Document:

vggl_ex103.htm

EXHIBIT 10.3

 

AMENDED AND RESTATED LINE OF CREDIT GRID PROMISSORY NOTE

 

New York, New York

 

As of March 11, 2013 

$25,000,000.00

 

1) FOR VALUE RECEIVED, on the Maturity Date, Viggle Inc., a Delaware corporation (“Viggle” or the “Borrower”), at its offices at 902 Broadway, 11th Floor, New York, New York 10010, promises to pay to the order of Sillerman Investment Company II LLC (“SIC II” or the “Lender”) at its offices, or at such other place as the Lender may designate in writing, the aggregate principal sum of Twenty Five Million Dollars ($25,000,000) or, if less, the unpaid amount of all draws, plus accrued and unpaid interest due with respect to all outstanding draws, made by the Lender hereunder. This Amended and Restated Line of Credit Grid Promissory Note (this “Grid Note” or this “Note”) amends and restates in its entirety that certain Line of Credit Grid Promissory Note by and between the Borrower and Lender dated as of February 11, 2013 in the original principal amount of $25,000,000 (the “Original Note”).This Note and the rights and obligations evidenced hereby and any security interests or other liens securing such obligations are subordinate in the manner and to the extent set forth in that certain Subordination Agreement, dated as of the date hereof (as amended, restated, modified and/or supplemented from time to time, the “Subordination Agreement”), by and among the Borrower, Deutsche Bank Trust Company Americas (“Bank”), Sillerman Investment Company LLC, SIC II and Robert F.X. Sillerman, in his individual capacity and as collateral agent for the holders of notes described therein (the “Collateral Agent”), to the indebtedness (including interest) owed by the Borrower to Bankunder that certain Term Loan Agreement, dated as of the date hereof, by and between the Borrower and Bank (as amended, restated, modified and/or supplemented from time to time, the “Deutsche Loan Agreement”), and each party hereto irrevocably agrees to be bound by the provisions of the Subordination Agreement.

 

2) Maturity Date.  The “Maturity Date” shall be the earlier to occur of (i) February 11, 2015 or (ii) upon a Change of Control Transaction, whichever comes first.

 

3) Interest. (a) Borrower will pay interest on the unpaid principal amount of all draws from time to time outstanding from the date of each draw until each such draw has been paid in full. Interest shall accrue at the simple interest rate equal to nine percent (9%) per annum, simple, with respect to each draw. Interest shall be compounded semi-annually.

 

(b) Borrower will pay interest, calculated at the rate set forth above, upon the Maturity Date or such earlier date upon which any draw is repaid. In addition, Borrower will pay a default rate equal to two percent (2%) per annum in excess of the rate set forth herein if an Event of Default has occurred and is continuing. Notwithstanding the foregoing however, in no event shall interest exceed the maximum legal rate permitted by law. All payments, including insufficient payments, shall be credited, regardless of their designation by Borrower, first to outstanding late charges, then to interest and the remainder, if any, to principal.

 

  

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4) Requests for Loans; Disbursement of Proceeds.

 

(a) Borrower may borrow, and Lender agrees to fund draws hereunder in amounts of no less than One Million Dollars ($1,000,000), upon notice of a proposed borrowing, and the requested amount thereof, to the Lender not later than 12:00 Noon (New York time) five (5) days prior to the date on which the proposed borrowing is requested to be made, subject to the satisfaction of all conditions precedent to such draw, including the delivery to the Lender of a funding memorandum substantially in the form attached hereto as Exhibit A; provided, that, the aggregate principal amount of all draws outstanding at any one time shall not exceed $25,000,000; provided, further, that Borrower may not request any draws hereunder unless and until all amounts available for borrowing under the Deutsche Loan Agreement have been fully drawn by the Borrower or the Deutsche Loan Agreement has been terminated; provided, further, that the Borrower may not request any draws hereunder to the extent that any such draw would result in the aggregate principal amount outstanding under the Deutsche Loan Agreement, when added to the principal amount outstanding under this Grid Note, to exceed $25,000,000.00 in the aggregate; and provided, further, that Borrower agrees that it shall draw first under the Deutsche Loan Agreement to the full extent of amounts available thereunder before it draws under this Note or any other credit facility.  Lender shall not be obligated to fund draws more than once per month. Each notice of borrowing shall be delivered by hand or facsimile transmission. Each such notice shall be irrevocable by and binding on Borrower. Unless otherwise directed in writing by Borrower, the Lender shall promptly disburse the proceeds of such draw made hereunder by crediting the amount thereof as instructed in the applicable Disbursement Request.

 

(b) Prior to any draw to be made hereunder, the Board of Directors of the Borrower shall have adopted a resolution exempting Lender from the requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended, provided by Rule 16b-3 promulgated thereunder relating to the issuance of warrants in accordance with the provisions of Section 4(c) hereunder substantially in the form attached as Exhibit B.

 

(c) Simultaneously with any draw made hereunder in excess of $10,000,000.00 permitted to be drawn pursuant to the Deutsche Loan Agreement, there shall be issued to the Lender (or the Lender’s designee) one warrant for each dollar drawn.  Each such warrant shall be for one share of the Borrower’s common stock and shall be exercisable for $1.00, within 60 months from the date of the draw.  Such warrant shall be in the form attached as Exhibit C hereto.

 

5) Payments and Prepayments; Use of Grid.

 

(a) The Lender is hereby authorized by Borrower to enter and record on the schedule attached hereto (i) the loan number, (ii) the date of each draw made under this Grid Note, (iii) the dollar amount of the draw, (iv) the applicable interest rate, (v) interest due on Maturity Date, (vi) each payment and prepayment of any draw thereon, and (vii) date of payment, without any further authorization on the part of Borrower or any endorser or guarantor of this Grid Note; provided, however, that the Lender shall promptly deliver to the Borrower a copy of this Grid Note following the entry of each draw hereunder. The entry of a draw on said schedule shall be prima facie and presumptive evidence of the entered draw and its conditions, absent manifest error. The Lender’s failure to make an entry, however, shall not limit or otherwise affect the obligations of Borrower or any endorser or guarantor of this Grid Note.

 

  

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(b) Borrower may make prepayments in whole or in part hereunder at any time, provided accrued, but unpaid interest, is paid through the prepayment date.

 

(c) If any payment of principal or interest becomes due on a day on which the Lender is closed, such payment shall be made not later than the next succeeding Business Day (a “Business Day” shall be considered to be Monday through Friday from 9am to 5pm local time, excluding weekends and public holidays) and such extension shall be included in computing interest in connection with such payment, provided, however, that if the payment of any sum due hereunder is not permitted to be paid pursuant to the restrictions contained in the Deutsche Loan Agreement or the Subordination Agreement, then Lender shall have the right to receive payment in shares of the Company’s common stock (“Common Stock”) or any combination of cash or shares of Common Stock as elected by the Company in its sole discretion, so long as permitted thereunder. If the Company elects to pay all or any portion of such payment in shares of Common Stock, the Company shall deliver to the Lender on the applicable due date a number of shares of Common Stock equal to the quotient of (i) the applicable amount due which has been elected to be paid by the Company on such date in shares of Common Stock divided by (ii) the average of the closing sale prices of the Common Stock for the fifteen (15) trading days immediately preceding such date. Alternatively, if not permitted, such payment may be deferred by Company until all obligations and liabilities under the Deutsche Loan Agreement shall have been satisfied or payment is permitted under the Deutsche Loan Agreement and the Subordination Agreement.  All cash payments by Borrower on account of principal, interest or fees hereunder shall be made in lawful money of the United States of America, in immediately available funds.  All net proceeds received by the Company or any of its wholly owned subsidiaries from any debt or equity offering by the Company or any of its wholly-owned subsidiaries shall first be applied toward the payment in full of all outstanding principal and accrued but unpaid interest outstanding under this Grid Note.

 

6) Use of Proceeds. The proceeds of each draw hereunder shall be used for general corporate and working capital purposes of Borrower. Borrower will not, directly or indirectly, use any proceeds of draws hereunder for the purpose of purchasing or carrying any margin stock within the meaning of Regulation X of the Board of Governors of the Federal Reserve System or to extend credit to any person for the purpose of purchasing or carrying any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors.

 

7) Event of Default.

 

(a) It is expressly agreed that the whole of the indebtedness evidenced by this Grid Note shall immediately become due and payable, at the option of the Lender, on the happening of any default or event constituting an event of default hereunder (each an “Event of Default”).

 

  

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8) An Event of Default shall occur on: (i) the non-payment of any of the amounts due hereunder within five (5) Business Days after the date such payment is due and payable; (ii) dissolution or liquidation, as applicable, of the Borrower; (iii) any petition in bankruptcy being filed by or against the Borrower or any proceedings in bankruptcy, or under any Acts of Congress relating to the relief of debtors, being commenced for the relief or readjustment of any indebtedness of the Borrower either through reorganization, composition, extension or otherwise; provided, however, that Borrower shall have a sixty (60) day grace period to obtain the dismissal or discharge of involuntary proceedings filed against it, it being understood that during such sixty (60) day grace period, the Lender shall not be obligated to make draws hereunder and the Lender may seek adequate protection in any bankruptcy proceeding; (iv) the making by the Borrower of an assignment for the benefit of creditors, calling a meeting of creditors for the purpose of effecting a composition or readjustment of its debts, or filing a petition seeking to take advance of any other law providing for the relief of debtors; (v) any seizure, vesting or intervention by or under authority of a government, by which the management of the Borrower, is displaced or its authority in the conduct of its business is curtailed; (vi) the appointment of any receiver of any material property of the Borrower; (vii) if any warranty, representation, statement, report or certificate made now or hereafter by Borrower to Lender pursuant hereto is untrue or incorrect in any material respect at the time made or delivered; (viii) the Borrower shall contest, dispute or challenge in any manner, whether in a judicial proceeding or otherwise, the validity or enforceability of any material provision set forth herein or any transaction contemplated in this Grid Note; or (ix) if there shall be a material adverse change in the business plan or prospects of Borrower in the reasonable opinion of Lender.

 

9) Representations:  In consideration of the commitment by SIC II to make the loan evidenced by theOriginal Note, the Borrower issued to SIC II Five Million(5,000,000) shares of Borrower’s common stock, $0.001 par value, (the “Common Shares”) and in connection therewith SIC II and, to the extent applicable as set forth below when Borrower is named,Borrower made, and hereby reaffirm, the following representations:

 

(a) Organization; Authority.  SIC II is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder.

 

(b) No Public Sale or Distribution.  SIC II has acquired the 5,000,000 shares of the Company’s common stock (such 5,000,000 shares are referred to herein as the “Common Shares”) for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the Securities Act of 1933, as amended (the “1933 Act”); provided, however, by making the representations herein, SIC II does not agree, or make any representation or warranty, to hold any of the Common Shares for any minimum or other specific term and reserves the right to dispose of the Common Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. SIC II does not have any agreement or understanding with any person or entity to distribute any of the Common Shares in violation of applicable securities laws.

 

  

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(c) Accredited Investor Status.  SIC II is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(d) Reliance on Exemptions. SIC II understands that the Common Shares are being offered and sold to it 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 SIC II’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of SIC II set forth herein in order to determine the availability of such exemptions and the eligibility of SIC II to acquire the Common Shares.

 

(e) Information. SIC II and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Common Shares which have been requested by SIC II.  SIC II and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  SIC II understands that its acquisition of the Common Shares involves a high degree of risk. SIC II has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Common Shares.

 

(f) No Governmental Review.  SIC II understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Common Shares or the fairness or suitability of the acquisition of the Common Shares nor have such authorities passed upon or endorsed the merits of the offering of the Common Shares.

 

(g) Transfer or Resale. SIC II understands that: (i) the Common Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or (B) SIC II shall have delivered to the Company an opinion of counsel to SIC II, in form and substance acceptable to the Company, to the effect that the Common Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; (ii) any sale of the Common Shares made in reliance on Rule 144 promulgated under the 1933 Act (or the successor rule thereto) (“Rule 144”) may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Common Shares under circumstances in which the seller (or the person or entity through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the Securities and Exchange Commission promulgated thereunder; and (iii) neither the Company nor any other person or entity is under any obligation to register any of the Common Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

(h) Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Viggle and SIC II and constitutes the legal, valid and binding obligations of Viggle and SIC II enforceable against the other in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

  

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(i) No Conflicts. The execution, delivery and performance by Viggle and SIC II of this Agreement and the consummation of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of Viggle or SIC II, (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 Viggle or SIC II is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment  or decree (including federal and state securities laws) applicable to Viggle or SIC II, except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Viggle or SIC II to perform its obligations hereunder.

 

(j) Experience. SIC II,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 Common Shares, and has so evaluated the merits and risks of such investment. SIC II is able to bear the economic risk of an investment in the Common Shares and, at the present time, is able to afford a complete loss of such investment.

 

(k) General Solicitation.  SIC II is not acquiring the Common Shares as a result of any advertisement, article, notice or other communication regarding the Common Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

10) Reissuance of this Note.

 

(a) Transfer. If this Note is to be transferred, the Lender shall surrender this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Lender a new Note (in accordance with Section 10(d)), registered as the Lender may request, representing the outstanding principal being transferred by the Lender and, if less than the entire outstanding principal is being transferred, a new Note (in accordance with Section 10(d)) to the Lender representing the outstanding principal not being transferred. The Lender and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 1 following payment of any portion of this Note, the outstanding principal represented by this Note may be less than the principal stated on the face of this Note.

 

(b) Lost, Stolen or Mutilated Note. Upon receipt by the Borrower of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Lender to the Borrower in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrower shall execute and deliver to the Lender a new Note (in accordance with Section 10(d)) representing the outstanding principal.

 

(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Lender at the principal office of the Borrower, for a new Note (in accordance with Section 10(d)) and in principal amounts of at least $5,000,000) representing in the aggregate the outstanding principal of this Note, and each such new Note will represent such portion of such outstanding principal as is designated by the Lender at the time of such surrender.

 

  

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(d) Issuance of New Note. Whenever the Borrower is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 10(a) or Section 10(c), the principal designated by the Lender which, when added to the principal represented by the other new Note issued in connection with such issuance, does not exceed the principal remaining outstanding under this Note immediately prior to such issuance of new Note), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the issuance date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid interest and late charges on the principal and interest of this Note, from the issuance date.

 

11) Security.Subject to the terms of the Subordination Agreement, this Note and the Other Notes are secured to the extent, and in the manner, set forth in the Security Agreement dated as of the date hereof made by the Borrowerand its subsidiaries in favor of the Collateral Agent for the benefit of the Lender and the other holders of notes described therein.

 

12) Governing Law. This Grid Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to its rules on conflicts of laws.

 

13) No Waiver. No failure or delay on the part of the Lender in exercising any right, power, or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy hereunder. The rights and remedies provided herein are cumulative, and are not exclusive of any other rights, powers, privileges, or remedies, now or hereafter existing, at law or in equity or otherwise.

 

14) Costs and Expenses. Borrower shall reimburse the Lender for all costs and expenses incurred by the Lender in connection with the enforcement of this Grid Note or any document, instrument or agreement relating thereto.

 

15) Amendments. No amendment, modification, or waiver of any provision of this Grid Note nor consent to any departure by Borrower therefrom shall be effective unless the same shall be in writing and signed by the Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

16) Successors and Assigns. This Grid Note shall be binding upon Borrower and the Lender and their respective heirs, legal representatives, successors and assigns and the terms hereof shall inure to the benefit of Lender and its successors and assigns, including subsequent holders hereof.

 

17) Severability. The provisions of this Grid Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Grid Note in any jurisdiction.

 

  

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18) Entire Agreement. This Grid Note sets forth the entire agreement of Borrower and the Lender with respect to this Grid Note and may be modified only by a written instrument executed by Borrower and the Lender.

 

19) Headings. The headings herein are for convenience only and shall not limit or define the meaning of the provisions of this Grid Note.

 

20) Jurisdiction; Service of Process. Borrower agrees that in any action or proceeding brought on or in connection with this Grid Note (i) any New York State or Federal court sitting in New York County, New York, shall have jurisdiction of any such action or proceeding, (ii) service of any summons and complaint or other process in any such action or proceeding may be made by the Lender upon Borrower by registered or certified mail directed to Borrower at its address referenced above, Borrower hereby waiving personal service thereof, and (iii) within thirty (30) days after such mailing Borrower shall appear or answer to any summons and complaint or other process, and should Borrower fail to appear to answer within said thirty day period, it shall be deemed in default and judgment may be entered by the Lender against Borrower for the amount as demanded in any summons or complaint or other process so served.

 

21) WAIVER OF THE RIGHT TO TRIAL BY JURY. BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, IN ANY MANNER CONNECTED WITH THIS GRID NOTE OR ANY TRANSACTIONS HEREUNDER. NO OFFICER OF THE LENDER HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.

 

[Reminder of Page Intentionally Left Blank; Signature Page to Follow]]

  

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IN WITNESS WHEREOF, the Borrower and the Lender have caused this Note to be duly executed as of the date first written above.

 

 

	 	VIGGLE INC.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	Mitchell J. Nelson	 
	 	Title:	Executive Vice President	 
	 	 	 	 
	 	 	 	 
	 	SILLERMAN INVESTMENT COMPANY II, LLC	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	Robert FX Sillerman	 
	 	Title:	Member-Manager	 

 

  

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SCHEDULE TO LINE OF CREDIT GRID PROMISSORY NOTE

 

Borrower:  Viggle Inc.

 

Date:  March [__], 2013

 

	
Loan Number

	
Date of draw

	
Commitment Amount

	
Amount of draw

	
Maturity Date

	
Interest Rate

	
Interest Due upon

Maturity Date

	
Amount Paid

	
Date Payment

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  

 

  

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EXHIBIT A

FUNDING MEMORANDUM

 

	 	_________ __, 2013

 

____________________

____________________

____________________

Dear ____________________:

We hereby request that you make available in our account No. _____________ the amount of $______________, and which shall constitute a draw under the Line of Credit Grid Note made by Viggle Inc. (“Borrower”) to the order of Sillerman Investment Company II, LLC  (the “Lender”) dated as of February 11, 2013 (as amended from time to time, the “Grid Note”).

 

Under the Grid Note, the Lender is authorized to enter and record on the schedule attached thereto (i) the loan number, (ii) the date of each draw, (iii) the Commitment Amount, (iv) the dollar amount of the draw, (v) the Maturity Date of the draw, (vi) the interest rate, (vii) interest due on Maturity Date, (viii) each payment of any draw and (ix) date of payment, without any further authorization on the part of Borrower.

 

Borrower represents, warrants and certifies to Lender as follows:

 

(a) there does not exist any known deficiency in any of the documents identified in this Funding Memorandum, and Borrower agrees that any deficiencies subsequently discovered will be promptly reported to the Lender;

 

(b) both before and after funding the draw requested hereunder Borrower is not in default, no Event of Default exists, and no Event of Default shall result from the making of the draw requested hereunder;

 

(c) all of the representations and warranties of Borrower contained herein shall be true and correct in all material respects to the same extent as though made on and as of any making of the draw requested hereunder;

 

(d) after giving effect to the amount of the requested draw, the aggregate amount of outstanding draws under the Facility shall not exceed $25,000,000;

 

(e) all amounts available for borrowing under the Deutsche Loan Agreement have been fully drawn by the Borrower, or the Deutsche Loan Agreement has been terminated;

 

(f) after giving effect to the amount of the requested draw, the aggregate principal amount outstanding under the Deutsche Loan Agreement, when added to the principal amount outstanding under the Grid Note, does not exceed $25,000,000.00 in the aggregate; and

 

(g) Borrower has drawn first under the Deutsche Loan Agreement to the full extent of amounts available thereunder before it has drawn under this Grid Note or any other credit facility.

 

  

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(i) The Board of Directors of Borrower has adopted a resolution exempting Lender from the requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended, provided by Rule 16b-3 promulgated thereunder relating to the issuance of warrants in accordance with the provisions of Section 4(c) of the Amended and Restated Line of Credit Grid Promissory Note and the warrants to be issued upon the draw will be so issued upon funding of the draw.

 

	 	
Very truly yours,

	 
	 	 	 
	 	Viggle Inc.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

  

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EXHIBIT B

FORM OF RESOLUTION

 

Rule 16b-3 Approvals.

WHEREAS, (i) Robert F.X. Sillerman (“Mr. Sillerman”) is a director of the Corporation and (ii) the Board, on behalf of the Corporation, previously agreed, acknowledged and determined that Sillerman Investment Company II, LLC (“SIC II”) is (and continues to be), for purposes of the exemption from Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provided by Rule 16b-3 promulgated thereunder (“Rule 16b-3”), a director by deputization of the Corporation.

WHEREAS, the Board deems it is in the best interest of the Corporation and its shareholders to approve, for purposes of securing for each of Mr. Sillerman and SIC II, the exemption provided by Rule 16b-3 with respect to each acquisition (including, without limitation, purchase), disposition (including, without limitation, sale), cancellation, re-grant, deemed acquisition (including, without limitation, deemed purchase), deemed disposition (including, without limitation, deemed sale), deemed cancellation, deemed re-grant and other transaction described in Annex A attached hereto, and any other acquisition (including, without limitation, purchase), disposition (including, without limitation, sale), cancellation, re-grant, deemed acquisition (including, without limitation, deemed purchase), deemed disposition (including, without limitation, deemed sale), deemed cancellation, deemed re-grant and other transactions contemplated by the terms of the Warrants, relating to all Common Stock, warrants and other equity securities of the Corporation (including, without limitation, any derivative securities that may result therefrom or be related thereto) (collectively, the “Transaction Securities”).

NOW, THEREFORE, BE IT RESOLVED, that the Board hereby approves, for purposes of Rule 16b-3, all transactions by each of Mr. Sillerman and SIC II described in Annex A attached hereto relating to the Warrants to be issued to SIC II (including, without limitation, as contemplated by the Warrants, the acquisition (including, without limitation, purchase), disposition (including, without limitation, sale), cancellation, re-grant, deemed acquisition (including, without limitation, deemed purchase), deemed disposition (including, without limitation, deemed sale), deemed cancellation, deemed re-grant and other transactions (and, without limitation, any transactions resulting from any amendment, exchange, conversion, exercise, adjustment or other transaction contemplated by the Warrants) of any Transaction Securities, all as described generally in Annex A attached hereto)), it being understood that such approval is given, without limitation, for purposes of securing an exemption for each such acquisition (including, without limitation, purchase), disposition (including, without limitation, sale), cancellation, re-grant, deemed acquisition (including, without limitation, deemed purchase), deemed disposition (including, without limitation, deemed sale), deemed cancellation, deemed re-grant or other transaction from the provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.

  

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FURTHER RESOLVED, that the Board hereby approves (without any requirement for subsequent action by the Board or any committee thereof in any specific case) all acquisitions (including, without limitation, purchases), dispositions (including, without limitation, sales), cancellations, re-grants, deemed acquisitions (including, without limitation, deemed purchases), deemed dispositions (including, without limitation, deemed sales), deemed cancellations, deemed re-grants or other transactions that may be effected automatically or otherwise pursuant to the terms of such Transaction Securities (including, without limitation, exercises, price resets, price adjustments, share adjustments, anti-dilution adjustments, redemptions, purchases and the withholding and/or delivery of shares to pay exercise prices), it being the intention of the Board that all such transactions be exempt from the provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.

 

FURTHER RESOLVED, that the Board may provide such further specific approval of other acquisitions (including, without limitation, purchases), dispositions (including, without limitation, sales), cancellations, re-grants, deemed acquisitions (including, without limitation, deemed purchases), deemed dispositions (including, without limitation, deemed sales), deemed cancellations, deemed re-grants and other transactions involving Mr. Sillerman and/or SIC II and the Transaction Securities as may be deemed necessary, appropriate or advisable to secure an exemption under Rule 16b-3.

  

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Annex A

Rule 16b-3 Approvals

 

	
Name

	
Description of Transaction

	
Mr. Sillerman and SIC II (1) (2)

	
Acquisitions of the Warrants

 

	  	
Acquisitions and dispositions of shares of Common Stock issuable upon exercise of the Warrants

 

	  	
Acquisitions and dispositions of all or any portion of the Warrants and shares of Common Stock pursuant to Section 2 thereof

 

	  	
Acquisitions and dispositions of all or any portion of the Warrants and shares of Common Stock pursuant to Section 3 thereof

 

	  	
Acquisitions and dispositions of shares of Common Stock and all or any portion of the Warrants resulting from the application of any provisions of Section 7 of the Warrants

 

	  	
Dispositions of shares of Common Stock and all or any portion of the Warrants resulting from the application of any provisions of Section 8 of the Warrants

 

	  	  

Footnotes:

	
(1)  

	
Mr. Sillerman is a director of the Corporation and SIC II is a director of the Corporation by deputization for purposes of Section 16 of the Exchange Act, and the Board hereby approves, for purposes of Rule 16b-3, without limiting the approval by the Board of any other acquisition (including, without limitation, purchase), disposition (including, without limitation, sale), cancellation, re-grant, deemed acquisition (including, without limitation, deemed purchase), deemed disposition (including, without limitation, deemed sale), deemed cancellation, deemed re-grant or other transactions intended to be encompassed by these resolutions, the transactions set forth opposite the name of Mr. Sillerman and SIC II in the table above.

	
(2)  

	
Each of Mr. Sillerman and SIC II disclaims beneficial ownership of any securities of the Corporation in which it does not have a pecuniary interest.

  

15

  

EXHIBIT C

FORM OF WARRANT

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAW OR ANY OTHER SECURITIES LAWS 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 THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

VIGGLE INC.

WARRANT

 

	
CUSIP No.

Warrant No. _________

	Dated:  [__________________]

 

Holder: [______________________________________]

 

Number of Shares:  [_______________] (__________)

 

Viggle Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, the holder whose name appears above or its registered assigns (“Holder”), is entitled, subject to the terms set forth herein, to purchase from the Company up to the total number of shares appearing above of Common Stock, $0.001 par value (including any class of common equity of the Company or any successor  company for which such Common Stock becomes exchangeable or into which it becomes convertible, directly or indirectly, pursuant to any reorganization, recapitalization, reclassification, merger, combination, share exchange or similar transaction as provided in Section 3, the “Common Stock”), of the Company (each such share, a “Warrant Share”), at an exercise price equal to $1.00 per share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time and from time to time from and after this date through and including [date that is five years from date of issue] or earlier as provided herein (the “ Expiration Date ”), and subject to the following terms and conditions:

  

16

  

 

1.           Registration of Warrant .  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof (notwithstanding any notations of ownership or writing hereon made by any person other than the Company) for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, and the Company shall not be affected by any notice to the contrary.

2.           Registration of Transfers and Exchanges .

(a)           The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto appropriately completed and duly executed by the Holder or its duly authorized agent, to the Company at the office specified in or pursuant to Section 3(b) and upon the Holder's compliance with Section 4, provided that such transfer is made in compliance with the Securities Act and state securities laws.  Upon any such registration of transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee (a “Transferee” ) and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the Transferee thereof shall be deemed the acceptance of such Transferee of all of the rights and obligations of a holder of a Warrant.  Notwithstanding anything to the contrary contained in this Section 2(a), a transfer of any portion of this Warrant will not be effected until the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that registration under the Securities Act is not required in connection with such proposed transfer.

  

17

  

 

(b)           This Warrant is exchangeable, upon the surrender hereof by the Holder to the office of the Company specified in or pursuant to Section 3(b), for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.  Any such New Warrant shall be dated the date of such exchange.

3.           Duration, Exercise of Warrants and Redemption .

(a)           This Warrant shall be exercisable by the registered Holder on any day other than a Saturday, Sunday or legal holiday on which the commercial banks in the City of New York, New York, are required or permitted by law to remain closed (a “ Business Day ”), at any time and from time to time on or after 5:00 p.m., New York City time, [date of issuance] to and including [five years from date of issuance].   At 5:00 p.m., New York City time, on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

(b)           The Holder may exercise this Warrant by—

(i)           delivering the Form of Election to Purchase attached hereto appropriately completed and duly executed, to the Company at its office at 902 Broadway, New York, New York 10010, or at such other address as the Company may specify in writing to the then registered Holder,

(ii)          surrendering this Warrant to the Company, properly endorsed by the Holder and

  

18

  

 

(iii)           tendering payment for the number of the Warrant Shares that the Holder intends to purchase in the form of cash, bank or certified check made payable to the order of the Company, or by wire transfer of immediately available funds, of an amount of consideration equal to the Exercise Price in effect on the Date of Exercise multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder.

Upon proper exercise of this Warrant by the Holder, the Company shall promptly issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, one or more certificates representing, in the aggregate, the number of Warrant Shares issuable upon such exercise, free of restrictive legends other than as required by this Warrant or by law.  Any person so designated by the Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

A “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly executed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the holder hereof to be purchased.

(c)           This Warrant shall be exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares.  If this Warrant is exercised for less than all of the Warrant Shares which may be purchased under this Warrant, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

  

19

  

 

(d)           The certificate or certificates for Warrant Shares issued upon exercise of this Warrant shall be stamped or imprinted (unless registered under the Securities Act) with a legend substantially in the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS, AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.

4.           Payment of Taxes.  The Company shall pay all documentary stamp taxes attributable to the issuance of Warrant Shares upon the exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration or issue of any certificates for Warrant Shares or Warrants in a name other than that of the registered Holder of the Warrant surrendered, and the Company shall not be required to issue or cause to be issued or deliver or cause to be delivered the certificates for Warrant Shares unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or is not required to be paid.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

5.           Replacement of Warrant .  If this Warrant is mutilated, lost, stolen or destroyed, the Company may in its discretion issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and in substitution for this Warrant, a New Warrant, but only upon receipt of such mutilated warrant or evidence reasonably satisfactory to the Company of such loss, theft or destruction.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures, pay such reasonable charges and provide such indemnity as the Company may prescribe.

  

20

  

 

6.           Reservation of Warrant Shares .  The Company covenants that it shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders (taking into account the adjustments and restrictions of Section 7).  The Company covenants that all Warrant Shares that shall be so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly authorized, validly issued and fully paid and nonassessable.  The Company shall provide for and maintain the listing of the Common Stock, including the Warrant Shares, upon any securities exchange or interdealer quotation system, if any, which is the principal exchange or system on which the Common Stock is then traded or listed.

7.           Certain Adjustments .  The Exercise Price payable upon exercise of this Warrant is subject to adjustment from time to time as set forth in this Section 7.  Upon each such adjustment of the Exercise Price pursuant to this Section 7, the Holder shall thereafter prior to the Expiration Date be entitled to purchase, at the Exercise Price then in effect pursuant hereto, the number of Warrant Shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

(a)           Stock Splits and Combinations .  If the Company, at any time while this Warrant is outstanding, (i) subdivides outstanding shares of Common Stock into a larger number of shares or (ii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be adjusted to equal the price obtained by multiplying the Exercise Price in effect immediately prior to the effective date of such subdivision or combination by a fraction, (1) the numerator of which shall be the number of shares of Common Stock outstanding immediately before such event and (2) the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment pursuant to this Section 7(a) shall become effective immediately after the effective date of such subdivision or combination.

  

21

  

 

(b)           Reclassification .  In case of any reclassification or change of the shares of Common Stock issuable upon exercise of this Warrant (other than a change in par value, or as a result of a subdivision or combination covered by Section 7(a), but including any change in the shares into one or more classes or series of shares), then the Holder shall have the right thereafter to exercise this Warrant only for the shares of stock and other securities of the Company and property receivable by holders of Common Stock following such reclassification or change, and the Holder shall thereafter upon exercise of this Warrant be entitled to receive such amount of securities or property attributable to the number of Warrant Shares such Holder would have been entitled to receive had such Holder exercised this Warrant immediately prior to such action.  The terms of any such reclassification or other change shall include such terms so as to continue to give to the Holder the right to receive the securities or property set forth in this Section 7(b) upon any exercise following any such reclassification or other action.

(c)           Merger, Consolidation, Etc.    If (A) any person (the “ Acquirer ”) directly or indirectly acquires the Company in a transaction in which the Company is merged with or into or consolidated with another person or (B) the Company sells or conveys all or substantially all of its assets to another person (unless, subsequent to such merger, consolidation or other transaction, the Company is the surviving entity and the stockholders of the Company immediately prior to the transaction constitute at least a majority of the stockholders of the Company following the transaction, this Section 7(c) shall not apply with respect to such merger, consolidation or other transaction) (such merger, consolidation or other transaction referred to hereinafter as a “ Change ”), then, upon exercise of this Warrant at any time after the consummation of the Change but prior to the Expiration Date, in lieu of the Warrant Shares (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Change, the Holder shall be entitled to receive such Warrant Shares or other securities, cash, assets or any other property whatsoever which such Holder would have been entitled to receive after the occurrence of such Change had this Warrant been exercised immediately prior to such Change.  As a condition to the consummation of such Change, the Company shall take all reasonable steps to cause the Acquirer to execute and deliver to the Holder of this Warrant a written instrument in which the Acquirer assumes all of the obligations under this Warrant and any adjustments to the Warrant as assumed by the Acquirer that may occur subsequent to the effective date of such Change shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 7 of this Warrant.

  

22

  

 

The Company shall give written notice of any Change to the Holder, in accordance with Section 7(e), at least ten Business Days prior to the effective date of the Change.   The Company’s failure to give notice required by this Section 7(c) or any defect therein shall not affect the validity of the Change covered by this Section 7(c).  However, if the Company fails to give notice, the responsibilities of the Company with respect to this Section 7(c) shall be assumed by the Acquirer and nothing in this paragraph shall prejudice the rights of the Holder pursuant to this Warrant.

(d)           All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.

(i)           the approval of any stockholders of the Company shall be required in connection with any reclassification or change of the shares of Common Stock issuable upon exercise of this Warrant (other than a change in par value, or as a result of a subdivision or combination, but including any change in the shares into one or more classes or series of shares); or

(ii)           the Company shall authorize the voluntary dissolution, liquidation or winding up of the affairs of the Company,

  

23

  

 

then the Company shall cause to be mailed to each Holder at their last addresses as they shall appear upon the Warrant Register, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating the date on which such reclassification or change, or dissolution, liquidation or winding up is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification or change, dissolution, liquidation or winding up; provided , however , that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

(f)           Notice of Adjustments .  The Company shall promptly, and in any event within ten (10) Business Days, notify the Holder of this Warrant of any adjustment in the Exercise Price or number of Warrant Shares issuable upon the exercise of this Warrant pursuant to the provisions of this Section 7.  Such notice shall be in writing and shall set forth, in reasonable detail, the reason for such adjustment and the calculation thereof.  No defect in such notice, or in the mailing thereof, shall affect any such adjustment or the rights of the Holder hereunder.

8.           Fractional Shares .  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  The number of full Warrant Shares which shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of this Warrant so presented.  If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Market Price of one share of Common Stock on the Date of Exercise of such Warrant multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

  

24

  

 

9.           Registration Rights .  If at any time hereafter, the Company proposes to register any shares of its Common Stock or other company securities with the Securities and Exchange Commission (the “ SEC ”), other than a registration statement on Form S-4 or S-8 or any similar of successor form relating to securities to be issued under any employee benefit plan or in connection with the direct or indirect acquisition by the Company of any other company or entity, whether or not for its own account, the Company shall give prompt written notice to the Holder at least ten days prior to the filing date of the registration statement relating to such registration, which notice shall offer the Holder the opportunity to include in such registration statement the Warrant Shares.  The Holder shall have five days after such notice to elect, by notice to the Company, to have the Warrant Shares included in such registration statement.  If the Holder so elects, the Company will use all commercially reasonable efforts to effect the registration of the Warrant Shares in such registration statement.

 

10.         Notices .  Any and all notices or other communications or deliveries hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 11 prior to 4:30 p.m. (New York City time) on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 10 later than 4:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  The addresses for such communications shall be:  (1) if to the Company, to Viggle Inc., at the address of its chief executive offices, Attention: Chief Executive Officer or (ii) if to the Holder, to the Holder at the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section 11.

  

25

  

 

11.         Miscellaneous .

(a)           This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns, except that the obligations of the Company hereunder shall not be assigned except by operation of law.  This Warrant may be amended only in writing duly executed by the Company and the Holder.

(b)           Subject to Section 12(a), nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Holder any legal or equitable right, remedy or cause under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Holder and its successors and assigns.

(c)           This Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York applicable to contracts made and to be performed entirely in such State.

(d)           The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions or interpretation of this Warrant.

(e)           This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.

  

26

  

 

(f)            In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties shall attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

(g)           Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as stockholders in respect of the meetings of stockholders or the election of members of the Board of Directors of the Company or any other matter, or any rights whatsoever as stockholders of the Company or as imposing any obligation on such holder to purchase any securities or as imposing any li­abilities on such Holder as a stockholder of the Company, whether such obligation or liabilities are asserted by the Company or by creditors of the Company.

 

[THIS SPACE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE TO FOLLOW]

  

27

  

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer on the date first written above.

 

	  	
VIGGLE INC.

	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
Name:

	  
	  	  	
Title:

	  

  

28

  

FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of

Common Stock under the Warrant)

To Viggle Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase  _____________ shares of Common Stock, $0.001 par value  (“ Common Stock ”), of Viggle Inc. and encloses herewith $________ in cash or certified or official bank check or checks or wire transfer of immediately available funds, which sum represents the aggregate Exercise Price (as defined in the Warrant) for the number of shares of Common Stock to which this Form of Election to Purchase relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of

 

	  	
PLEASE INSERT SOCIAL SECURITY OR

	  	
TAX IDENTIFICATION NUMBER

	  	  
	  	  

 

	  
	
(Please print name and address)

 

	  

 

  

29

  

 

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

 

	  
	
(Please print name and address)

 

	  

  

30

  

 

	
Dated:  _________________________ ,

	
_______________________________________________ 

	  	
(Signature) ______________________________________

	  	
(Print) __________________________________________

	  	
(By:) ___________________________________________

	  	
(Name:) _________________________________________

	  	
(Title:) __________________________________________

                                     

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

  

31

  

 

FORM OF ELECTION TO TRANSFER

[To be completed and executed only upon transfer of the Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase  ____________ shares of Common Stock of Viggle Inc. to which the within Warrant relates, together with all title and interest therein, and hereby irrevocably appoints ________________ attorney to transfer said right on the books of Viggle Inc. with full power of substitution in the premises.

Dated:_______________, ____ 20__

 

	  	
(Signature must conform in all respects to name of holderas specified on the face of the Warrant)

	  	  
	  	  
	  	
Address of Transferee

	  	  
	  	  
	  	  
	  	  

 

In the presence of:

__________________________________

 

 

 

 

32vggl_ex104.htm

EXHIBIT 10.4

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (the “Agreement”), dated as of March 11, 2013, is by and among Viggle Inc., a Delaware corporation (the “Company”), and the investor listed on the Schedule attached hereto (the “Investor”).

 

RECITALS

 

A.          The Company and the Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.

B.           The Company has authorized the issuance of (i) secured convertible notes in the aggregate original principal amount of $50,000,000 (the “Notes”), which Notes shall be convertible into shares of Common Stock (as defined in the Notes) (as converted, collectively, the “Conversion Shares”), in accordance with the terms of the Notes and (ii) the Common Shares (as defined below).

C.           The Investor and the Company previously entered into that certain Line of Credit Grid Promissory Note, dated as of June 29, 2012, as amended (the “Original Note”), pursuant to which the Company currently owes the Investor $20,781,546.58.

D.           The Company and the Investor wish to exchange, upon the terms and conditions stated in this Agreement, (i) the aggregate original principal amount of the Original Note for a Note in the original principal amount of $20,781,546.58 (such Note, the “New Note”), which New Note shall be convertible into shares of Common Stock on the terms set forth in such New Note.  In addition, in order to induce the Investor to convert the Original Note, the Company will issue to the Investor 40,000 shares of Common Stock for each $100,000.00 in principal amount exchanged under the Original Note, for a total of 8,312,699 shares of Common Stock, which shares shall collectively be referred to herein as the “Common Shares”).

D.           The Notes, the Conversion Shares and the Common Shares are collectively referred to herein as the “Securities.”

 

E.           The Notes will be secured by a perfected security interest in all of the assets of the Company and its Subsidiaries (as defined below) as evidenced by a security agreement, in the form attached hereto as Exhibit A (the “Security Agreement” and together with the other security documents and agreements entered into in connection with the Security Agreement, as each may be amended or modified from time to time, collectively, the “Security Documents”), and each of its Subsidiaries will execute a guaranty in favor of each buyer of Securities (collectively, the “Guaranties”) pursuant to which each of them guarantees the payment obligations of the Company under the Notes.  Payment of the Notes will be subject to the Subordination Agreement (as hereinafter defined).  The “Subordination Agreement” means that certain Subordination Agreement, dated as of the date hereof, by and among Deutsche Bank Trust Company Americas, the Company, Sillerman Investment Company, LLC and Sillerman Investment Company II, LLC. 

 

  

1

  

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

 

	
1.  

	
EXCHANGE OF ORIGINAL NOTE.

 

(a)  New Note and Common Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue to Investor, and Investor, shall receive from the Company on the Closing Date (as defined below), (i) the New Note in the original principal amount of $20,781,746.58 in the form attached hereto as Exhibit B, and (ii) the Common Shares.

 

(b) Exchange. In exchange for the issuance of the New Note and Common Shares as described in Section 1(a) above, the Investor shall provide the Original Note to the Company for cancellation, and the Original Note shall thereafter be of no further force or effect.

 

(c) Closing. The closing (the “Closing”) of the exchange described above shall occur at the offices of the Company at 902 Broadway, 11th Floor, New York, NY 10010. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such later date as is mutually agreed to by the Company and the Investor). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.

 

	
2.  

	
INVESTOR’S REPRESENTATIONS AND WARRANTIES.

 

The Investor represents and warrants to the Company that:

 

(a) Organization; Authority. The Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

(b) No Public Sale or Distribution. The Investor (i) is acquiring the New Note and Common Shares and (ii) upon conversion of the New Notes will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, the Investor does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute any of the Securities in violation of applicable securities laws. “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

  

2

  

 

(c) Accredited Investor Status.  The Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(d) Reliance on Exemptions. The Investor understands that the Securities are being offered and sold to it 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 the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

 

(e) Information. The Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company. The Investor understands that its investment in the Securities involves a high degree of risk. The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

(f) No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(g) Transfer or Resale. The Investor understands that except as provided in Section 4(h) hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Investor shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Investor, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Investor provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

  

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(h) Validity; Enforcement. This Agreement and the other Transaction Documents to which the Investor will be a party have been, or will be prior to the Closing, duly and validly authorized, executed and delivered on behalf of the Investor and constitutes the legal, valid and binding obligations of the Investor enforceable against the Investor 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 and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(i) No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents to which the Investor will be a party and the consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Investor, (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 Investor is a party or (iii) result in a violation of any law, rule, regulation, order, judgment  or decree (including federal and state securities laws) applicable to the Investor, except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder or thereunder.

 

	
3.  

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to the Investor that:

 

(a) Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, properties, assets, liabilities, operations (including results thereof) or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. Except as set forth in the SEC Documents, the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, owns 100% of the outstanding capital stock or holds 100% of the equity or similar interests of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”

 

  

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(b) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents to which it will be a party and to issue the Securities in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it will be a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries, and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby have been duly authorized by the Company’s board of directors and each of its Subsidiaries’ board of directors or other governing body, as applicable, and (other than the filing with the SEC of a Form D with the SEC, any other filings as may be required by any state securities agencies and any other filing that may be required by Section 4(h) (collectively, the “Required Filings”)) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and the other Transaction Documents will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its 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 law. Prior to the Closing, the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary 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 law. “Transaction Documents” means, collectively, this Agreement, the Notes, the Security Documents and the Guaranties, as may be amended from time to time.

 

(c) Issuance of Securities. The issuance of the New Note and the Common Shares is duly authorized, and upon issuance in accordance with the terms of the Transaction Documents, 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. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than the number of Conversion Shares issuable upon conversion of the New Note (assuming for purposes hereof that the New Note is convertible at the initial Conversion Price (as defined in the New Note)). Upon conversion in accordance with the New Note, the Conversion Shares, 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, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Investor in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

 

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby will not (i) result in a violation of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”) or the organizational documents of any of its Subsidiaries, the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”) or the bylaws of any of the Company’s 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 applicable to the Company or any of its Subsidiaries other than, in the case of clauses (ii) and (iii) above, conflicts, defaults, rights or violations that could not reasonably be expected to have a Material Adverse Effect.

 

  

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(e) Consents. Neither the Company nor any of its Subsidiaries is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the Required Filings), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under the Transaction Documents, in each case, in accordance with the terms thereof. All consents, authorizations, orders, filings and registrations which the Company or any of its Subsidiaries is required to obtain at or prior to the Closing have been obtained or effected on or prior to the Closing Date.

 

(f) No General Solicitation; Placement Agents’ Fees. Neither the Company, nor any of its Subsidiaries, nor any Person acting on its or their behalf at their respective direction, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agents’ fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by the Investor or its investment advisor) relating to or arising out of the transactions contemplated hereby.

 

(g) No Integrated Offering. Neither the Company, nor any of its Subsidiaries, nor any Person acting on its or their behalf at their respective direction, has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company under any applicable stockholder approval provisions.

 

(h) SEC Documents; Financial Statements. During the one (1) year prior to the date hereof, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and, none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

  

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(i) Absence of Certain Changes. Since the date of the Company’s most recent Form 10-K, except as disclosed in the SEC Documents filed subsequent to such Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof) or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole.

 

(j) Conduct of Business; Contracts. Neither the Company nor any of its Subsidiaries is in material violation of any term of, or in material default under, its Certificate of Incorporation or Bylaws or the organizational charter, certificate of formation or certificate of incorporation or bylaws of any of the Company’s Subsidiaries, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, except in all cases for possible violations which would not reasonably be expected in the aggregate to have a Material Adverse Effect. Other than the contracts, agreements and instruments disclosed in the SEC Documents, neither the Company nor any of its Subsidiaries is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect

 

(k) Sarbanes-Oxley Act. The Company and each Subsidiary is in material compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.

 

(l) Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 300,000,000 shares of Common Stock, of which 88,323,498 are issued and outstanding and (ii) 1,000,000 shares of preferred stock, of which no shares are issued or outstanding. 53,864,121 shares of Common Stock are reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes and the Other Notes (as defined below)).

 

(m) Absence of Litigation . Except as disclosed in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by the OTCQB (the “Principal Market”), any court, public board, government agency, self-regulatory organization or body, to the knowledge of the Company, pending or threatened in writing against or affecting the Company or any of its Subsidiaries, which could reasonably be expected to have a Material Adverse Effect.

 

(n) Money Laundering. The Company and its Subsidiaries are in material compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations in any material respect, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.

 

  

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(o) Transfer Taxes. On the Closing Date, any stock transfer taxes which are required to be paid by the Company in connection with the issuance of the New Note and Common Shares by the Company hereunder will be, or will have been, fully paid or provided for by the Company.

 

	
4.  

	
COVENANTS.

 

(a) Best Efforts.  The Investor shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

(b) Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the New Note and Common Shares for sale to the Investor pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification).

 

(c) Public Information

 

(i) Maintaining Current Public Information. While the New Note is outstanding, the Company agrees to (1) make and keep public information available, as those terms are understood and defined in Rule 144 and (2) file with the SEC all reports and other documents required of the Company under the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144.

 

(ii) Liquidated Damages for Failure to Maintain Current Public Information. If, after the six (6) month anniversary of the Closing Date, the Company fails to file with the SEC any required reports under Section 13 or 15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable) (a “Current Public Information Failure”) and, as a result thereof, the Investor is unable to sell Conversion Shares or Common Shares without restriction under Rule 144 (including, without limitation, volume restrictions), then, as liquidated damages by reason of the Investor being unable to so sell Conversion Shares or Common Shares (as the case may be) (which remedy shall be the Investor’s sole and exclusive remedy), the Company shall pay to the Investor an amount in cash equal to 1.5% of the outstanding principal amount of the New Note on every thirty (30) day anniversary of a Current Public Information Failure until the earlier of (1) the date such Current Public Information Failure is cured and (2) such time that such public information is no longer required pursuant to Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to which the Investor shall be entitled pursuant to this Section 4(c)(ii) are referred to herein as “Public Information Failure Payments.” If a Current Public Information Failure giving rise to Public Information Failure Payments is cured prior to any thirty (30) day anniversary of such Current Public Information Failure, then such Public Information Failure Payment shall be made on the fifth (5th) Business Day after such cure. Notwithstanding the foregoing, (I) no Public Information Failure Payments shall be owed to the Investor to the extent that the Investor is then an “affiliate” of the Company (as such term is used in Rule 144), (II) in no event shall the aggregate amount of all Public Information Failure Payments paid to the Investor exceed an amount equal to 18% of the principal amount of the New Note and (III) no Public Information Failure Payments shall be owed to the Investor with respect to any period during which all of the Investor’s Conversion Shares and Common Shares may be sold by the Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable), pursuant to Section 4(a)(1) of the 1933 Act or are otherwise freely transferrable under the 1933 Act.

 

  

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(d) Reserved.

 

(e) Listing . The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Conversion Shares and Common Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) if required by the rules and regulations thereof. The Company shall use its reasonable efforts to cause the Common Stock to be listed or designated for quotation (as the case may be) on the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market (collectively, the “Nasdaq Markets”) while the New Note is outstanding, provided that in no event shall the Company have any obligation or liability to the Investor if the Common Stock is not so listed or designated for quotation (as the case may be) on any of the Nasdaq Markets unless the Company fails to use its reasonable efforts to cause the Common Stock to be so listed or designated for quotation (as the case may be) on one of the Nasdaq Markets.

 

(f) Fees and Expenses. Each party to this Agreement shall bear its own expenses in connection with the exchange of the Original Note for the New Note.

 

(g) Disclosure of Transactions. The Company shall, on or before 9:00 a.m. New York time, on the fourth (4th) Business Day following the date of this Agreement, file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement, the form of the New Note, the form of Security Agreement and the form of Guaranty).

 

(h) Piggyback Registration Rights .

 

(i) Participation. If the Company at any time proposes to register any of its securities under the 1933 Act, whether for its own account or for the account of any other Person (other than a registration on Form S-4 or S-8 or any successor form to such forms), (a “Public Sale”), then, as soon as practicable after the Company’s determination to undertake such registration, the Company shall give written notice of such proposed filing to the Investor and the Investor may elect to request inclusion in such registration such number of the Investor’s Conversion Shares and Common Shares as the Investor may request in writing (a “Piggyback Registration”). If the Investor so requests, the Company shall use commercially reasonable efforts to include in such Piggyback Registration all Conversion Shares and Common Shares which are requested to be included therein.

 

  

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(i) Subsequent Placements .

 

(i) Certain Defined Terms.

 

(1) “Approved Share Plan” means any plan which has been approved by the Company’s board of directors pursuant to which shares of Common Stock, options to purchase shares of Common Stock, RSUs, stock appreciation rights and the like may be issued to any employee, officer, director or consultant.

 

(2) “Convertible Securities” means any capital stock, note, debenture, option, warrant or other security of the Company that is directly or indirectly convertible into or exercisable for any shares of Common Stock.

 

(3) “Excluded Securities” means, collectively, (I) shares of Common Stock, options to purchase shares of Common Stock, RSUs, stock appreciation rights and the like to employees, officers, directors and consultants issued pursuant to an Approved Share Plan; (II) shares of Common Stock issued upon conversion, exercise or otherwise on account of Convertible Securities issued by the Company prior to the date of the Agreement; (III) the Common Shares, (IV) the Conversion Shares; (V) the Exchange Common Shares (as defined below); (VI) the Exchange Conversion Shares (as defined below); (VII) the Notes; (VIII) the Exchange Notes (as defined below), (IX) the Draw Warrant (as defined below), (X) shares issuable upon exercise of the Draw Warrant) and (XI) shares of Common Stock or other securities issued in connection with strategic mergers, acquisitions, alliances, corporate relationships and the like.

 

(4) “Number of Shares Issued Below the Conversion Price” means, as of the applicable time of determination, the number of shares of Common Stock equal to the sum of (i) 82,641,753 plus (ii) the aggregate number of Common Shares plus (iii) the aggregate number of the Exchange Common Shares (as defined below) plus (iv) the aggregate number of Conversion Shares plus (v) the aggregate number of Exchange Conversion Shares plus (vi) the aggregate number of shares of Common Stock issuable upon exercise, exchange or conversion (as the case may be) of all Convertible Securities that are outstanding immediately prior to execution of this Agreement (with the number of shares of Common Stock so issuable upon exercise, exchange or conversion (as the case may be) of such Convertible Securities to be determined based upon the maximum number of shares of Common Stock that could be issuable under such Convertible Securities pursuant to the terms and conditions thereof (other than anti-dilution provisions under which an adjustment has not yet then occurred)), all regardless of whether such Convertible Securities are actually then exercisable, exchangeable or convertible (as the case may be) and disregarding any limitations on exercise, exchange or conversion thereof (in each case of clauses (i) through (vi) above, as adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement).

 

(5) “Number of Shares Deemed Outstanding” means, as of the applicable time of determination, the number of shares of Common Stock equal to the sum of (i) 82,641,753 plus (ii) the aggregate number of Common Shares plus (iii) the aggregate number of the Exchange Common Shares (as defined below) plus (iv) the aggregate number of Conversion Shares plus (v) the aggregate number of Exchange Conversion Shares plus (vi) the aggregate number of shares of Common Stock issuable upon exercise, exchange or conversion (as the case may be) of all Convertible Securities that are outstanding immediately prior to execution of this Agreement (with the number of shares of Common Stock so issuable upon exercise, exchange or conversion (as the case may be) of such Convertible Securities to be determined based upon the maximum number of shares of Common Stock that could be issuable under such Convertible Securities pursuant to the terms and conditions thereof (other than anti-dilution provisions under which an adjustment has not yet then occurred)), all regardless of whether such Convertible Securities are actually then exercisable, exchangeable or convertible (as the case may be) and disregarding any limitations on exercise, exchange or conversion thereof (in each case of clauses (i) through (vi) above, as adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement).

 

  

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(6) “Subsequent Placement” means the issuance or sale by the Company of any shares of Common Stock or any Convertible Securities.

 

(ii) Notice or Consent. If immediately following the consummation of a contemplated Subsequent Placement by the Company following the Closing Date in which the consideration per share of Common Stock is less than $1.25 per share  (as adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement) (or deemed less than $1.25 per share (as adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement) in the case of a Convertible Security as determined in accordance with Section 4(i)(iii) below) (a “Dilutive Subsequent Placement”),

 

(1) the Number of Shares Issued Below the Conversion Price is less than 33% of the Number of Shares Deemed Outstanding, then the Company shall not consummate such Dilutive Subsequent Placement unless (x) the Company has provided notice of such Dilutive Subsequent Placement to the Investor at least one (1) Business Day prior to the consummation of such Dilutive Subsequent Placement (without implication that the contrary would otherwise be true, the consent of the Required Holders shall not be required to consummate such Dilutive Subsequent Placement) or (y) such Dilutive Subsequent Placement involves the issuance of Excluded Securities;

 

(2) the Number of Shares Issued Below the Conversion Price is greater than 25% of the Number of Shares Deemed Outstanding but less than 33% of the Number of Shares Deemed Outstanding, then the Company shall not consummate such Dilutive Subsequent Placement unless (x) the Company has obtained the prior written consent of the Required Holders or (y) such Dilutive Subsequent Placement involves the issuance of Excluded Securities; or

 

(3) the Number of Shares Issued Below the Conversion Price is greater than 33% of the Number of Shares Deemed Outstanding, then the Company shall not consummate such Dilutive Subsequent Placement unless (x) the Company has obtained the prior written consent of the Required Holders or (y) such Dilutive Subsequent Placement involves the issuance of Excluded Securities.

 

(iii) Miscellaneous. Notwithstanding anything contained in this Section 4(i) to the contrary, (i) shares of Common Stock issuable upon conversion or exercise of any Convertible Security issued by the Company in a Dilutive Subsequent Issuance after the Closing Date shall be deemed to have been issued by the Company on the issuance date of such Convertible Security and the consideration per share therefor shall be the conversion price or exercise price (as the case may be) specified in such Convertible Security, (ii) this Section 4(i) shall automatically cease to apply and shall automatically terminate at such time as 75% of the aggregate original principal amounts of the Notes are no longer outstanding (whether through repayment, conversion or otherwise) and (iii) this Section 4(i) shall not apply (and no notice or consent shall be required) if all of the then-outstanding Notes will be repaid by the Company within five (5) Business Days following the consummation of the applicable Dilutive Subsequent Placement in accordance with Section 1(b) of the Notes.

 

  

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5.  

	
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGENDS.

 

(a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and the Common Shares in which the Company shall record the name and address of the Person in whose name the Notes and the Common Shares have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes held by such Person and the number of Common Shares held by such Person.

 

(b) Legends. The Investor understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

 

(c)  Removal of Legends. Certificates evidencing Conversion Shares or Common Shares (as the case may be) shall not be required to contain the legend set forth in Section 5(b) above or any other legend (i) following any sale of such Conversion Shares or Common Shares (as the case may be) pursuant to an effective registration statement containing a usable prospectus, (ii) following any sale of such Conversion Shares or Common Shares (as the case may be) pursuant to Rule 144 (provided that the Investor provides the Company with reasonable assurances (which shall include, without limitation, customary representation letters and an opinion of counsel) that such Conversion Shares or Common Shares (as the case may be) were properly sold pursuant to, and in compliance with, Rule 144) or (iii) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) Trading Days following the delivery by the Investor to the Company of a legended certificate representing such Conversion Shares or Common Shares (as the case may be) (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Investor as may be required above in this Section 5(c), as directed by the Investor, either: (A) provided that the Company and its transfer agent are participating in the DTC Fast Automated Securities Transfer Program, credit the aggregate number of Conversion Shares or Common Shares (as the case may be) to which the Investor shall be entitled to the Investor’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company or its transfer agent are not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Investor, a certificate representing such Conversion Shares or Common Shares (as the case may be) that is free from all restrictive and other legends, registered in the name of the Investor or its designee.

 

	
6.  

	
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

(a) The obligation of the Company hereunder to issue and sell the New Note and the related Common Shares to the Investor at the Closing is subject to the satisfaction, at or before the Closing Date, 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:

 

(i) The Investor shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii) The Investor shall have delivered to the Company the Original Note, duly endorsed for cancellation.

 

(iii) The representations and warranties of the Investor 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 Investor shall 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 the Investor at or prior to the Closing Date.

 

(iv) 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 the Transaction Documents.

 

(v) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.

 

  

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7.  

	
CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE.

 

(a) The obligation of the Investor to exchange the Original Note at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(i) The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to the Investor each of the Transaction Documents to which it is a party, and the Company shall have duly executed and delivered to the Investor the New Note and the related Common Shares to be issued at the Closing pursuant to this Agreement.

 

(ii) The representations and warranties 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 by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.  The Investor shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Investor in a form reasonably acceptable to the Investor.

 

(iii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

 

(iv) 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 the Transaction Documents.

 

(v) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.

 

	
8.  

	
TERMINATION.

 

In the event that the Closing shall not have occurred within twenty (20) days after the date hereof, then each party hereto shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such party to any other party hereto; provided, however, the right of a party to terminate its obligations under this Agreement pursuant to this Section 8 shall not be available to a party if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such party’s breach of this Agreement.  Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.

 

  

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9.  

	
MISCELLANEOUS.

 

(a)  All questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents 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 of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or under any of the other Transaction Documents or in connection herewith or therewith or with any transaction contemplated hereby or thereby or discussed herein or therein, 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. Nothing contained herein (i) shall be deemed or operate to preclude any party from bringing suit or taking other legal action against any other party to any of the Transaction Documents in any other jurisdiction to collect on such other party’s obligations to such party or to enforce a judgment or other court ruling in favor of such party or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 16 of the Notes. 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, THE OTHER TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

(b) Counterparts. 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.

 

(c) Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

(d) Severability. 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).

 

  

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(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Investor, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein. The parties hereto make no representations or warranties to each other, express (except as expressly contained in this Agreement) or implied, and any and all prior representations and warranties made by any party hereto or its representatives, whether verbally or in writing, are deemed to have been merged into this Agreement and the other written agreements contemplated hereby, it being intended that no such prior representations or warranties shall survive the execution and delivery of this Agreement. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investor. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

(f) Notices. 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, if delivered personally; (ii) when sent, if sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail server that such e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:

 

If to the Company:

 

Viggle Inc.

902 Broadway, 11th Floor

New York, New York 10022

E-mail: mitch@viggle.com

Facsimile: (212) 750-3034

Attention: General Counsel

 

If to the Investor:

 

Sillerman Investment Company LLC

902 Broadway, 11th Floor

New York, New York 10010

E-mail: fx@viggle.com

Facsimile: (212) 750-3034

 

  

15

  

 

, or to such other address, facsimile number and/or e-mail 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) mechanically or electronically generated by the sender’s facsimile machine containing the time, date and recipient facsimile number or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iv) above, respectively. A copy of the e-mail transmission containing the time, date and recipient e-mail address shall be rebuttable evidence of receipt by e-mail in accordance with clause (iii) above.

 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns, including, as contemplated below, any assignee of any of the New Note. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. Following the Closing, the Investor may assign some or all of its rights hereunder in connection with any transfer of any of its New Note without the consent of the Company.

 

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(i) Survival. The representations and warranties shall survive the Closing for a period of two (2) years following the Closing, and the covenants and agreements shall survive the Closing.

 

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

 

(k) Construction. 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. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement.

 

  

16

  

 

(l) Currency . Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

(m) Additional Issuance. It is expressly understood and agreed that notwithstanding anything contained in this Agreement or any of the other Transaction Documents to the contrary, (i) the Company shall be permitted to issue in one or more Subsequent Placements up to an additional $29,300,000 in secured convertible notes and shares of Common Stock in exchange for the shares of Common Stock and warrants to purchase Common Stock that were issued by the Company previously on terms and conditions similar to the terms and conditions contained in the Transaction Documents (such additional convertible notes are collectively referred to herein as the “Exchange Notes,” such additional shares of Common Stock are referred to herein as the “Exchange Common Shares” and the shares of Common Stock issuable upon conversion of the Exchange Notes are referred to herein as the “Exchange Conversion Shares”). In addition, it is expressly understood and agreed that notwithstanding anything contained in this Agreement or any of the other Transaction Documents to the contrary, the Company shall be permitted to issue to borrow from Deutsche Bank Trust Company Americas (the “Bank”) up to $10 million pursuant to that certain Term Loan Agreement, dated as of the date hereof, by and among the Company and the Bank, as amended , restated, modified and/or supplemented from time to time (the “Deutsche Loan Agreement”), the Company shall be permitted to borrow under that certain Amended and Restated Line of Credit Grid Promissory Note by and between the Company and Sillerman Investment Company II, LLC, dated as of the date hereof (the “Amended and Restated Note”) and the Company shall be permitted to issue to Sillerman Investment Company II, LLC warrants to purchase  one share of the Company’s common stock for each dollar drawn on the Amended and Restated Note in excess of the $10 million permitted to be drawn under the Deutsche Loan Agreement  (“the “Draw Warrant”).

 

[signature pages follow]

 

  

17

  

 

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

 

	 	
COMPANY:

	 
	 	 	 
	 	VIGGLE INC.	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

  

18

  

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

 

	  	
SILLERMAN INVESTMENT COMPANY LLC:

	 	 
	  	
By:  ____________________

Its:  ____________________

 

 

 

19

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