8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported: March 24, 2016

DraftDay Fantasy Sports, Inc.

(Exact name of Registrant as Specified in its Charter)

Delaware	0-13803	33-0637631
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

902 Broadway, 11th Floor New York, New York (Address of principal executive offices)   10010 (Zip Code)

(212)  231-0092

(Registrant’s Telephone Number, including Area Code)

 (Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions ( see General Instruction A.2 below):

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o              Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17  CFR 240.14d-2(b)).

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Item 1.01 Entry into a Material Definitive Agreement.

(a)           Agreements with MGT Sports, Inc.

As previously reported on the Company’s Current Report on Form 8-K filed on September 9, 2015, on September 8, 2015, DraftDay Fantasy Sports, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with MGT Capital Investments, Inc. and MGT Sports, Inc. (“collectively, MGT”), pursuant to which the Company acquired all of the assets of the DraftDay.com business (the “DraftDay Business”) from MGT.  Under the Asset Purchase Agreement, the Company issued a promissory note to MGT Sports, Inc. in the amount of $1,875,000 (the “MGT Note”), bearing interest at the rate of 5% per annum, which was due on March 8, 2015.

On March 24, 2016, the Company’s Board of Directors approved the Company entering into an exchange agreement with MGT (the “MGT Exchange Agreement”) relating to the MGT Note.  Under the MGT Exchange Agreement, the MGT Note shall be exchanged in full for (a) approximately $51,302.74 in cash representing the six months of accrued interest; (b) 2,748,353 common shares of Company stock in exchange for a reduction in the remaining principal amount of $824,506; and (c) 110 shares of a new Series D convertible preferred series of Company stock.  The $940,505 remaining due under the note will be due on July 31, 2016.

The foregoing description of the MGT Exchange Agreement is not complete and is subject to and qualified in its entirety by reference to the MGT Exchange Agreement, a copy of which is attached as Exhibit 10.1 and incorporated herein by reference.

(b)           Series D Convertible Preferred Stock

The Company created a new class of Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”) by filing a Certificate of Designations of the Series D Convertible Preferred Stock of the Company (the "Series D Certificate of Designation") with the Secretary of State of the State of Delaware. The Company authorized the issuance of up to 150 shares of the Series D Convertible Preferred Stock. The rights, preferences, privileges and restrictions of the shares of Series D Convertible Preferred Stock and the qualifications, limitations and restrictions thereof are contained in the Series D Certificate of Designation and are summarized as follows:

The shares of Series D Convertible Preferred Stock have a stated value of $1,000 per share (the "Stated Value").

The holder of a share of Series D Convertible Preferred Stock shall not be entitled to a liquidation preference or any dividends on such share.  The shares of Series D Convertible Preferred Stock shall have no voting rights except as required by law.  The consent of the holders of a majority of the shares of Series D Convertible Preferred Stock is necessary for the Company to amend the Series D Certificate of Designation.

Each share of Series D Convertible Preferred Stock is convertible, at the option of the holders, into shares of Company common stock at a at a ratio of 3,333.33 shares of Company common stock for each share of Series D Convertible Preferred Stock.. The conversion price is not subject to antidilution protection. The Company may redeem any or all of the outstanding Series D Convertible Preferred Stock at any time at the then current Stated Value plus a redemption premium equal to the Stated Value multiplied by 10%.

The foregoing description of the Series D Convertible Preferred Stock is not complete and is qualified in its entirety by reference to the full text of the Series D Certificate of Designation, a copy of which is filed herewith as Exhibit 3.1, and incorporated herein by reference.

(c)           Line of Credit

On March 29, 2016, Sillerman Investment Company VI LLC (“SIC VI”), an affiliate of Robert F.X. Sillerman, the Executive Chairman and Chief Executive Officer of the Company entered into a secured revolving line of credit agreement (the “Secured Revolving Line of Credit”) with the Company and its subsidiaries, wetpaint.com, Inc. and Choose Digital Inc. (collectively, the “Subsidiaries”), pursuant to which the Company can borrow up to $500,000.  The Secured Revolving Line of Credit bears interest at the rate of 12% per annum.

In connection with the Secured Revolving Line of Credit, the Company and the Subsidiaries have entered into a Security Agreement (the “Security Agreement”) with SIC VI, under which the Company and the Subsidiaries have granted SIC VI a continuing security interest in all assets of the Company and the Subsidiaries, with the exception of the Company’s interest in DraftDay Gaming Group, Inc.

The Company intends to use the proceeds from the Secured Revolving Line of Credit to fund working capital requirements and for general corporate purposes in accordance with a budget to be agreed upon by SIC VI and the Company.  $88,000 has been advanced thereunder.  Because Mr. Sillerman is a director, executive officer and greater than 10% stockholder of the Company, a majority of the Company’s independent directors approved the transaction.

The foregoing descriptions of the Secured Revolving Line of Credit and Security Agreement Loan are not complete and is qualified in its entirety by reference to the full text of the form of Secured Revolving Line of Credit Promissory Note and Security Agreement, which are filed herewith as Exhibit 10.2 and Exhibit 10.3 and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

(a)           As previously reported by DraftDay Fantasy Sports, Inc. (the “Company”) on a Form 8-K filed on February 2, 2016, Sillerman Investment Company VI LLC (“SIC VI”), an affiliate of Robert F.X. Sillerman, the Executive Chairman and Chief Executive Officer of the Company entered into a secured revolving loan agreement (the “Secured Revolving Loan”) with the Company and its subsidiaries, wetpaint.com, Inc. and Choose Digital Inc. (collectively, the “Subsidiaries”), pursuant to which the Company can borrow up to $1,500,000.  On March 29, 2016, the Company borrowed an additional $112,000 under the Secured Revolving Loan. The Company has now borrowed the entire $1,500,000 under the Secured Revolving Loan.  The terms of the Secured Revolving Loan are set forth in such Form 8-K and are hereby incorporated herein by reference.

(b)           The information required by this item is incorporated by reference from Item 1.01(c) above.

Item 3.02 Unregistered Sales of Equity Securities.

The information required by this item is incorporated by reference from Item 1.01(b) above.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information required by this item is incorporated by reference from Item 1.01(a) above.

Item 8.01 Other Events

As previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2015, the Company’s Board of Directors has formed a Special Committee of independent directors to explore strategic alternatives to enhance value, and that these alternatives could include, among others, possible joint ventures, strategic partnerships, marketing alliances, sale of all or some of the Company, or other possible transactions. The Special Committee continues to study alternatives, including the possibility of reorganization.  The Company continues to experience liquidity issues and is in the process of attempting to settle debts with various trade and other creditors.  There can be no assurances that the Company will be able to do so. 

Item 9.01 Financial Statements and Exhibits.

(d)           Exhibits

Exhibit No.	Description
3.1	Series D Certificate of Designation
10.1	Form of MGT Exchange Agreement
10.2	Form of Secured Revolving Line of Credit Promissory Note
10.3	Form of Security Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DRAFTDAY FANTASY SPORTS, INC.
DATE: March 30, 2016	By:	/s/ Mitchell J. Nelson
	Name:	Mitchell J. Nelson
	Title:	Executive Vice President and Secretary

INDEX TO EXHIBITS

Exhibit No.	Description
3.1	Series D Certificate of Designation
10.1	Form of MGT Exchange Agreement
10.2	Form of Secured Revolving Line of Credit Promissory Note
10.3	Form of Security Agreement

EX-3.1

Exhibit 3.1

DRAFTDAY FANTASY SPORTS, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES D CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

        The undersigned, Robert F.X. Sillerman and Mitchell J. Nelson, do hereby certify that:

                1. They are the Executive Chairman and Secretary, respectively, of DraftDay Fantasy Sports, Inc., a Delaware corporation (the “Corporation”).

                2. The Corporation is authorized to issue 100,000 shares of preferred stock, 10,000 of which have been issued.

                3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

        WHEREAS, the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 150 shares, $0.001 par value per share, issuable from time to time in one or more series;

        WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate,  conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

        WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Exchange Agreement, up to 1,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:

        NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

TERMS OF PREFERRED STOCK

Section 1.                      Definitions. For the purposes hereof, the following terms shall have the following meanings:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 5(d).

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Exchange Securities pursuant to Section 1.2 of the Exchange Agreement.

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto and the Closing as contemplated by Section 1.2 of the Exchange Agreement has occurred.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Conversion Amount” means the sum of the Stated Value at issue.

“Conversion Date” shall have the meaning set forth in Section 5(a).

“Conversion Price” shall have the meaning set forth in Section 5(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exchange Agreement” means the Securities Exchange Agreement, dated as of the Original Issue Date, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

“Exchange Securities” shall have the meaning given such term in the Recital of the Exchange Agreement.

“GAAP” means United States generally accepted accounting principles.

“Holder” shall have the meaning given such term in Section 2.

“Junior Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Liquidation” shall have the meaning set forth in Section 4.

“New York Courts” shall have the meaning set forth in Section 7(c).

“Notice of Conversion” shall have the meaning set forth in Section 5(a).

“Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Preferred Stock” shall have the meaning set forth in Section 2.

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

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 5(c).

“Stated Value” shall have the meaning set forth in Section 2.

“Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction Documents, including the issuance of Exchange Securities.

“Trading Day” means a day on which the principal Trading Market is open for business.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).

“Transaction Documents” means this Certificate of Designation, the Exchange Agreement and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Exchange Agreement.

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Corporation with a mailing address of Operations Center 6201 15th Avenue, Brooklyn, NY 11219, and any successor transfer agent of the Corporation.

Section 2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series D Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 150 (which shall not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,000 (the “Stated Value”).

Section 3. Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock, alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation.

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Section 4.                      Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to participate, with the holders of Common Stock, in the amounts received by holders of the Common Stock, as though the Holders’ shares of Preferred Stock were converted into Common Stock in accordance with the terms set forth herein (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation or exceeding the Issuable Maximum, then the Holder shall not be entitled to participate in such Distribution to such extent).  The Corporation shall mail written notice of any such Liquidation, not less than 15 days prior to the payment date stated therein, to each Holder.

Section 5.                      Conversion.

a)Conversions at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 5(d) and Section 5(e)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required.The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.  To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue.  Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.

b)  Conversion Price.  The conversion price for the Preferred Stock shall equal $0.30, subject to adjustment herein (the “Conversion Price”).

c)  Mechanics of Conversion

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i.Delivery of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder the number of Conversion Shares being acquired upon the conversion of the Preferred Stock, which, on or after the six month anniversary of the Original Issue Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Exchange Agreement).

ii.Failure to Deliver Conversion Shares.  If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.

iii.Obligation Absolute.  The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder.  In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment.  In the absence of such injunction, the Corporation shall issue Conversion Shares upon a properly noticed conversion.

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iv.Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Exchange Agreement) be issuable (taking into account the adjustments and restrictions of Section 5 upon the conversion of the then outstanding shares of Preferred Stock.  The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

v.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.   As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

vi.Transfer Taxes and Expenses.  The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.  The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.

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d)Beneficial Ownership Limitation.The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation  subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock) beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 5(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  To the extent that the limitation contained in this Section 5(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 5(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder.  A Holder, upon not less than 61 days’ prior notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 5(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 5(d) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

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Section 6.                      Certain Adjustments.

a)Stock Dividends and Stock Splits.  If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section 6(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Pro Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Preferred Stock (without regard to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

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c)Calculations.  All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 6, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

(d)  Notice to the Holders.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 6, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

Section 7.                      Miscellaneous.

a)Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: General Counsel, e-mail address: tom@wetpaint.com, or such other e-mail address or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 7.  Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally or sent by a nationally recognized overnight courier service addressed to each Holder at the address of such Holder appearing on the books of the Corporation, or if no such address appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Exchange Agreement.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earlier of the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or upon actual receipt by the party to whom such notice is required to be given.

b)Lost or Mutilated Preferred Stock Certificate.  If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

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c)Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby.  If any party shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

d)Waiver.  Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders.  The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion.  Any waiver by the Corporation or a Holder must be in writing.

e)Severability.  If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

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f)Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

g)Headings.  The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

h)Status of Converted or Redeemed Preferred Stock.  Shares of Preferred Stock may only be issued pursuant to the Exchange Agreement.  If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series D Convertible Preferred Stock.

*********************

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RESOLVED, FURTHER, that the Chairman, the president or any vice-president,   and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Delaware law.

        IN WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day of March 2016.

     __________________________________________      Name:      Title:        __________________________________________      Name:      Title:  

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ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “Common Stock”), of DraftDay Fantasy Sports, Inc., a Delaware corporation (the “Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Exchange Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

Conversion calculations:

Date to Effect Conversion: ___________________________________________
Number of shares of Preferred Stock owned prior to Conversion: ______________
Number of shares of Preferred Stock to be Converted: ______________________
Stated Value of shares of Preferred Stock to be Converted: ___________________
Number of shares of Common Stock to be Issued: _________________________
Applicable Conversion Price:_________________________________________
Number of shares of Preferred Stock subsequent to Conversion: ______________
Address for Delivery: ______________________
	[HOLDER] By:___________________________________      Name:      Title:

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EX-10.1

Exhibit 10.1

SECURITIES EXCHANGE AGREEMENT

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

WHEREAS:

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

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

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

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

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

a)   A portion consisting of $824,207.40 of the outstanding principal of the Note shall be exchanged for 2,747,358 shares (the “Common Shares”) of the common stock of the Company, par value $0.001 (“Common Stock”);

b)   An additional portion of outstanding principal of the Note, equal to $110,000.50, shall be exchanged for 110 shares (the “Preferred Shares”) of a newly created class of convertible preferred stock of the Company (the “Preferred Class”), which shall be convertible into shares of the Company’s common stock at a rate of 3,333 shares of common stock for one share of converted  preferred stock, such that the Preferred Shares will be convertible into an aggregate of 366,630 shares of the Company’s common stock;

c)   Conversions of the Preferred Shares shall be limited such that any given conversion shall not cause MGT Sport’s aggregate beneficial ownership of the shares of Common Stock to exceed 9.99% of the Company’s outstanding common stock;

d)   The remaining portion of outstanding principal of the Note, consisting of a remaining principal amount equal to $940,505.10 (the “Remainiung Principal”), shall remain outstanding and shall continue to bear interest at a rate of 5% per annum and all the terms thereof shall remain unchanged except that the maturity date shall be amended hereby to July 31, 2016 . The Common Shares, the Preferred Shares,  and the shares of common stock issuable upon conversion of the Preferred Shares shall be referred to collectively herein as the “Exchange Securities”.

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

ARTICLE I

THE NOTE EXCHANGE

AND ISSUANCE OF EQUITY SECURITIES

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

1.2           Exchange. At the Closing:

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

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

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

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

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

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

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

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

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

ARTICLE II

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

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

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

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

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

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

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

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

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2.8           SEC Reports; Financial Statements.

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

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

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

2.9           Exchange Act Registration, NASDAQ.

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF MGT SPORTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE IV

COVENANTS AND OTHER AGREEMENTS

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

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

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

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

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

ARTICLE V

CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER

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

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

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

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

ARTICLE VI

CONDITIONS TO THE OBLIGATIONS

OF MGT SPORTS HEREUNDER

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

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

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

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

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

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

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

ARTICLE VI

MISCELLANEOUS

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

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

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

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

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

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

If to the Company:                                               DraftDay Fantasy Sports, Inc.

902 Broadway, 11th Floor

New York, NY 1010

Telephone: 212.231.0092  

Attention:  General Counsel

Email:  tom@wetpaint.com

If to the Investor:                                                 MGT Sports, Inc.

500 Mamaroneck Avenue, Suite 320

Harrison, NY 10528

ATTN: Robert B. Ladd, President and CEO

Phone: (914)630-7430

Email: rladd@mgtci.com

With a copy to:

                                Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone:  (212) 930-9700

Email:  jkaplowitz@srrff.com

Attention:  Jay Kaplowitz, Esq.

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

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

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

[signature page follows]

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

COMPANY:

DRAFTDAY FANTASY SPORTS, INC.

By:________________________________

Name:

Title:

MGT SPORTS, INC.

By: ________________________________

Name: Robert Ladd

Title: President and Chief Executive Officer

PARENT:

MGT CAPITAL INVESTMENTS, INC.

By: ________________________________

Name: Robert Ladd

Title: President and Chief Executive Officer

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EXHIBIT A

Wiring Instructions:

CitiBank

ABA# 021 000 089

Account #

499 869 9668

MGT Sports, Inc.

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SCHEDULE 2.7

On September 8, 2015, the Company entered into a promissory note with Kuusamo Capital Ltd.  The Company intends to enter into a similar exchange agreement with Kuusamo Capital pursuant to which a portion of such note may be satisfied through the issuance of stock.  That stock, if issued, could be integrated with the issuance of stock hereunder.

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SCHEDULE 2.9

The SEC opened a formal order of investigation relating to a matter regarding certain dealings in our securities by an unaffiliated third party. We have also received an informal request from the staff of the SEC, dated June 11, 2012, for the voluntary production of documents and information concerning certain aspects of our business and technology. We initially provided documents in response to such request on July 2, 2012, and we have provided supplements and documents for additional questions, as requested. We intend to cooperate with the SEC regarding this matter and any other requests we may receive. However, there is no assurance that the SEC will not take any action against us. A determination by the SEC to take action against us could be costly and time consuming, could divert the efforts and attention of our directors, officers and employees from the operation of our business and could result in sanctions against us, any or all of which could have a material adverse effect on our business and operating results.

Our common stock has traded on the NASDAQ Capital Market under the symbol DDAY. NASDAQ recently informed us that we have failed to comply with certain of NASDAQ's continuing listing criteria, and that our stock will be delisted.  We received two different de-listing notices.  One was regarding our failure to maintain a price of at least $1.00, and one was relating to a failure to maintain at least $2.5 million in stockholders equity.

With respect to the latter notice, we replied to Nasdaq with a plan for getting back into compliance, and Nasdaq rejected that plan.  We have appealed the decision, and we have a hearing scheduled with Nasdaq for the appeal. If our appeal is unsuccessful, our stock will be delisted. Delisting will impair the liquidity of our securities not only in the number of shares that could be bought and sold at a given price, which may be depressed by the relative illiquidity, but also through delays in the timing of transactions. As a result, an investor may find it more difficult to dispose of shares of our common stock. We believe that current and prospective investors will view an investment in our common stock less favorably after it is delisted from NASDAQ. This failure to meet the continuing NASDAQ listing requirements will likely have an adverse impact on the value of and trading activity in our common stock.

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EX-10.2

Exhibit 10.2

REVOLVING SECURED PROMISSORY NOTE

New York, New York As of March 29, 2016 $500,000.00

1)FOR VALUE RECEIVED, on the Maturity Date (defined below), each of DraftDay Fantasy Sports, Inc., a Delaware corporation (the “Parent”), wetpaint.com, Inc., a Delaware corporation, and Choose Digital, Inc., a Delaware corporation (each, including the Parent, a “Borrower” and collectively, the “Borrowers”), at their offices at 902 Broadway, 11th Floor, New York, New York 10010, jointly and severally promise to pay to the order of Sillerman Investment Company VI LLC (“SIC VI” or the “Lender”) at its offices, or at such other place as the Lender may designate in writing, the aggregate unpaid principal amount of all outstanding advances hereunder plus accrued and unpaid interest thereon; provided, that the aggregate unpaid principal amount of all outstanding advances shall not exceed Five Hundred Thousand Dollars ($500,000.00) at any one time outstanding (the “Maximum Credit Amount”).

2)Maturity Date. The “Maturity Date” shall be the earliest to occur of (a) December 31, 2016, (b) the occurrence and continuance of an Event of Default (as defined below) pursuant to any of clauses 8(iii) – (vi) hereof, (c) the acceleration of the obligations hereunder as a result of the occurrence and continuance of any other Event of Default, or (d) the occurrence of a Change of Control Transaction.  For purposes hereof, a “Change of Control Transaction” means (i) a sale of all or substantially all of the assets of the Borrowers or (ii) the issuance by the Parent of Common Stock (as defined below) that results in any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) becoming the “beneficial owner” (as defined in Rule 13d-3 promulgated under the 1934 Act) of a majority of the aggregate ordinary voting power represented by issued and outstanding Common Stock (other than as a result of, or in connection with, any merger, acquisition, consolidation or other business combination in which the Parent is the surviving entity following the consummation thereof), excluding, with respect to each of (i) and (ii), transactions with affiliates of the Borrowers. For purposes hereof, “Common Stock” means (i) the Parent’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

3)Interest.

(a) Borrowers will pay interest on the unpaid outstanding principal amount from time to time outstanding from the date of each advance under this Revolving Secured Promissory Note until each such advance has been paid in full. Interest shall accrue at the simple interest rate equal to twelve percent (12%) per annum.

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

4)Requests for Loans; Disbursement of Proceeds.

(a)  Subject to the terms and conditions of this Revolving Secured Promissory Note, Borrowers may borrow, and Lender agrees to fund advances hereunder, upon notice of a proposed borrowing, and the requested amount thereof, to the Lender not later than 12:00 Noon (New York time) three (3) days prior to the date on which the proposed borrowing is requested to be made, subject to the satisfaction of all conditions precedent to such advance, including the delivery to the Lender of a funding memorandum substantially in the form attached hereto as Exhibit A (a “Funding Memorandum”).

(b)  Each notice of borrowing shall be delivered by hand or facsimile transmission. Each such notice shall be irrevocable by and binding on the Borrowers. Unless otherwise directed in writing by Borrowers, the Lender shall promptly disburse the proceeds of such advance made hereunder by crediting the amount thereof as instructed in the applicable Funding Memorandum.

5) Funding Limitations.  The aggregate principal amount outstanding at any one time hereunder shall not exceed the Maximum Credit Amount.  In addition, all advances hereunder shall be subject to, and used in accordance with a budget to be approved by the Company’s Board of Directors and Lender (as amended or modified from time to time with the consent of the Lender and the Company, the “Budget”).  The Lender shall have no obligation to make any advance hereunder if (A) an Event of Default has occurred and is continuing, (B) such advance would result in the outstanding amounts hereunder exceeding the Maximum Credit Amount and or (C) such advance is not in compliance with the Budget.

6)Payments and Prepayments; Use of Grid.  The Lender is hereby authorized by Borrowers to enter and record on the schedule attached hereto (i) the loan number, (ii) the date of each advance made under this Revolving Secured Promissory Note, (iii) the dollar amount of the advance, (iv) the applicable interest rate, (v) interest due on Maturity Date, (vi) each payment and prepayment of any advance thereon, and (vii) date  of payment, without any further authorization on the part of Borrowers or any endorser or guarantor of this Revolving Secured Promissory Note; provided, however, that the Lender shall promptly deliver to the Borrowers a copy of this Revolving Secured Promissory Note following the entry of each advance hereunder. The entry of a advance on said schedule shall be prima facie and presumptive evidence of the entered advance and its conditions, absent manifest error. The Lender’s failure to make an entry, however, shall not limit or otherwise affect the obligations of any Borrower or any endorser or guarantor of this Revolving Secured Promissory Note. Borrowers may make prepayments in whole or in part hereunder at any time, provided accrued, but unpaid interest, is paid through the prepayment date.  If any payment of principal or interest becomes due on a day on which the Lender is closed, such payment shall be made not later than the next succeeding Business Day (a “Business Day” shall be considered to be Monday through Friday from 9am to 5pm local time, excluding weekends and public holidays) and such extension shall be included in computing interest in connection with such payment. All payments by Borrowers on account of principal, interest or fees hereunder shall be made in lawful money of the United States of America, in immediately available funds.

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7)Use of Proceeds. The proceeds of each advance hereunder shall be used for general corporate and working capital purposes of the Borrowers.  Borrowers may use the proceeds to repay existing indebtedness of the Borrowers, including indebtedness to Lender or any of its affiliates.  None of the Borrowers will, directly or indirectly, use any proceeds of advances hereunder for the purpose of purchasing or carrying any margin stock within the meaning of Regulation X of the Board of Governors of the Federal Reserve System or to extend credit to any person for the purpose of purchasing or carrying any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors

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

9)Representations: In consideration of the commitment by SIC VI to make advances hereunder Borrower represents and warrants:

(a)Organization; Authority. The Borrower is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted.

(b)Authorization; Enforcement; Validity. The Borrower has the requisite power and authority to enter into and perform its obligations under this Note in accordance with the terms hereof. The execution and delivery of this Note by the Borrower, and the consummation by the Borrower of the transactions contemplated hereby have been duly authorized by the Borrower’s board of directors.  This Note has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

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(c)No Conflicts. The execution, delivery and performance of the Note by the Borrower and the consummation by the Borrower of its obligations set forth herein will not (i) result in a violation of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s bylaws, as amended and as in effect on the date hereof, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Borrower is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Borrower.

(d)Consents. The Borrower is not required to obtain any consent from, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its respective obligations hereunder, except for disclosing the execution of this Note in its filings with the SEC.

10)Reissuance of this Note.

(a)Transfer. If this Note is to be transferred, the Lender shall surrender this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Lender a new Note (in accordance with Section 9(d)), registered as the Lender may request, representing the outstanding principal being transferred by the Lender and, if less than the entire outstanding principal is being transferred, a new Note (in accordance with Section 9(d)) to the Lender representing the outstanding principal not being transferred. The Lender and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 1 following payment of any portion of this Note, the outstanding principal represented by this Note may be less than the principal stated on the face of this Note.

(b)Lost, Stolen or Mutilated Note. Upon receipt by the Borrower of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Lender to the Borrower in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrower shall execute and deliver to the Lender a new Note (in accordance with Section 9(d)) representing the outstanding principal.

(c)Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Lender at the principal office of the Borrower, for a new Note (in accordance with Section 9(d)) and in principal amounts of at least $1,000,000) representing in the aggregate the outstanding principal of this Note, and each such new Note will represent such portion of such outstanding principal as is designated by the Lender at the time of such surrender.

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(d)Issuance of New Note. Whenever the Borrower is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note,(ii) shall represent, as indicated on the face of such new Note, the principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 9(a) or Section 9(c), the principal designated by the Lender which, when added to the principal represented by the other new Note issued in connection with such issuance, does not exceed the principal remaining outstanding under this Note immediately prior to such issuance of new Note), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the issuance date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid interest and late charges on the principal and interest of this Note, from the issuance date.

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

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

13)Costs and Expenses. Borrowers shall reimburse the Lender for all costs and expenses incurred by the Lender in connection with the enforcement of this Revolving Secured Promissory Note or any document, instrument or agreement relating thereto.

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

15)Successors and Assigns. This Revolving Secured Promissory Note shall be binding upon Borrowers and the Lender and their respective heirs, legal representatives, successors and assigns and the terms hereof shall inure to the benefit of Lender and its successors and assigns, including subsequent holders hereof.

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

17)Entire Agreement. This Revolving Secured Promissory Note sets forth the entire agreement of Borrowers and the Lender with respect to this Revolving Secured Promissory Note and may be modified only by a written instrument executed by Borrowers and the Lender.

18)Headings.  The headings herein are for convenience only and shall not limit or define the meaning of the provisions of this Revolving Secured Promissory Note.

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

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

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

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

DRAFTDAY FANTASY SPORTS, INC.

By: _______________________________

Name: _____________________________

Title: ______________________________

WETPAINT.COM, INC.

By: _______________________________

Name: _____________________________

Title: ______________________________

CHOOSE DIGITAL INC.

By: _______________________________

Name: _____________________________

Title: ______________________________

SILLERMAN INVESTMENT COMPANY

VI, LLC

By: _______________________________

Name: _____________________________

Title: ______________________________

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SCHEDULE TO REVOLVING SECURED PROMISSORY NOTE

Loan Number Date of draw Commitment Amount Amount of draw Maturity Date Interest Rate Interest Due upon Maturity Date Amount Paid Date Payment

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EXHIBIT A

FUNDING MEMORANDUM

_____________                               , 2016

---------------------------------------------

---------------------------------------------

---------------------------------------------

Dear __________________:

We hereby request that you make available in our account No. ___________ the amount of $ _______________, and which shall constitute an advance under the Revolving Secured Promissory Note Line of Credit made by each of DraftDay Fantasy Sports Inc., wetpaint.com, Inc., and Choose Digital Inc. (each, a “Borrower” and collectively the “Borrowers”) to the order of Sillerman Investment Company VI LLC (the “Lender”) dated as of March 29, 2016 (as amended from time to time, the “Revolving Secured Promissory Note”).

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

Each Borrower represents warrants and certifies to Lender as follows:

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

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

(c)all of the representations and warranties of Borrowers contained herein and in the Revolving Secured Promissory Note are true and correct in all material respects to the same extent as though made on and as of any making of the advance requested hereunder;

(d)the advances under the Revolving Secured Promissory Note are in accordance with the Budget; and

(e)after giving effect to the amount of the requested advance, the aggregate amount of outstanding advances under the Revolving Secured Promissory Note do not exceed $1,500,000;

or, if any of the foregoing representations and warranties set forth in items (a) through (e) above are not true, and the Borrowers requests a waiver of such item, so indicate:

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Very truly yours,

DraftDay Fantasy Sports, Inc.

By: ___________________________

Name:_________________________

Title: __________________________

wetpaint.com, Inc.

By: ___________________________

Name:_________________________

Title: __________________________

Choose Digital Inc.

By: ___________________________

Name:_________________________

Title: __________________________

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EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of March 29, 2016 (as amended, restated or otherwise modified from time to time, this “Agreement”) made by DraftDay Fantasy Sports, Inc., a Delaware corporation, wetpaint.com, Inc., a Delaware corporation, and Choose Digital Inc., a Delaware corporation (each a “Company” or a “Grantor” and collectively, the “Companies” or the “Grantors”), in favor of Sillerman Investment Company VI, LLC (the “Secured Party”).

RECITALS

WHEREAS, the Grantors and the Secured Party are parties to that certain Revolving Secured Promissory Note of even date herewith between the Companies, jointly and severally, as borrowers and the Secured Party as lender (the “Note”);

WHEREAS, it is a condition precedent to the Secured Party entering into the Note that the Grantors execute and deliver to the Secured Party this Agreement providing for the grant to the Secured Party of a security interest in all or substantially all personal property of the Grantors to secure all of the Grantors’ payment obligations under the Note; and

WHEREAS, each of the Grantors have determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest of, such Grantor.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Secured Party to perform its obligations under the Note, each of the Grantors agrees with the Secured Party, as follows:

SECTION 1.Definitions.

(a)Reference is hereby made to the Note for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto which are defined in the Note or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York or such other applicable jurisdiction (the “Code”), and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute.

(b)As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

“Copyright Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright.

“Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by a Grantor, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Event of Default” shall have the meaning set forth in Section 8 of the Note.

“Intellectual Property” means the Copyrights, Trademarks and Patents.

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.

“Lien” means any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights).

“Patent Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent.

“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or governmental authority.

“Pledged Companies” means each direct Subsidiary of a Company that has issued Pledged Interests.

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“Pledged Interests” means all of the Grantors’ right, title and interest in and to all of the Capital Stock now or hereafter owned by such Grantor, regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the Capital Stock, the right to receive any certificates representing any of the Capital Stock, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

“Pledged Operating Agreements” means all of the Grantors’ rights, powers, and remedies under the limited liability company operating agreements of each of the Pledged Companies that are limited liability companies, as may be amended, restated, supplemented, or otherwise modified from time to time.

“Pledged Partnership Agreements” means all of the Grantors’ rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships, as may be amended, restated, supplemented, or otherwise modified from time to time.

“Trademark Licenses” means all written licenses, contracts or other agreements naming a Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by a Grantor and now or hereafter covered by such licenses.

“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by a Grantor, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of a Grantor relating to the distribution of products and services in connection with which any of such marks are used.

SECTION 2.Grant of Security Interest.  As collateral security for all of the “Obligations” (as defined in Section 3 hereof), each Grantor hereby pledges and assigns to the Secured Party, and grants to the Secured Party a continuing security interest in, all of the following personal property and assets of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:

(a)all Accounts;

(b)all Chattel Paper (whether tangible or electronic);

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(c)all Documents;

(d)all Equipment;

(e)all Fixtures;

(f)all General Intangibles (including, without limitation, all Payment Intangibles);

(g)all Goods;

(h)all Instruments (including, without limitation, Promissory Notes and each certificated Security);

(i)all Inventory;

(j)all Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Interests, Pledged Operating Agreements and Pledged Partnership Agreements);

(k)all Copyrights, Patents and Trademarks, and all Licenses;

(l)all Letter-of-Credit Rights;

(m)all Supporting Obligations; and

(n)all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

in each case, howsoever each Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise). Notwithstanding anything herein to the contrary, the security interest created by this Agreement, and the term “Collateral,” shall expressly exclude any Capital Stock of (a) any foreign Subsidiary (except for Capital Stock consisting of more than 65% of the voting power of all classes of Capital Stock entitled to vote of any first-tier foreign Subsidiary) and (b) DraftDay Gaming Group, Inc.; provided, in each case, that Collateral shall include all Proceeds, including all Cash Proceeds and Noncash Proceeds, thereof. Notwithstanding anything herein to the contrary, the security interest created by this Agreement shall not extend to, and the term “Collateral” shall not include, (a) any lease, license, contract, property rights or agreement to which a Grantor is a party (or to any of its rights or interests thereunder) if the grant of such security interest would constitute or result in either (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement; (b) any Intellectual Property registrations owned and applications for Intellectual Property registrations to be owned, jointly by such Grantor and a Person other than such Grantor, including all renewals and extensions thereof, all rights to recover for past, present or future infringements thereof and all other rights whatsoever accruing thereunder or pertaining thereto; (c) assets owned by such Grantor on the date hereof or hereafter acquired that are subject to a Lien if the contract or other agreement in which such Lien is granted (or the documentation providing for such Lien) validly prohibits the creation of any other Lien on such assets; (d) any intent-to-use Trademark application to the extent and for so long as creation by such Grantor of a security interest therein would result in the loss by such Grantor of any material rights therein; and (e) in the case of any Collateral that consists of general or limited partnership interests in a general or limited partnership, the security interest hereunder shall be deemed to be created only to the maximum extent permitted under the applicable organizational instrument pursuant to which such partnership is formed; and in no event shall such Grantor be required to take any actions to perfect the security interest in any of its assets (including Intellectual Property) located outside the United States. Each Grantor hereby irrevocably authorizes the Secured Party and its counsel and other representatives, at any time and from time to time, to file or record financing statements, amendments to financing statements, and, with notice to such Grantor, other filing or recording documents or instruments with respect to the Collateral in such form and in such offices as the Secured Party determines appropriate to perfect the security interests created under this Agreement, and such financing statements and amendments to financing statements may describe the Collateral covered thereby as “all assets of debtor, whether now existing or hereafter acquired, together with all proceeds thereof” or words of similar effect.

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SECTION 3.Security for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for, so long as the Note is outstanding, the payment by any of the Grantors, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it under the Note (the “Obligations”).

SECTION 4.Representations and Warranties.  Each Grantor represents and warrants as of the date of this Agreement as follows:

(a)Schedule I hereto sets forth (i) the exact legal name of such Grantor, and (ii) the state of incorporation, organization or formation and the organizational identification number of such Grantor in such state.

(b)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, is required for the grant by such Grantor of the security interest purported to be created hereby in the Collateral, except (A) for the filing under the Code as in effect in the applicable jurisdiction of the financing statements described in Schedule II hereto, all of which financing statements have been or will be duly filed and are or will be in full force and effect, (B) with respect to Commodity Contracts, for the execution of a control agreement with the commodity intermediary with which such commodity contract is carried, (C) with respect to the perfection of the security interest created hereby in the United States Intellectual Property and Licenses, for the recording of an appropriate Assignment for Security, substantially in the form of Exhibit A hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (D) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (E) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights, for the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect in the applicable jurisdiction, (F) with respect to any action that may be necessary to obtain control of Collateral constituting Commodity Contracts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, and (G) the Secured Party having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral.

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(c)This Agreement creates in favor of the Secured Party a valid and enforceable security interest in the Collateral, as security for the Obligations (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies).

(d)Such Grantor has delivered to the Secured Party all Collateral constituting Certificated Securities and Instruments along with blank endorsements thereof; provided, however, that if any such Certificated Securities have been pledged and delivered prior to the date of this Agreement, then such Certificated Securities shall only be delivered to the Secured Party after the prior pledge has been released.

(e)Such Grantor does not have any Commercial Tort Claim for an alleged claim in excess of $100,000.

SECTION 5.Covenants as to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing:

(a)Further Assurances.  Each Grantor shall at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that the Secured Party may reasonably request in order to: (i) perfect and protect the security interest purported to be created hereby; or (ii) enable the Secured Party to exercise and enforce its rights and remedies hereunder in respect of the Collateral.

(b)Insurance. Each Grantor shall, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.  To the extent requested by the Secured Party at any time and from time to time, each such policy shall name the Secured Party as an additional insured party and/or loss payee, as applicable, thereunder (without any representation or warranty by or obligation upon the Secured Party) as its interests may appear.  Each Grantor shall, if so requested by the Secured Party, deliver to the Secured Party original or duplicate policies of such insurance and, as often as the Secured Party may reasonably request, a report of a reputable insurance broker with respect to such insurance.

(c)Provisions Concerning the Accounts and the Licenses.  Each Grantor shall give the Secured Party at least 5 days’ prior written notice of any change in the Grantor’s name, identity, organizational structure or jurisdiction of incorporation, organization or formation.

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(d)Intellectual Property.  If applicable, each Grantor shall duly execute and deliver the applicable Assignment for Security in the form attached hereto as Exhibit A.  Each Grantor (either itself or through licensees) shall take all action necessary to maintain all of the material Intellectual Property in full force and effect, and such Grantor shall not do any act or knowingly omit to do any act whereby any material Intellectual Property may become invalidated; provided, however, such Grantor shall have no obligation to use or to maintain any Intellectual Property (i) it determines in its reasonable discretion that such application or registration of such Intellectual Property is no longer material or useful to its business or operations, or that pursuit or maintenance of such application or registration is no longer reasonable, prudent or beneficial to it or its operations, (ii) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (iii) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (iv) that is substantially the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement. Each Grantor shall furnish to the Secured Party from time to time upon its reasonable (but not more frequently than on a quarterly basis) request statements and schedules identifying and describing the material Intellectual Property and material Licenses in connection with the Intellectual Property and Licenses, all in reasonable detail and promptly upon request of the Secured Party.

(e)Notices of Additional Collateral. Each Grantor shall promptly notify the Secured Party upon acquiring any Collateral constituting Certificated Securities, Instruments, Uncertificated Securities, Securities Accounts, Securities Entitlements, Commodities Accounts, Electronic Chattel Paper, Letter-of-Credit Rights or Commercial Tort Claims.

(f)Additional Perfection Steps with respect to Certificated Securities and Instruments. Grantor shall take all actions necessary to: (i) establish the Secured Party’s “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Collateral constituting Certificated Securities; and (ii) deliver any portion of the Collateral constituting Instruments to the Secured Party along with blank endorsements thereof.

(g)Additional Perfection Steps with respect to Certain other Collateral. If an Event of Default occurs and is continuing, each Grantor shall, upon the Secured Party’s request, (i) establish the Secured Party’s “control” (within the meanings of Section  9-106 of the UCC) over any portion of the Collateral constituting Uncertificated Securities, Securities Accounts, Securities Entitlements or Commodities Accounts; (ii)  upon the Secured Party’s request, establish the Secured Party’s “control” (within the meanings of Section 9-105 of the UCC) over any portion of the Collateral constituting Electronic Chattel Paper; and (iii) upon Secured Party’s request, establish the Secured Party’s “control” (within the meanings of Section 9-107 of the UCC) over any portion of the Collateral constituting Letter-of-Credit Rights.

(h)Commercial Tort Claims.  Each Grantor hereby covenants and agrees that with respect to any Commercial Tort Claim for an alleged claim in excess of $100,000 hereafter arising, it shall notify the Secured Party in writing and deliver updated applicable schedules, identifying such new Commercial Tort Claims.

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(i)Notwithstanding the foregoing, Secured Party hereby agrees to release from the Collateral the assets which are required in connection with the sale of such assets presently under contract to Perk.com Inc. (“Perk”) pursuant to the Asset Purchase Agreement between Grantor and Perk dated December 13, 2015, provided that Secured Party receives as Collateral the proceeds of such sale simultaneously with the release of such collateral from the lien held by Perk when its loan to Grantor is satisfied as part of the transaction closing in accordance with the provisions of the APA.

SECTION 6.Remedies Upon Event of Default. If any Event of Default shall have occurred and be continuing upon prior written notice to the Company:

(a)The Secured Party may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Secured Party may deem commercially reasonable.  Each Grantor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Secured Party shall be made without warranty, (ii) the Secured Party may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.

(b)Any cash held by the Secured Party as Collateral and all Cash Proceeds received by the Secured Party in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall be applied by the Secured Party against all or any part of the Obligations in such order as the Secured Party shall elect. Any surplus of such cash or Cash Proceeds held by the Secured Party and remaining after the satisfaction in full of all of the Obligations shall be paid over to the Company or to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

(c)In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, each Grantor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Note for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to collect such deficiency.

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(d)The Secured Party may perform any and all of its duties and exercise its rights and powers hereunder by or through, or delegate any and all such rights and powers to, any one or more agents appointed by the Secured Party.

SECTION 7.Notices, Etc. All notices and other communications provided for hereunder (a) shall be given in the form and manner set forth in the Note and (b) shall be delivered (i) in the case of notice or other communications to the Grantors, by delivery of such notice to the Grantors at their address, facsimile number or e-mail address specified in the Note or at such other address, facsimile number or e-mail address as shall be designated by a Company in a written notice to the Secured Party in accordance with the provisions thereof or (ii) in the case of notice or other communications to the Secured Party, by delivery of such notice to the Secured Party to its address, facsimile number or e-mail address set forth below or at such other address as shall be designated by the Secured Party in a written notice to the Grantors.

If to the Grantors:

DraftDay Fantasy Sports, Inc. / wetpaint.com, Inc / Choose Digital Inc.

902 Broadway, 11th Floor, New York, New York 10010

Attention:  General Counsel

Telephone:  212-231-0092

Facsimile: 646-417-7393

E-mail:  tom@wetpaint.com

If to the Secured Party:

Sillerman Investment Company VI, LLC

902 Broadway, 14th Floor, New York, New York 10010

Attention: Robert F.X. Sillerman

Telephone: 646-561-6388

Facsimile: 646-417-7393

E-mail:  carol@sfxii.com

SECTION 8.Miscellaneous.

(a)Upon satisfaction in full of the Obligations, (i) this Agreement and the security interests created hereby shall automatically terminate and all rights to the Collateral shall revert to the Grantors, and (ii) the Secured Party shall, upon the Grantors’ request and at the Grantor’s expense, (A) return to the Grantors such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.

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

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(c)This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. Any party delivering an executed counterpart of this Agreement by facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

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

(e)Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

(f)The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

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(g)The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. For clarification purposes, the Recitals are part of this Agreement.

(h)Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and  “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).

(i)THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT BETWEEN THE PARTIES SOLELY WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATER HEREOF. No provision of this Agreement may be amended other than by an instrument in writing signed by the Grantor and the Secured Party. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

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

GRANTOR:

DRAFTDAY FANTASY SPORTS, INC.

By: __________________________

Name:

Title:

GRANTOR:

WETPAINT.COM, INC.

By: __________________________

Name:

Title:

GRANTOR:

CHOOSE DIGITAL INC.

By: __________________________

Name:

Title:

SECURED PARTY:

SILLERMAN INVESTMENT COMPANY

VI, LLC

By: __________________________

Name:

Title:

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SCHEDULE I

●   Viggle Inc., a Delaware corporation, No. 2413666

●   wetpaint.com, Inc., a Delaware corporation, No. 3991989

●   Choose Digital Inc., a Delaware corporation, No. 5080835

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SCHEDULE II

List of previously filed financing statements attached.

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EXHIBIT A

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

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