Document:

EX-10.1

Exhibit 10.1

AMENDMENT NO. 2 TO

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

This Amendment No. 2 to Second Amended and Restated Receivables Purchase Agreement (this
“Amendment”) is dated as of August 25, 2011, among Avnet Receivables Corporation, a
Delaware corporation (“Seller”), Avnet, Inc., a New York corporation (“Avnet”), as
initial Servicer (the Servicer together with Seller, the “Seller Parties” and each a
“Seller Party”), the entities party hereto and identified as a “Financial Institution”
(together with any of their respective successors and assigns hereunder, the “Financial
Institutions”), the entities party hereto and identified as a “Company” (together with any of
their respective successors and assigns hereunder, the “Companies”) and JPMorgan Chase
Bank, N.A. (successor by merger to Bank One, NA (Main Office Chicago)), as agent for the Purchasers
or any successor agent hereunder (together with its successors and assigns hereunder, the
“Agent”), amending the Second Amended and Restated Receivables Purchase Agreement, dated as
of August 26, 2010, as amended by Amendment No. 1 thereto, dated as of December 28, 2010, each
among the Seller Parties, the Financial Institutions, the Companies, and the Agent (the
“Original Agreement,” and as further amended, modified or supplemented from time to time,
the “Receivables Purchase Agreement”).

RECITALS

The parties hereto are parties to the Original Agreement and they now desire to amend the
Original Agreement, subject to the terms and conditions hereof, as more particularly described
herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

Section 1. Definitions Used Herein. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth for such terms in, or incorporated by
reference into, the Original Agreement.

Section 2. Amendment. Subject to the terms and conditions set forth herein, the
Original Agreement is hereby amended as follows:

(a) The first sentence of Section 1.2 of the Original Agreement is hereby deleted in its
entirety and replaced with the following:

“Seller shall provide the Agent, by 12:00 noon (Chicago time) at least one
Business Day prior to the date of each Incremental Purchase, with prior written
notice in a form set forth as Exhibit II hereto of such Incremental Purchase
(a “Purchase Notice”).

(b) The following sentence is hereby added to the end of Section 4.1 of the Original
Agreement:

“Notwithstanding the foregoing, any Financial Institution that is also a
Company shall continue to receive CP Costs and Company Costs in accordance with
Article III rather than Yield at the Discount Rate in accordance with this
Article IV.”

(c) Section 7.1(i)(J) of the Original Agreement is hereby deleted in its entirety and replaced
with the following:

“(J) except as herein specifically otherwise provided, maintain the funds or
other assets of Seller separate from, and not commingled with, those of Originator
or any Affiliate thereof and only maintain bank accounts or other depository
accounts to which Seller alone is the account party;”

(d) Section 7.1(p) of the Original Agreement is hereby deleted in its entirety and replaced
with the following:

“(p) General Ledger and Certain Receivables. Such Seller Party shall
maintain its consolidated general accounting ledger such that all indebtedness and
other obligations owed to Originator or in which Originator has a security interest
or other interest arising in connection with the sale or lease of goods or the
rendering of services by Originator and sold to Seller are recorded as part of
general ledger category “company code 0100” provided however, that from and after
December 28, 2010 indebtedness or other obligations owed to Originator or in which
Originator has a security interest or other interest arising in connection with the
sale or lease of goods or the rendering of services by the business previously
conducted by businesses acquired by Originator in an Excluded Acquisition shall not
be recorded as part of general ledger category “company code 0100” until such time,
if any, as such indebtedness or other obligations are originated, serviced and
collected in a manner substantially similar to the Receivables.

(e) The following section is hereby added as a new Section 8.8, immediately following Section
8.7 of the Original Agreement:

“Section 8.8 CRD Compliance. The Servicer agrees, for the
benefit of each Purchaser that is required to comply with the requirements of
Article 122(a) of the CRD, that from and after August 25, 2011 (a) it shall retain a
net economic interest in the Receivables in an amount at least equal to 5% of the
nominal value of the Purchaser Interests in accordance with Article 122a(1) of the
CRD, (b) it shall not change the manner in which it retains such net economic
interest, except to the extent such change is permitted under Article 122a(1) of the
CRD, (c) it shall not enter into any credit risk mitigation, short position or any
other hedge with respect to such net economic interest, except to the extent
permitted under Article 122a(1) of the CRD and (d) provide any information that the
Purchasers may require in order to comply with their respective obligations under
Articles 122a(4) and (5) of the CRD.”

(f) Section 10.2(a) of the Original Agreement is hereby deleted in its entirety and replaced
with the following:

“If any Regulatory Change (i) subjects any Purchaser or any Funding Source to
any charge or withholding on or with respect to any Funding Agreement or this
Agreement or a Purchaser’s or Funding Source’s obligations under a Funding Agreement
or this Agreement, or on or with respect to the Receivables, or changes the basis of
taxation of payments to any Purchaser or any Funding Source of any amounts payable
under any Funding Agreement or this Agreement (except for changes in the rate of tax
on the overall net income of a Purchaser or Funding Source or taxes excluded by
Section 10.1) or (ii) imposes, modifies or deems applicable any reserve,
assessment, fee, tax, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or liabilities of a Funding
Source or a Purchaser, or credit extended by a Funding Source or a Purchaser
pursuant to a Funding Agreement or this Agreement or (iii) imposes any other
condition the result of which is to increase the cost to a Funding Source or a
Purchaser of performing its obligations under a Funding Agreement or this Agreement,
or to reduce the rate of return on a Funding Source’s or Purchaser’s capital as a
consequence of its obligations under a Funding Agreement or this Agreement, or to
reduce the amount of any sum received or receivable by a Funding Source or a
Purchaser under a Funding Agreement or this Agreement, or to require any payment
calculated by reference to the amount of interests or loans held or interest
received by it, then, upon demand by the Agent, which demand shall be made at least
30 days prior to the date of any payment by the Seller pursuant to this Section
10.2 and shall include an explanation in reasonable detail of the manner in
which such amounts shall have been determined, Seller shall pay to the Agent, for
the benefit of the relevant Funding Source or Purchaser, such amounts charged to
such Funding Source or Purchaser or such amounts to otherwise compensate such
Funding Source or such Purchaser for such increased cost or such reduction.
Notwithstanding anything to the contrary contained herein, Seller shall not be
liable for any amounts for any such costs or reduced returns incurred by the party
demanding payment under this Section 10.2 more than 90 days before the related
demand for payment. The term “Regulatory Change” shall mean (i) the adoption after
August 26, 2010 of any applicable law, rule or regulation (including any applicable
law, rule or regulation regarding capital adequacy) or any change therein after
August 26, 2010, (ii) any change after August 26, 2010 in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, or (iii) the compliance, whether
commenced prior to or after August 25, 2011, by any Funding Source or Purchaser with
(A) the final rule titled Risk-Based Capital Guidelines; Capital Adequacy
Guidelines; Capital Maintenance: Regulatory Capital; Impact of Modifications to
Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial
Paper Programs; and Other Related Issues, adopted by the United States bank
regulatory agencies on December 15, 2009, (B) the Dodd-Frank Wall Street Reform and
Consumer Protection Act, as amended from time to time or (C) any rules or
regulations promulgated in connection with the foregoing by any such agency.”

(g) The following section is hereby added as a new Section 13.17, immediately following
Section 13.16 of the Original Agreement:

“Section 13.17 PATRIOT Act. Each Purchaser that is subject to
the requirements of the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into
law October 26, 2001)) (the”Patriot Act”) hereby notifies the Seller Parties
that pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Seller Parties, which information
includes, among other things, the name and address of the Seller Parties and other
information that will allow such Purchasers to identify such parties in accordance
with the Patriot Act.”

(h) The definition of “Alternative Base Rate” in Exhibit I to the Original Agreement is hereby
deleted in its entirety and replaced with the following:

““Alternative Base Rate” means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% and (c) the LIBO Rate for a one
month Tranche Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day), provided that, for the avoidance of doubt, the
LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen
LIBOR01 Page1 (or on any successor or substitute page) at approximately 11:00 a.m.
London time on such day (without any rounding). Any change in the Alternative Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the LIBO
Rate shall be effective from and including the effective date of such change in the
Prime Rate, the Federal Funds Effective Rate or the LIBO Rate, respectively.”

(i) The definition of “Applicable Margin” in Exhibit I to the Original Agreement is hereby
deleted in its entirety and replaced with the following:

““Applicable Margin” means 2.50%.”

(j) The following definition is hereby added to Exhibit I to the Original Agreement
immediately after the definition of “CP Costs”:

““CRD” means, Directive 2006/48/EC of the European Parliament and of
the Council of 14 June 2006 (as amended by Directive 2009/111/EC), as amended from
time to time.”

(k) The definition of “Default Fee” in Exhibit I to the Original Agreement is hereby deleted
in its entirety and replaced with the following:

““Default Fee” means with respect to any amount due and payable by
Seller in respect of any Aggregate Unpaids, an amount equal to the greater of (i)
$1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum
equal to 2.00% above the Alternative Base Rate.”

(l) The following definition is hereby added to Exhibit I to the Original Agreement
immediately after the definition of “ERISA”:

““Excluded Acquisition” means any direct or indirect acquisition of any
business by the Originator consummated on or after January 1, 2010.”

(m) The definition of “Excluded Receivable” in Exhibit I to the Original Agreement is hereby
deleted in its entirety and replaced with the following:

““Excluded Receivable” means all indebtedness and other obligations
owed to Originator or in which Originator has a security interest or other interest
(including, without limitation, any indebtedness, obligation or interest
constituting an account, chattel paper, instrument or general intangible) arising in
connection with the sale or lease of goods or the rendering of services by
Originator and further includes, without limitation, the obligation to pay any
Finance Charges with respect thereto, which, in any case, both (i) arises in
connection with the sale or lease of goods or the rendering of services by the
business previously conducted by any businesses acquired by Originator in an
Excluded Acquisition and (ii) is not recorded or maintained in Avnet’s consolidated
general ledger accounting records as part of general ledger category “company code
0100” (other than any Receivables previously coded under “company code 0100” that
have been coded under any other category without the Agent’s prior written consent).
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute an Excluded Receivable
separate from an Excluded Receivable consisting of the indebtedness and other rights
and obligations arising from any other transaction; provided, that any indebtedness,
rights or obligations referred to in the immediately preceding sentence shall be an
Excluded Receivable regardless of whether the account debtor or Seller treats such
indebtedness, rights or obligations as a separate payment obligation.”

(n) The definition of “Liquidity Termination Date” in Exhibit I to the Original Agreement is
hereby deleted in its entirety and replaced with the following:

““Liquidity Termination Date” means August 23, 2012.”

(o) The definition of “Prime Rate” in Exhibit I to the Original Agreement is hereby deleted in
its entirety and replaced with the following:

““Prime Rate” means a rate per annum equal to the prime rate of
interest announced from time to time by the Agent.”

(p) The definition of “Purchase Limit” in Exhibit I to the Original Agreement is hereby
deleted in its entirety and replaced with the following:

““Purchase Limit” means $750,000,000, as such amount may be modified in
accordance with the terms of Section 4.6(b).

(q) The following definitions are hereby added to Exhibit I to the Original Agreement
immediately after the definition of “Weekly Reporting Condition”:

““Wells” means Wells Fargo Bank, National Association, a national
banking association.”

““Wells Company” means Wells Fargo Bank, National Association, a
national banking association.”

(r) Schedule A to the Original Agreement is hereby deleted in its entirety and replaced by
Schedule A hereto.

(s) The following paragraph is hereby added as a new paragraph h of the definition of “Company
Costs” in Schedule C to the Original Agreement:

“h. For any Purchaser Interest purchased by Wells or the Wells Company, for any
day, the one-month eurodollar rate for U.S. dollar deposits as reported on the
Reuters Screen LIBOR01 Page or any other page that may replace such page from time
to time for the purpose of displaying offered rates of leading banks for London
interbank deposits in United States dollars, as of 11:00 a.m. (London time) on such
date, or if such day is not a Business Day, then the immediately preceding Business
Day (or if not so reported, then as determined by Wells from another recognized
source for interbank quotation), in each case, changing when and as such rate
changes. For each Settlement Period, Wells or the Wells Company, as applicable,
shall calculate its aggregate Company Costs for such Settlement Period and report
such Company Costs to the Agent pursuant to Section 3.3 of this Agreement.”

Section 3. Assignments. In connection with the amendment hereunder, the following
assignments shall be effected as of the date hereof:

(a) Assignment from the Existing RBS Company to the New RBS Company. In consideration
of the payment by Thames Asset Global Securitization No. 1, Inc. (the “New RBS Company”) to
Amsterdam Funding Corporation (the “Existing RBS Company”), in immediately available funds,
of an amount equal to $73,333,333.33, representing 100% of the Capital of the Existing RBS
Company’s Purchaser Interests outstanding under the Original Agreement (such percentage amount, the
“RBS Company Transferred Capital”), the Existing RBS Company hereby sells, transfers and
assigns to the New RBS Company, without recourse, representation or warranty, and the New RBS
Company hereby irrevocably takes, receives and assumes from the Existing RBS Company, the RBS
Company Transferred Capital and all related rights and obligations under the Receivables Purchase
Agreement and under the other Transaction Documents. From and after the date of this Amendment,
all references to the “RBS Company” in the Receivables Purchase Agreement and any other Transaction
Document shall mean the New RBS Company rather than the Existing RBS Company.

(b) Additional Assignments.

(i) In consideration of the payment by Wells Fargo Bank, National Association (the “Wells
Company”) to the New RBS Company, in immediately available funds, of an amount equal to
$14,666,666.67, representing 20.0% of the Capital of the New RBS Company’s Purchaser Interests
outstanding immediately after giving effect to the assignment described in Paragraph 3(a)
above (such percentage amount, the “RBS – Wells Transferred Capital”), the New RBS Company
hereby sells, transfers and assigns to the Wells Company, without recourse, representation or
warranty, and the Wells Company hereby irrevocably takes, receives and assumes from the New RBS
Company, the RBS – Wells Transferred Capital and all related rights and obligations under the
Receivables Purchase Agreement and under the other Transaction Documents.

(ii) In consideration of the payment by the Wells Company to the BNP Company, in immediately
available funds, of an amount equal to $14,666,666.67, representing 20.0% of the Capital of the BNP
Company’s Purchaser Interests outstanding under the Original Agreement (such percentage amount, the
“BNP – Wells Transferred Capital”), the BNP Company hereby sells, transfers and assigns to
the Wells Company, without recourse, representation or warranty, and the Wells Company hereby
irrevocably takes, receives and assumes from the BNP Company, the BNP – Wells Transferred Capital
and all related rights and obligations under the Receivables Purchase Agreement and under the other
Transaction Documents.

(iii) In consideration of the payment by the Wells Company to the Scotia Company, in
immediately available funds, of an amount equal to $14,666,666.67, representing 20.0% of the
Capital of the Scotia Company’s Purchaser Interests outstanding under the Original Agreement (such
percentage amount, the “Scotia – Wells Transferred Capital”), the Scotia Company hereby
sells, transfers and assigns to the Wells Company, without recourse, representation or warranty,
and the Wells Company hereby irrevocably takes, receives and assumes from the Scotia Company, the
Scotia – Wells Transferred Capital and all related rights and obligations under the Receivables
Purchase Agreement and under the other Transaction Documents.

(iv) In consideration of the payment by the Wells Company to the Bank One Company, in
immediately available funds, of an amount equal to $14,666,666.67, representing 13.33% of the
Capital of the Bank One Company’s Purchaser Interests outstanding under the Original Agreement
(such percentage amount, the “Bank One – Wells Transferred Capital”), the Bank One Company
hereby sells, transfers and assigns to the Wells Company, without recourse, representation or
warranty, and the Wells Company hereby irrevocably takes, receives and assumes from the Bank One
Company, the Bank One – Wells Transferred Capital and all related rights and obligations under the
Receivables Purchase Agreement and under the other Transaction Documents.

(v) In consideration of the payment by the BTMU Company to the Bank One Company, in
immediately available funds, of an amount equal to $3,666,666.67, representing 3.33% of the Capital
of the Bank One Company’s Purchaser Interests outstanding under the Original Agreement (such
percentage amount, the “Bank One – BTMU Transferred Capital”), the Bank One Company hereby
sells, transfers and assigns to the BTMU Company, without recourse, representation or warranty, and
the BTMU Company hereby irrevocably takes, receives and assumes from the Bank One Company, the Bank
One – BTMU Transferred Capital and all related rights and obligations under the Receivables
Purchase Agreement and under the other Transaction Documents.

(vi) In consideration of the payment by the CA Company to the Bank One Company, in immediately
available funds, of an amount equal to $3,666,666.67, representing 3.33% of the Capital of the Bank
One Company’s Purchaser Interests outstanding under the Original Agreement (such percentage amount,
the “Bank One – CA Transferred Capital”), the Bank One Company hereby sells, transfers and
assigns to the CA Company, without recourse, representation or warranty, and the CA Company hereby
irrevocably takes, receives and assumes from the Bank One Company, the Bank One – CA Transferred
Capital and all related rights and obligations under the Receivables Purchase Agreement and under
the other Transaction Documents.

(c) Effect of Assignments. The parties acknowledge and agree that immediately after
giving effect to the assignments set forth above, the respective Capital of the Purchaser Interest
of the Companies shall be as follows:

	 	 	 	 	 
	The Bank One Company
	 	$	88,000,000.00	 
	The Scotia Company
	 	$	58,666,666.67	 
	Existing RBS Company
	 	$	0	 
	New RBS Company
	 	$	58,666,666.67	 
	The BNP Company
	 	$	58,666,666.67	 
	The CA Company
	 	$	58,666,666.67	 
	The BTMU Company
	 	$	58,666,666.67	 
	The Wells Company
	 	$	58,666,666.67	 

(d) Wiring; Payment. The parties agree that all payments to be made in connection
with the foregoing assignments may be wired to the Agent for further application to the accounts
designated by the respective sellers of the Capital transferred hereunder.

Section 4. Additional Agreements.

(a) New Companies. From and after the date hereof, each of the New RBS Company and
the Wells Company (together, the “New Companies”) shall be Companies party to the
Receivables Purchase Agreement for all purposes thereof as if such New Company were an original
party thereto and the New Companies agree to be bound by all of the terms and provisions contained
therein.

(b) New Financial Institution. From and after the date hereof, Wells Fargo Bank,
National Association (“Wells,” and together with the New Companies, the “New
Parties”) shall be a Financial Institution party to the Receivables Purchase Agreement for all
purposes thereof as if Wells were an original party thereto and Wells agrees to be bound by all of
the terms and provisions contained therein.

(c) Additional Agreements by New Parties. Each of the New Parties hereby: (i)
confirms that it has received a copy of the Receivables Purchase Agreement and copies of such other
Transaction Documents, and other documents and information as it has requested and deemed
appropriate to make its own credit analysis and decision to become a party to the Receivables
Purchase Agreement; (ii) agrees that it will, independently and without reliance upon the Agent,
any Company, the Seller or any other Financial Institution or Purchaser and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Receivables Purchase Agreement and the Transaction
Documents; (iii) appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Transaction Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations which, by the terms of the
Receivables Purchase Agreement and the other Transaction Documents, are required to be performed by
it as a Company or a Financial Institution (including, without limitation, as a Related Financial
Institution), as applicable, or, when applicable, as a Purchaser; (v) represents and warrants to
and agrees with the Agent that it is aware of and will comply with the provisions of the
Receivables Purchase Agreement; and (vi) agrees that, prior to the date which is one year and one
day after the payment in full of all senior indebtedness for borrowed money of any Company, it will
not institute against, or join any other Person in instituting against, any Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.

(d) Additional Agreement by Wells. Wells, as Financial Institution, hereby confirms
that the representations and warranties set forth in Section 5.2 of the Receivables Purchase
Agreement are true and correct as of the date hereof.

(e) Changes in Commitments. Each Financial Institution agrees and acknowledges that,
after giving effect to this Amendment, the Commitment of such Financial Institution shall be the
amount set forth opposite its signature page hereto.

Section 5. Waiver. The Agent and each Financial Institution hereby waive their right
to receive an Extension Notice in connection with the extension of the Liquidity Termination Date
contemplated by this Amendment and hereby consent to the proposed extension of the Liquidity
Termination Date as set forth herein.

Section 6. Conditions to Effectiveness of Amendment. This Amendment shall become
effective as of the date hereof, upon the satisfaction of the conditions precedent that:

(a) Amendment. The Agent and each Seller Party shall have received, on or before the
date hereof, executed counterparts of this Amendment, duly executed by each of the parties hereto.

(b) Representations and Warranties. As of the date hereof, both before and after
giving effect to this Amendment, all of the representations and warranties of each seller Party
contained in the Original Agreement and in each other Transaction Document shall be true and
correct in all material respects as though made on the date hereof (and by its execution hereof,
each Seller Party shall be deemed to have represented and warranted such).

(c) No Termination Event or Potential Termination Event. As of the date hereof, both
before and after giving effect to this Amendment, no Termination Event or Potential Termination
Event shall have occurred and be continuing (and by its execution hereof, each of Seller Party
shall be deemed to have represented and warranted such).

Section 7. Miscellaneous.

(a) Effect; Ratification. The amendment set forth herein is effective solely for the
purposes set forth herein and shall be limited precisely as written, and shall not be deemed (i) to
be a consent to, or an acknowledgment of, any amendment, waiver or modification of any other term
or condition of the Original Agreement or of any other instrument or agreement referred to therein
or (ii) to prejudice any right or remedy which the Agent, any Company or Financial Institution (or
any of their respective assigns) may now have or may have in the future under or in connection with
the Receivables Purchase Agreement, as amended hereby, or any other instrument or agreement
referred to therein. Each reference in the Receivables Purchase Agreement to “this Agreement,”
“herein,” “hereof” and words of like import and each reference in the other Transaction Documents
to the Original Agreement or to the “Receivables Purchase Agreement” shall mean the Original
Agreement as amended hereby. This Amendment shall be construed in connection with and as part of
the Receivables Purchase Agreement and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Receivables Purchase Agreement and each other instrument
or agreement referred to therein, except as herein amended, are hereby ratified and confirmed and
shall remain in full force and effect.

(b) Transaction Documents. This Amendment is a Transaction Document executed pursuant
to the Receivables Purchase Agreement and shall be construed, administered and applied in
accordance with the terms and provisions thereof.

(c) Costs, Fees and Expenses. Seller agrees to reimburse the Agent and each Purchaser
and its assigns upon demand for all reasonable and documented out-of-pocket costs, fees and
expenses in connection with the preparation, execution and delivery of this Amendment (including
the reasonable fees and expenses of counsels to the Agent).

(d) Counterparts. This Amendment may be executed in any number of counterparts, each
such counterpart constituting an original and all of which when taken together shall constitute one
and the same instrument.

(e) Severability. Any provision contained in this Amendment which is held to be
inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions of this Amendment
in that jurisdiction or the operation, enforceability or validity of such provision in any other
jurisdiction.

(f) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

(g) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT, ANY
DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AMENDMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date first written above.

AVNET RECEIVABLES CORPORATION, as Seller

By:

Name:

Title:

AVNET, INC., as Servicer

By:

Name:

Title:

CHARIOT FUNDING LLC, as a Company

By: 

Authorized Signatory

	 	 	 
	Commitment: $153,000,000

	 	JPMORGAN CHASE BANK, N.A.,
	 

	 	

	as a Financial Institution and as Agent

	 	

By:
	
 
	 	 

Name:

Title:

1

LIBERTY STREET FUNDING LLC, as a Company

By:

Name:

Title:

	 	 	 
	Commitment: $102,000,000
	 	THE BANK OF NOVA SCOTIA, as a Financial Institution

	 
	 	

	 	 	By:

	 	 	 

Name:

Title:

AMSTERDAM FUNDING CORPORATION, as a Company

By:

Name:

Title:

THAMES ASSET GLOBAL SECURITIZATION NO. 1, INC., as a

Company

By:

Name:

Title:

	 	 	 	 	 
	Commitment: $102,000,000	 	THE ROYAL BANK OF SCOTLAND PLC, as a Financial
	

	 	Institution

By:
	 	

RBS SECURITIES INC., as agent

By:

	 	 	 	 	 

	 	 	 	 	Name:

	 	 	 	 	Title:

2

STARBIRD FUNDING CORPORATION, as a Company

	 	 	 
	 	 	By:

	 	 	 

	 	 	Name:

	 	 	Title:

	Commitment: $102,000,000

	 	BNP PARIBAS, acting through its New York Branch, as

a Financial Institution

By:

	 	 	 

	 	 	Name:

	 	 	Title:

	 	 	By:

	 	 	 

Name:

Title:

VICTORY RECEIVABLES CORPORATION, as a Company

By:

Name:

Title:

	 
	Commitment: $102,000,000THE BANK OF TOKYO-MITSUBISHI UFJ,

LTD.,

NEW YORK BRANCH, as a Financial Institution

By:

	 

Name:

Title:

3

ATLANTIC ASSET SECURITIZATION LLC, as a Company

By:

Name:

Title:

By:

Name:

Title:

	 	 	 
	Commitment: $102,000,000
	 	CRÉDIT AGRICOLE CORPORATE AND

	 
	 	

	INVESTMENT BANK NEW YORK BRANCH,
	as a Financial Institution
	 	

By:

	 	 	 

	 	 	Name:

	 	 	Title:

	 	 	By:

	 	 	 

	 	 	Name:

	 	 	Title:

	Commitment: $100,000,000

	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a

Company and as a Financial Institution

By:

	 	 	 

Name:

Title:SCHEDULE A

COMMITMENTS, COMPANY PURCHASE LIMITS

AND RELATED FINANCIAL INSTITUTIONS

Commitments of Financial Institutions

	 	 	 	 	 
	Financial Institution
	 	Commitment
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A.
	 	$	153,000,000	 
	 
	 	 	 	 
	The Bank of Nova Scotia
	 	$	102,000,000	 
	 
	 	 	 	 
	The Royal Bank of Scotland PLC
	 	$	102,000,000	 
	 
	 	 	 	 
	BNP Paribas, acting through its New York Branch
	 	$	102,000,000	 
	 
	 	 	 	 
	The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch
	 	$	102,000,000	 
	 
	 	 	 	 
	Crédit Agricole Corporate and Investment Bank New York Branch
	 	$	102,000,000	 
	 
	 	 	 	 
	Wells Fargo Bank, National Association
	 	$	100,000,000	 
	 
	 	 	 	 

Company Purchase Limits and

Related Financial Institutions of Companies

	 	 	 	 	 	 	 
	Company

	 	Company Purchase

Limit
	 	Related Financial Institution(s)

	 

	 	 	 	 	 	 
	Chariot Funding LLC

	 	$	150,000,000	 	 	JPMorgan Chase Bank, N.A.
	 

	 	 	 	 	 	 
	Liberty Street Funding LLC

	 	$	100,000,000	 	 	The Bank of Nova Scotia
	 

	 	 	 	 	 	 
	Thames Asset Securitization

Global 1, Inc.

	 	$100,000,000

	 	The Royal Bank of Scotland PLC

	 

	 	 	 	 	 	 
	Starbird Funding Corporation

	 	$	100,000,000	 	 	BNP Paribas, acting through its

New York Branch
	 

	 	 	 	 	 	 
	Victory Receivables

Corporation

	 	$	100,000,000	 	 	The Bank of Tokyo-Mitsubishi

UFJ, Ltd., New York Branch
	 

	 	 	 	 	 	 
	Atlantic Asset

Securitization LLC

	 	$	100,000,000	 	 	Crédit Agricole Corporate and

Investment Bank New York Branch
	 

	 	 	 	 	 	 
	Wells Fargo Bank, National

Association

	 	$	100,000,000	 	 	Wells Fargo Bank, National

Association
	 

	 	 	 	 	 	 

4fncx_ex101.htm

Exhibit 10.1

 

Function(x) Inc.

902 Broadway

New York, New York 10010

SUBSCRIPTION AGREEMENT

[________________]

[________________]

[________________]

[________________]

Ladies and Gentlemen:

Function(x) Inc., a Delaware corporation (the “Company”), is hereby privately offering (the “Offering”) units (the “Units”) consisting of (i) one (1) share of common stock, $0.001 par value per share, of the Company (a “Share”), and (ii) one (1) detachable warrant to purchase one (1) share (a “Warrant Share”), which warrant shall have a three year term and an exercise price of $4.00 per Warrant Share (the “Warrant”), at a purchase price of $2.50 per Unit (the “Purchase Price”) to the undersigned, in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Rule 506 of Regulation D under the Securities Act.  This subscription agreement and the Purchase Price will be deposited in an escrow account at Kramer Levin Naftalis & Frankel LLP, to be released upon the satisfaction of the conditions of the Offering.  The Units, the Shares, the Warrants and the Warrant Shares are sometimes collectively referred to in this Subscription Agreement as the “Securities.”

The Company intends to use the proceeds from the Offering to fund its working capital requirements in order to develop its new entertainment and consumer enterprise which will capitalize on the convergence of digital media and entertainment and which effort will be led by Robert F.X. Sillerman.  Upon completion of the Offering, the Company will continue to be quoted on the Pink Sheets or the OTC Bulletin Board.  The Securities to be issued in the Offering will be restricted securities under the Securities Act and the Shares and the Warrant Shares cannot be resold unless pursuant to registration or an exemption from registration under the Securities Act.  The Company has agreed to file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-1 (the “Registration Statement”) to register the Shares and Warrant Shares for resale as soon as practicable but in no event later than thirty (30) days after the SEC has declared the Company’s pending registration statement effective and to use commercially reasonable efforts thereafter to have such Registration Statement declared effective by the SEC within one hundred and twenty (120) days of the filing of such Registration Statement with the SEC.

1.           Subscription. Subject to the terms and conditions of this subscription agreement (“Subscription Agreement”), the undersigned (“Purchaser”) hereby agrees to be legally bound to purchase the number of Units set forth on the Subscription Page of this Subscription Agreement. Purchaser hereby irrevocably tenders this Subscription Agreement for the purchase of such Units.  Purchaser further sets forth statements herein upon which the Company may rely to determine the suitability of the Purchaser as a purchaser of such Units.

 

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

 

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

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

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

(d)           You have executed and delivered this Subscription Agreement and hereby agree to tender the Purchase Price within two (2) business days of receipt of written notice from the Company advising you to do so.

 

  

1

  

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

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

	
  

	
 

	
(a)

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

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

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

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

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

(b)           Purchaser is an “accredited investor” within the meaning of Rule 501(a)(3), as promulgated under the Securities Act because Purchaser is a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of $5,000,000.

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

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

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

 

  

2

  

(f)           Purchaser acknowledges:

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

(ii)   Purchaser has reviewed the Company’s quarterly report on Form 10-Q for the quarter ending March 31, 2011.   Purchaser has had an opportunity to ask questions of and receive answers from, or obtain additional information from, the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such Purchaser’s personal knowledge of the Company’s affairs, Purchaser has asked such questions and received answers to the full satisfaction of such Purchaser.

(iii)   Purchaser acknowledges that the nondisclosure agreement entered into in connection with the Offering and its investment remains in full force and effect.

(iv)   Purchaser consents to the placement of the following legend on any certificate or other document evidencing the Securities:

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

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

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

5.           Notices. All notices hereunder shall be sufficient upon receipt for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy or other electronic transmission service to the appropriate address or number (a) if to the Company, at the address set forth above, or (b) if to Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 5).

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

 

  

3

  

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

8.           Disclosure Notices.

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

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

[SUBSCRIPTION PAGE FOLLOWS]

 

  

4

  

SUBSCRIPTION PAGE

 

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

 

	Units being purchased: 	 _______________________________
	Purchase Price:	 _______________________________

 

Wire Transfer Purchase Price to :

 

	Bank: 	Citibank, N.A. 

666 Fifth Avenue

New York, NY 10103

	ABA :	021000089
	Account #:	9985290786
	Account Name:	Kramer Levin Naftalis & Frankel LLP IOLA Account
	Reference:	Function(x) Subscription

 

 

___________________________________________________________________

Please print exact name (registration) that Purchaser desires on records of the Company

 

__________________________________________________

 

 

__________________________________________________

 

 

__________________________________________________

 

 

__________________________________________________

 

Telephone _________________________________________                                                                

 

Fax Number ________________________________________                                                                

_________________________________________________

Social Security or Taxpayer I.D. Number

_________________________________________________

State of Organization, if applicable

 

  

5

  

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

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

 

 

	
_______________, 2011

	___________________________________
	Date	Name of Partnership
	 	(Please type or print)
	 	 
	 	
By:_________________________________

Name:_______________________________

Title:________________________________

	 	 

 

 

  

6

  

COMPANY’S ACCEPTANCE

 

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

ACCEPTED as to [______] Units:

Function(x) Inc.

By:______________________________

Name:___________________________

Title: ___________________________

Date:_______________________, 2011

 

 

  

7

  

EXHIBIT A

Risk Factors

 

Since the Company has a limited operating history and no revenues to date, the Company may be unable to achieve or maintain profitability.  The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company.

 

The Company has limited financial resources and no revenues to date. The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which the Company will operate. Since the Company has a limited operating history, the Company cannot assure investors that its business will be profitable or that the Company will ever generate sufficient revenues to fully meet its expenses and totally support its anticipated activities.

 

The Company’s ability to continue as a business and implement its business plan will depend on the Company’s ability to raise sufficient debt or equity.   There is no assurance such debt and/or equity offerings will be successful or that the Company will remain in business or be able to implement its business plan if the offerings are not successful.

 

The Company needs substantial additional financing to execute its business plan which may not be available. If the Company is unable to raise additional capital, it may not be able to continue operations.

 

The Company does not yet have revenues and its ability to continue in business depends upon the Company’s ability to obtain working capital.  There can be no assurance that any such financing would be available upon terms and conditions acceptable to the Company, if at all. The inability to obtain additional financing in a sufficient amount when needed, and upon acceptable terms and conditions could have a material adverse effect upon the Company. If additional funds are raised by issuing equity securities, further dilution to existing or future stockholders is likely to result.

 

  

8

  

 

The Company’s common stock is highly illiquid and the Shares and Warrant Shares issued in connection with this Offering will not be freely tradable until the Shares and the Warrant Shares are registered under the Securities Act.  It may take some time before investors are able to sell the Company’s common stock, and if a public market for the Company’s common stock never develops, it will be difficult for investors to sell their ownership interests.

The Shares and Warrant Shares have not been registered under the Securities Act or any state securities laws.  The Shares and Warrant Shares are highly illiquid.  The Shares and the Warrant Shares to be issued in the Offering will not be freely tradable until the Shares and the Warrant Shares are registered under the Securities Act.  Unless and until the Shares and the Warrant Shares are so registered, the Shares and the Warrant Shares will not be eligible for resale under Rule 144 promulgated under the Securities Act until one year after the Company files its “Form 10 information” with the SEC and unless the Company has filed all required periodic reports and materials under the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or such shorter period the Company was required to file such reports and materials).  An active public market for the Company’s common stock may not develop or be sustained. In addition, the number of unrestricted shares of the Company in the public float will represent only a small percentage of the shares of Company common stock outstanding upon completion of the Offering.

 

The Company may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute investors’ ownership.

 

The Company has financed its operations, and expects to continue to finance its operations, acquisitions and develop strategic relationships, by issuing equity or convertible debt securities, which could significantly reduce the percentage ownership of the Company’s existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of the Company’s existing stock. Moreover, any issuances by the Company of equity securities may be at or below the prevailing market price of the Company’s common stock and in any event may have a dilutive impact on investors ownership interest, which could cause the market price of stock to decline. The Company may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments senior to the Company’s shares of common stock. The holders of any debt securities or instruments the Company may issue would have rights superior to the rights of the Company’s common stockholders.

 

The Company’s common stock price may fluctuate significantly and investors may lose all or part of their investment.

 

Because the Company is a newly operating company, there are few objective metrics by which the Company’s progress may be measured. Consequently, the Company expects that the market price of its common stock will likely fluctuate significantly. There can be no assurance whether or when the Company will generate revenue from the license, sale or delivery of its unique products and services. In the absence of product revenue as a measure of the Company’s operating performance, the Company anticipates that investors and market analysts will assess the Company’s performance by considering factors such as:

 

	
·  

	
announcements of developments related to the Company’s business;

	
·  

	
developments in the Company’s strategic relationships with companies;

	
·  

	
the Company’s ability to enter into or extend investigation phase, development phase, commercialization phase and other agreements with new and/or existing partners;

	
·  

	
announcements regarding the status of any or all of the Company’s collaborations or products;

	
·  

	
market perception and/or investor sentiment regarding the Company’s products and services;

	
·  

	
announcements regarding developments in the digital and mobile technology and entertainment industries in general;

	
·  

	
the issuance of competitive patents or disallowance or loss of the Company’s patent or trademark rights; and

	
·  

	
quarterly variations in the Company’s operating results.

 

The Company will not have control over many of these factors but expects that the Company’s stock price may be influenced by them. As a result, the Company’s stock price may be volatile and investors may lose all or part of their investment.

 

The market for purchases and sales of the Company’s common stock may be very limited, and the sale of a limited number of shares could cause the price to fall sharply.

 

The Company’s securities are very thinly traded. Accordingly, it may be difficult to sell shares of the common stock without significantly depressing the value of the stock. Unless the Company is successful in developing continued investor interest in the Company’s stock, sales of the Company’s stock could continue to result in major fluctuations in the price of the stock.

 

  

9

  

 

Since the Company does not intend to declare dividends for the foreseeable future, and the Company may never pay dividends, investors may not realize a return on their investment unless the price of the Company’s common stock appreciates and investors sell their common stock.

 

The Company will not distribute cash to its stockholders until and unless it can develop sufficient funds from operations to meet the Company’s ongoing needs and implement its business plan. The time frame for that is inherently unpredictable, and investors should not plan on it occurring in the near future, if at all.  The Company’s payment of any future dividends will be at the discretion of the Company’s board of directors after taking into account various factors, including but not limited to the Company’s financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that the Company may be a party to at the time.  Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment.  Investors seeking cash dividends should not purchase the Company’s common stock.

 

Since the Company is controlled by current insiders and affiliates of the Company, investors and other non-management shareholders will be unable to affect the outcome in matters requiring shareholder approval.

 

Approximately 110,538,000 shares of the Company’s common stock are owned by current affiliates and insiders representing control of approximately 82% of the total voting power.

 

As result of the closing of the recapitalization of the Company in February 2011, Sillerman Investment Company LLC (“Sillerman”), together with other investors approved by Sillerman, owns approximately 89% of the outstanding shares of common stock, with Sillerman (together with Robert F.X. Sillerman personally) directly or indirectly beneficially owning more than a majority of the outstanding shares of common stock.  As a result, Sillerman essentially has the ability to elect all of the Company’s directors and to approve any action requiring stockholder action, without the vote of any other stockholders.  It is possible that the interests of Sillerman could conflict in certain circumstances with those of other stockholders.  Such concentrated ownership may also make it difficult for the Company’s shareholders to receive a premium for their shares of the Company’s common stock in the event the Company merges with a third party or enters into other transactions that require shareholder approval.  These provisions could also limit the price that investors might be willing to pay in the future for shares of the Company’s common stock.

 

The Company relies on key members of management, the loss of whose services could adversely affect the Company’s success and development.

 

The Company’s success depends to a certain degree upon certain key members of the management. These individuals are a significant factor in the Company’s growth and ability to meet its business objectives.  In particular, the Company’s success is highly dependent upon the efforts of its executive officers and its directors, particularly Robert F.X. Sillerman, the Company’s Executive Chairman and Director.  The loss of the Company’s executive officers and directors could slow the growth of its business, or it may cease to operate at all, which may result in the total loss of an investor’s investment.

 

Compensation may be paid to the Company’s officers, directors and employees regardless of the Company’s profitability, which may limit the Company’s ability to finance its business plan and adversely affect its business.

 

Robert F.X. Sillerman, the Company’s Executive Chairman and director and Janet Scardino, the Company’s Chief Executive Officer and director are receiving compensation and any future employees of the Company may be entitled to receive compensation, payments and reimbursements regardless of whether the Company operates at a profit or a loss. Any compensation received by Mr. Sillerman, Ms. Scardino or any other senior executive in the future will be determined from time to time by the board of directors or the Company’s Compensation Committee.  Such obligations may negatively affect the Company’s cash flow and its ability to finance its business plan, which could cause the Company’s business to fail.

 

Some of the Company’s officers and directors may have conflicts of interest in business opportunities that may be advantageous to the Company.

 

Robert F.X. Sillerman, the Company’s Executive Chairman and director, and Mitchell Nelson, the Company’s Executive Vice President, General Counsel, Secretary and director, are each engaged in other business endeavors, including serving as executive officers of Circle Entertainment Inc. (“Circle”), and are not obligated to contribute any specific number of hours per week to the Company’s affairs.  As a result, Messrs, Sillerman and Nelson may become aware of business opportunities which may be appropriate for presentation to the Company as well as the other entities with which they are or may be affiliated. Due to their existing affiliations with other entities, they may have fiduciary obligations to present potential business opportunities to those entities in addition to presenting them to the Company which could cause additional conflicts of interest.  Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.  Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the board of directors, as set forth in the Company’s Code of Business Conduct and Ethics.  The Company’s Code of Business Conduct and Ethics also sets forth the procedures to follow in the event that a potential conflict of interest arises.

 

  

10

  

 

The Company’s business and growth may suffer if the Company is unable to attract and retain key officers or employees.

 

The Company’s success depends on the expertise and continued service of the Company’s Executive Chairman, Robert F.X Sillerman, and certain other key executives and technical personnel. It may be difficult to find a sufficiently qualified individual to replace Mr. Sillerman or other key executives in the event of death, disability or resignation, resulting in the Company being unable to implement its business plan and the Company having no operations or revenues.

 

Furthermore, the Company’s ability to expand operations to accommodate its anticipated growth will also depend on the Company’s ability to attract and retain qualified media, management, finance, marketing, sales and technical personnel.  However, competition for these types of employees is intense due to the limited number of qualified professionals.  The Company’s ability to meet its business development objectives will depend in part on the Company’s ability to recruit, train and retain top quality people with advanced skills who understand the Company’s technology and business.  The Company believes that it will be able to attract competent employees, but no assurance can be given that the Company will be successful in this regard. If the Company is unable to engage and retain the necessary personnel, its business may be materially and adversely affected.

 

The Company is uncertain of its ability to manage its growth.

 

The Company’s ability to grow its business is dependent upon a number of factors including the Company’s ability to hire, train and assimilate management and other employees, the adequacy of the Company’s financial resources, the Company’s ability to identify and efficiently provide such new products and services as the Company’s customers may require in the future and the Company’s ability to adapt its own systems to accommodate expanded operations.

 

Because of pressures from competitors with more resources, the Company may fail to implement its business strategy profitably.

 

The digital and mobile technology business is highly fragmented and extremely competitive. The market for customers is intensely competitive and such competition is expected to continue to increase. The Company believes that its ability to compete depends upon many factors within and beyond its control, including the timing and market acceptance of new solutions and enhancements to existing businesses developed by the Company, the Company’s competitors, and their advisors.  The Company is an entertainment company that utilizes digital media and Smartphone technology.  If the Company is successful, larger and more established entertainment companies with significantly greater resources may try to enter the market with similar technologies, and may be in better competitive positions than the Company.  The Company cannot be sure that it will be able to successfully implement its business strategy in the face of such competition.

 

The Company may be unable to compete with larger or more established companies in two industries.

 

The Company faces a large and growing number of competitors in the digital and mobile technology and entertainment industries.  If the Company successfully marries digital and mobile technology and entertainment, the Company will have competitors from both the digital and mobile and the entertainment industries. Many of these competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition, and more established relationships in the industry than does the Company. As a result, certain of these competitors may be in better positions to compete with the Company for customers and audiences. The Company cannot be sure that it will be able to compete successfully with existing or new competitors.

 

If the Company’s products do not achieve market acceptance, the Company may not have sufficient financial resources to fund further development.

 

While the Company believes that a viable market exists for the products the Company is developing, there can be no assurance that such technology will prove to be an attractive alternative to conventional or competitive products in the markets that the Company has identified for exploitation. In the event that a viable market for the Company’s products cannot be created as envisaged by the Company’s business strategy or the Company’s products do not achieve market acceptance, the Company may need to commit greater resources than are currently available to develop a commercially viable and competitive product. There can be no assurance that the Company would have sufficient financial resources to fund such development or that such development would be successful. The Company’s ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond the Company’s control. There can be no assurance that, when required, sufficient funds will be available to the Company on satisfactory terms.

 

  

11

  

 

If the Company’s products do not perform as expected, or the Company is unable to successfully develop and market its products, the Company’s business and financial condition will be adversely affected.

 

With the release of any new product release, the Company is subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in development and implementation, and failure of products to perform as expected. In order to introduce and market new or enhanced products successfully with minimal disruption in customer purchasing patterns, the Company must manage the transition from existing products in the market. There can be no assurance that the Company will be successful in developing and marketing, on a timely basis, product enhancements or products that respond to technological advances by others, that the Company’s new products will adequately address the changing needs of the market or that the Company will successfully manage product transitions. Further, failure to generate sufficient cash from operations or financing activities to develop or obtain improved products and technologies could have a material adverse effect on the Company’s results of operations and financial condition.

 

The Company’s business will suffer if the Company’s network systems fail or become unavailable.

 

A reduction in the performance, reliability and availability of the Company’s network infrastructure would harm the Company’s ability to distribute the Company’s products to its users, as well as the Company’s reputation and ability to attract and retain users and content providers. The Company’s systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, earthquake and similar events. The Company’s systems could also be subject to viruses, break-ins, sabotage, acts of terrorism, acts of vandalism, hacking, cyber-terrorism and similar misconduct. The Company might not carry adequate business interruption insurance to compensate the Company for losses that may occur from a system outage. Any system error or failure that causes interruption in availability of products or an increase in response time could result in a loss of potential customers or content providers, which could have a material adverse effect on the Company’s business, financial condition and results of operations. If the Company suffers sustained or repeated interruptions, then the Company’s products and services could be less attractive to its users and the Company’s business would be materially harmed.

 

The Company may be unable to protect its intellectual property rights from third-party claims and litigation, which could be expensive, divert management’s attention, and harm the Company’s business.

 

The Company’s success is dependent in part on obtaining, maintaining and enforcing the Company’s proprietary rights and the Company’s ability to avoid infringing on the proprietary rights of others. The Company seeks patent protection for those inventions and technologies for which the Company believes such protection is suitable and is likely to provide a competitive advantage to the Company.   Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, the Company may not be aware of third-party patents, patent applications and other intellectual property relevant to the Company’s products that may block the Company’s use of its intellectual property or may be used in third-party products that compete with the Company’s products and processes. In the event a competitor successfully challenges the Company’s products, processes, patents or licenses or claims that the Company has infringed upon their intellectual property, the Company could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on the Company’s business, operating results and financial condition.

 

The Company also relies substantially on trade secrets, proprietary technology, nondisclosure and other contractual agreements, and technical measures to protect its technology, application, design, and manufacturing know-how, and work actively to foster continuing technological innovation to maintain and protect the Company’s competitive position.  The Company cannot assure investors that steps taken by the Company to protect its intellectual property will be adequate, that the Company’s competitors will not independently develop or patent substantially equivalent or superior technologies or be able to design around patents that the Company may receive, or that the Company’s intellectual property will not be misappropriated.

 

  

12

  

 

Investors may have limited access to information regarding the Company’s business because the Company is a limited reporting company exempt from many regulatory requirements and the Company’s obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.

 

The Company will not become a fully reporting company but rather, will be subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). As of effectiveness of the Company’s registration statement on Form S-1 filed with the SEC on May 25, 2011, the Company will be required to file periodic reports with the SEC which will be immediately available to the public for inspection. Except during the year that such registration statement becomes effective, these reporting obligations may be automatically suspended under Section 15(d) if the Company has less than 300 shareholders. If this occurs after the year in which such registration statement becomes effective, the Company will no longer be obligated to file periodic reports with the SEC and investors’ access to the Company’s business information would then be even more restricted. After such registration statement becomes effective, the Company will be required to deliver periodic reports to security holders. However, the Company will not be required to furnish proxy statements to security holders and the Company’s directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of Exchange Act until the Company has both 500 or more security holders and greater than $10 million in assets. This means that investors’ access to information regarding the Company’s business may be limited.

 

Changes to federal, state or international laws or regulations applicable to the Company’s business could adversely affect its business.

 

The Company’s business is subject to a variety of federal, state and international laws and regulations, including those with respect to privacy, advertising generally, consumer protection, content regulation, intellectual property, defamation, child protection, advertising to and collecting information from children, taxation, employment classification and billing. These laws and regulations and the interpretation or application of these laws and regulations could change. In addition, new laws or regulations affecting the Company’s business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. If the Company fails to comply with these applicable laws or regulations, the Company could be subject to significant liabilities which could adversely affect its business.

 

There are many federal, state and international laws that may affect the Company’s business including measures to regulate consumer privacy, the use of copyrighted material, the collection of certain data, network neutrality, patent litigation, cyber security, child protection, subpoena and warrant processes, employee classification and others.

 

In addition, most states have enacted legislation governing the breach of data security in which sensitive consumer information is released or accessed. If the Company fails to comply with these applicable laws or regulations the Company could be subject to significant liabilities which could adversely affect its business.

 

Many of the Company’s potential partners are subject to industry specific laws and regulations or licensing requirements, including in the following industries: pharmaceuticals, online gaming, alcohol, adult content, tobacco, firearms, insurance, securities brokerage, real estate, sweepstakes, free trial offers, automatic renewal services and legal services. If any of the Company’s advertising partners fail to comply with any of these licensing requirements or other applicable laws or regulations, or if such laws and regulations or licensing requirements become more stringent or are otherwise expanded, the Company’s business could be adversely affected. Furthermore, these laws may also limit the way the Company advertises its products and services or cause the Company to incur compliance costs, which could affect the Company’s revenues and could further adversely impact the Company’s business.

 

There are a number of significant matters under review and discussion with respect to government regulations which may affect the business the Company intends to enter and/or harm the Company’s customers, and thereby adversely affect the Company’s business, financial condition and results of operations.

 

  

13

  

 

The undersigned hereby represents and warrants that the undersigned is the investment adviser of the fund named below (the “Purchaser”), and is duly authorized by the Purchaser to acquire the Units and that it has all requisite authority to acquire such Units.

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

 

	
_______________, 2011

	 
	Date	Name of Purchaser
	 	(Please type or print)
	 	 
	 	 
	 	By:______________________________ 

 

Name:___________________________

 

Title: ___________________________

 

	 	 
	 	 

 

 

[Baron Signature Page]

 

  

14

  

 

 

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.

FUNCTION(X) INC.

WARRANT

CUSIP No. 36077F 116

Warrant No. _                                                                                                           Dated:   August __, 2011

Holder:

Number of Shares:  _________________

Function(x) 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 $4.00 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 August __, 2014 or earlier as provided herein (the “Expiration Date”), and subject to the following terms and conditions:

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.

 

 

  

15

  

(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, August __, 2011 to and including August __, 2014.   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

(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.

 

  

16

  

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.

(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.

 

  

17

  

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.

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.

(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.

 

  

18

  

(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.

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.

 

  

19

  

          (e)           If:

(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,

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.

9.           Call.  Commencing six (6) months after the date of issuance of this Warrant, the Company, at its option, may call up to one hundred (100%) percent of this Warrant by providing the Holder of this Warrant written notice pursuant to Section 11 (the “Call Notice”), if (i) a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) providing for the resale of the Warrant Shares shall have been declared effective by the Securities and Exchange Commission (the “SEC”) for a period of at least 30 days and the closing bid price of the Common Stock has been equal to or greater than $4.00 (as may be adjusted for any stock splits or combinations of the Common Stock) for a period of twenty (20) consecutive trading days after such registration statement has been declared effective, and (ii) the registration statement shall remain in effect from the date of delivery of the Call Notice until the date which is the later of (x) the date the Holder exercises the Warrant pursuant to the Call Notice, and (y) the 10th day after the Holder receives the Call Notice (the “Early Termination Date”).  The rights and privileges granted pursuant to this Warrant with respect to the Warrant Shares subject to the Call Notice (the “Called Warrant Shares”) shall expire on the Early Termination Date if the Warrant is not exercised with respect to such Called Warrant Shares prior to such Early Termination Date.  In the event this Warrant is not exercised with respect to the Called Warrant Shares, the Company shall remit to the Holder of this Warrant (A) $.01 per Called Warrant Share and (B) a new Warrant representing the number of Warrant Shares, if any, which shall not have been subject to the Call Notice upon the Holder tendering to the Company the applicable Warrant certificate.

 

  

20

  

10.           Registration Rights.  The Company shall file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 (the “Registration Statement”) to register the Warrant Shares for resale as soon as practicable but in no event later than thirty (30) days after the Company’s pending registration statement has been declared effective by the SEC and to use commercially reasonable efforts thereafter to have such Registration Statement declared effective by the SEC within one hundred and twenty (120) days of the filing of the Registration Statement with the SEC.

 

 

11.           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 Function(x) 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.

12.           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.

 

  

21

  

(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.

(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]

 

  

22

  

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

 

 

	 	FUNCTION(X) INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

 

  

23

  

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 Function(x) 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 Function(x) 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)

 

	
 

 

	 
	 

 

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)

 

	
 

 

	 

 

 

	Dated:  _________________________ ,	_______________________________________________ 
	 	(Signature) ______________________________________
	 	(Print) __________________________________________
	 	(By:) ___________________________________________
	 	(Name:) _________________________________________
	 	(Title:) __________________________________________

                                     

 

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

 

  

24

  

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 Function(x) 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 Function(x) Inc. with full power of substitution in the premises.

Dated:

_______________, ____ 20__

 

 

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

	 	 
	 	 
	 	Address of Transferee
	 	 
	 	 
	 	 
	 	 

 

In the presence of:

__________________________________

 

25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}]]