registered.

ARTICLE VI INDEMNIFICATION.

6.1
    Company Indemnification. In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless each Holder, and its officers, directors and each other person, if any, who controls such Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder, or such persons may become subject under  the

Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement  of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable “blue sky” laws, and shall reimburse such Holder, and each such person for any legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing by or on behalf of a Holder  specifically for use in any such document.

6.2
    Holder Indemnification. Each Holder of Registrable Securities included in a Registration Statement pursuant to this Agreement shall indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact which was furnished in writing by the Investor to the Company expressly for use in (and such information is contained in) the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and  shall reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that a Holder shall be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of such Holder specifically for use in any such document. Notwithstanding the provisions of this paragraph, a Holder shall not be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by the Holder in respect of Registrable Securities in connection with any such registration under the Securities Act.

6.3
    Indemnification Procedures. Promptly after receipt by a party entitled to claim indemnification hereunder (an “Indemnified Party”) of notice of the commencement of any action, such Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an “Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 6.3 and shall only relieve it from any liability which it may

have to such Indemnified Party under this Section 6.3 if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such Indemnified Party, and, after notice from  the Indemnifying Party to such Indemnified Party of its election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 6.3 for any legal expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; if the Indemnified Party retains its own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel; provided, however, that, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred.

6.4
    Contribution.  In order to provide for just and equitable contribution in the event  of joint liability under the Securities Act in any case in which either (i) a Holder, or any officer, director or controlling person of a Holder, makes a claim for indemnification pursuant to this Section 6.4 but it is judicially determined (by the entry of a final judgment or decree by a court  of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6.4 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Investor or such officer, director or controlling person of the Investor in circumstances for which indemnification is provided under this Section 6.4; then, and in each such case, the Company and the Investor shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Investor is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the Registration  Statement bears to the public offering price of all securities offered by such Registration Statement, provided, however, that, in any such case, (A) the Investor shall not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) shall be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

6.5
    Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified  party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

ARTICLE VII MISCELLANEOUS.

7.1
    Compliance. Each Holder covenants and agrees that it shall comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to any Registration Statement.

7.2
    Discontinued Disposition. Each Holder agrees by its acquisition of Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a  Discontinuation Event (as defined below), such Holder shall forthwith discontinue disposition of such Registrable Securities under the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this Section 7.2. For purposes of this Agreement, a “Discontinuation Event” shall mean (i) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the Commission or any  other Federal or state governmental authority for amendments or supplements to such Registration Statement or Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and/or (v) the occurrence of any event or passage of time that makes the financial statements included in such Registration Statement ineligible for inclusion therein or any statement made in such  Registration Statement or Prospectus or any document incorporated or deemed to be  incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

7.3
    Transfer of Registration Rights. The rights to cause the Company to register securities granted to Holders under Article II or Article III may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by a Holder, provided that: (i) such transfer may otherwise be effected in accordance with applicable  securities laws, and (ii) written notice thereof is promptly given to the Company.  Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned to any constituent partner or affiliate of a Holder, without compliance with item (ii) above.

7.4
    Entire Agreement. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof. No provision of this Agreement may be explained or qualified by any prior or contemporaneous  understanding,  negotiation, discussion, conduct,   or course of conduct or by any trade usage, and, except as otherwise expressly stated herein, there is no condition precedent to the effectiveness of any provision hereof. No party has relied on any representation, warranty, or agreement of any person in entering this Agreement, except those expressly stated herein.

7.5
    Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Agreement shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.

		
	7.6

	Amendments; Waivers; Remedies.

(a)
    This Agreement cannot be amended, except by a writing signed by Holders of at least a majority of the then outstanding Registrable Securities, or terminated orally or by course of conduct. No provision hereof can be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the  rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence.

(b)
    Neither any failure or delay in exercising any right or remedy hereunder or in requiring satisfaction of any condition herein nor any course of dealing shall constitute a waiver of or prevent any party from enforcing any right or remedy or from requiring satisfaction of any condition. No notice to or demand on a party waives or otherwise affects any obligation  of that party or impairs any right of the party giving such notice or making such demand, including any right to take any action without notice or demand not otherwise required by this Agreement. No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise of any other right or remedy, as appropriate to make the aggrieved party whole with respect to such breach, or subsequent exercise of any right or remedy with respect to any other breach.

(c)
    Except as otherwise expressly provided herein, no statement herein of any right or remedy shall impair any other right or remedy stated herein or that otherwise may be available.

7.7
    Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: if by hand or recognized courier service, by 5:30 p.m. (New York City time) on a business day, addressee’s day and time, on the date of delivery, and otherwise on the first business day after such delivery; if by fax, on the date that transmission is confirmed electronically, if by 5:30 p.m. (New York City time) on a business day, addressee’s day and time, and otherwise on the first business day after the date of such confirmation; or three

days after mailing by certified or registered mail, return receipt requested. Notices shall be addressed to the respective parties as set forth in the Purchase Agreement.

7.8
    Successors and Assigns. Subject to the provisions of Section 7.3, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Registrable Securities.

7.9
    Further Assurances. Each party shall execute and deliver such documents and  take such action, as may reasonably be considered within the scope of such party’s obligations hereunder, necessary to effectuate the transactions contemplated by this Agreement.

		
	7.10

	Choice of Law and Forum; Service of Process.

(a)
    This Agreement, any disputed matter arising hereunder, including the construction, interpretation, or validity of any provision hereof or performance thereof, or any other matter relating hereto or arising in connection herewith (whether in tort, contract, equity, or otherwise) (any such matter, a “Disputed Matter”) is and shall be governed by and enforced in accordance with the laws of the State of New York, excluding its choice of law rules.

(b)
    Subject to Section 7.10(c), no party shall bring or maintain any action or proceeding with respect to any Disputed Matter (“Dispute Proceeding”), except in the Federal District Court for the Southern District of New York, or, if such court lacks subject matter jurisdiction, the Supreme Court sitting in New York County. Each party irrevocably submits and consents to the jurisdiction of such courts, and no party shall object to the laying of venue in any such court or claim that any such court is an inconvenient forum.

(c)
    Nothing herein shall affect the right of any party to enforce any judgment in any jurisdiction or the rule that any matter of internal governance of a corporation or other entity is determined under the laws of the state pursuant to which the corporation or other entity  is incorporated or formed.

(d)
    Each party irrevocably consents to service of process, by any means authorized, in respect of any Dispute Proceeding.

[Balance of page intentionally left blank; signature page follows]

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

FUNCTION(X) INC.

		
	By:______
	 

      Name:
Title:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR INVESTOR FOLLOWS]

IN WITNESS WHEREOF, the undersigned have caused this Registration Rights Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Investor:                                             

Signature of Authorized Signatory of Investor:      

Name of Authorized Signatory:      

Title of Authorized Signatory:

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