FUND.COMINC. WARRANTTO PURCHASE 2,338,333 SHARES OF CLASSA COMMON STOCK, PAR VALUE $0.001 PER SHARE

THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD WITHOUT RESTRICTIONS OR VOLUME LIMITATIONS PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON DECEMBER 31, 2014.

No. ___

FOR VALUE RECEIVED, IP GLOBAL INC. (the “Lender”) and/or its Affiliates (collectively, the “Warrant Holder”), is entitled to purchase, subject to the terms and condition of this Warrant, from FUND.COM INC., a Delaware corporation (the “Corporation”), at any time or from time to time from the “Initial Exercise Date” (as hereinafter defined) and not later than 5:00 P.M., Eastern time, on the “Warrant Expiration Date” (as hereinafter defined), an aggregate of  2,338,333 shares (the “Warrant Shares”) of the Corporation’s Class A Common Stock (as hereinafter defined), at an exercise price per Warrant Share equal to sixty cents ($0.60) (the “Exercise Price”).  The number of Warrant Shares issuable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as described herein.

This Warrant is the “Warrant” constituting Exhibit D, referred to in that certain revolving credit loan agreement dated as of April 30, 2009, by and between the Corporation and the Lender (the “Loan Agreement”).

The Corporation shall maintain books for the transfer and registration of the Warrant.  Upon the initial issuance of this Warrant, the Corporation shall issue and register the Warrant in the name of the Warrant Holder.

Definitions.                                Unless otherwise separately defined in this Warrant, all capitalized terms when used herein shall have the same meaning as they are defined in the Loan Agreement.  As used in this Warrant, the following terms shall have the meanings set forth below.

A           “Affiliate” of any particular Person means any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or under common control with such Person.  For purposes of this definition, “ control ” (including the terms “ controlling ,” “ controlled by ” and “ under common control with ”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 B.           “Bloomberg” shall mean Bloomberg, L.P. (or any successor to its function of reporting stock prices).

 

C.           "Business Day" means any day, other than a Saturday or Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law, regulation or executive order to close.

D.           “Class A Common Stock” means the Class A common stock of the Corporation, par value $0.001 per share, together with any securities into which the common stock may be reclassified and any additional class of stock of the Corporation having no preference as to dividends or distributions on liquidation, provided that the shares purchasable pursuant to this Warrant shall include only shares of Class A Common Stock, $0.001 par value per share, in respect of which this Warrant is exercisable, or shares resulting from any subdivision or combination of such Class A Common Stock, or in the case of any reorganization, reclassification, consolidation, merger, or sale of the character referred to in Section 4(e) hereof, the stock or other securities or property provided for in such Section.

E.           “Class A Common Stock Deemed Outstanding” shall mean the number of shares of Class A Common Stock actually outstanding (not including shares of Class A Common Stock held in the treasury of the Corporation), plus (x) pursuant to Section 4(f)(i) hereof, the maximum total number of shares of Class A Common Stock issuable upon the exercise of options (the “Options”), as of the date of such issuance or grant of such Options, if any, and (y) pursuant to Section 4(f)(ii) hereof, the maximum total number of shares of Class A Common Stock issuable upon conversion or exchange of convertible securities (the “Convertible Securities”), as of the date of issuance of such Convertible Securities, if any.

F.           "Exercise Date" means, for any one or more exercises of this Warrant, the date specified in the notice of exercise in the form attached hereto (the "Notice of Exercise"), so long as a copy of the Notice of Exercise is faxed, emailed or delivered by other means resulting in receipt by the Corporation before 11:59 p.m, New York City time, on the Warrant Expiration Date.

G.           "Exercise Price" means initially Sixty Cents ($0.60) per Warrant Share, or such other amount into which such Exercise Price may be adjusted pursuant to Section 4 of this Warrant.

 

H.            “Initial Exercise Date” shall mean the date of this Warrant.

I.            “Market Price” means, as of any Trading Day, (i) the average of the last reported sale prices for the shares of Class A Common Stock on a national securities exchange which is the principal trading market for the Class A Common Stock for the twenty (20) Trading Days immediately preceding such date as reported by Bloomberg or (ii) if no national securities exchange is the principal trading market for the shares of Class A Common Stock, the average of the last reported sale prices on the principal trading market for the Class A Common Stock during the same period as reported by Bloomberg, or (iii) if market value cannot be calculated as of such date on any of the foregoing bases, the Market Price shall be the fair market value as reasonably determined in good faith by the Corporation’s Board of Directors in the exercise of its good faith judgment.  The manner of determining the Market Price of the Class A Common Stock set forth in the foregoing definition shall apply with respect to any other security in respect of which a determination as to market value must be made hereunder.

J.            “Trading Day” shall mean any day on which the Class A Common Stock is traded for any period on the principal securities exchange or other securities market on which the Class A Common Stock is then being traded.

L.             “Warrant Expiration Date” shall mean 5:00 p.m. (Eastern time) on December 31, 2014.

M.            Warrant Holder” shall mean the collective reference to the Investor, its Affiliates or any one or more holder(s) of this Warrant.

 

 

 

 

N.            “Warrant Shares” shall mean the shares of Class A Common Stock issuable upon the full or partial exercise of this Warrant, as such shares may be adjusted pursuant to the terms of this Warrant.

 

This Warrant is subject to the following terms, provisions, and conditions:

 

Section 1. Manner of Exercise.

 

 

b.           Cashless Exercise.  Notwithstanding any provisions herein to the contrary, if during the Exercise Period the fair market value of one share of the Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash or by check, the Holder may exercise this Warrant in whole or in part by presentation and surrender of this Warrant to the Corporation at its principal executive offices, with a written notice of the Holders intention to effect a cashless exercise, including a calculation of the number of share of Class A Common Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”).  In the event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the Holder shall surrender this Warrant for that number of shares of Class A Common Stock determined by multiplying the number of Warrant Shares to which such Holder would otherwise be entitled by a fraction (i) the numerator of which shall be the difference between (A) the average Market Price per share of the Class A Common Stock for the twenty (20) Trading Days immediately prior to the date the completed Exercise Agreement shall have been delivered to the Corporation (the “Cashless Exercise Market Price”) and (B) the Exercise Price (as adjusted to the date of such calculation), multiplied by the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being canceled (at the date of such calculation) and (ii) the denominator of which shall be the Cashless Exercise Market Price.

 

 

 

 

 

 

 

 

Section 4. Antidilution Provisions.  During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject to adjustment from time to time as provided in this Section 4.  In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up to the nearest cent.

 

 

 

 c.           Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

(i)           Subject at all times to the provisions of Section 4(c)(iii) below, in case the Corporation after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Corporation shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Corporation and the Corporation shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Corporation shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Class A Common Stock and/or Preferred Stock (collectively, “Capital Stock”), then, and in the case of each such Triggering Event, proper provision shall be made to the Exercise Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Exercise Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Class A Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Capital Stock, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4; provided, however, the Holder at its option may elect to receive an amount in unregistered shares of the common stock of the surviving entity equal to the value of this Warrant calculated in accordance with the Black-Scholes formula; provided, further, such shares of Class A Common Stock shall be valued at a twenty percent (20%) discount to the VWAP of the Class A Common Stock for the twenty (20) Trading Days immediately prior to the Triggering Event.  Immediately upon the occurrence of a Triggering Event, the Corporation shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Exercise Price.  Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of Warrant Shares and the adjusted Exercise Price pursuant to the terms and provisions of this Section 4(c)(i).  Notwithstanding the foregoing to the contrary, this Section 4(c)(i) shall only apply if the surviving entity pursuant to any such Triggering Event is a company that has a class of equity securities registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board.  In the event that the surviving entity pursuant to any such Triggering Event is not a public company that is registered pursuant to the Exchange Act or its common stock is not listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, then the Holder shall have the right to demand that the Corporation pay to the Holder an amount in cash equal to the value of this Warrant calculated in accordance with the Black-Scholes formula.

 

 

 

 

 

(ii)           In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event and has also elected not to receive an amount in cash equal to the value of this Warrant calculated in accordance with the Black-Scholes formula pursuant to the provisions of Section 4(c)(i) above, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Corporation) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Corporation under this Warrant (and if the Corporation shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Corporation from, any continuing obligations of the Corporation under this Warrant) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Corporation, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Capital Stock, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

 

 

 

 

 

 

 (ii)           Issuance of Convertible Securities.  If the Corporation in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the price per share for which Class A Common Stock is issuable upon such conversion or exchange is less than the Exercise Price on the date of issuance, then the maximum total number of shares of Class A Common Stock issuable upon the conversion or exchange of all such Convertible Securities will, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by the Corporation for such price per share.  For the purposes of the preceding sentence, the “price per share for which Class A Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Corporation as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Class A Common Stock issuable upon the conversion or exchange of all such Convertible Securities.  No further adjustment to the Exercise Price will be made upon the actual issuance of such Class A Common Stock upon conversion or exchange of such Convertible Securities.

 

 (iii)           Change in Option Price or Conversion Rate.  If there is a change at any time in (i) the amount of additional consideration payable to the Corporation upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange of any Convertible Securities; or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Class A Common Stock (other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such change will be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.

 

 (iv)           Subdivision or Combination of Class A Common Stock.  If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Class A Common Stock acquirable hereunder into a greater number of shares, then, after such date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced.  If the Corporation at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Class A Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

 

 (v)           Treatment of Expired Options and Unexercised Convertible Securities.  If, in any case, the total number of shares of Class A Common Stock issuable upon exercise of any Option or upon conversion or exchange of any Convertible Securities is not, in fact, issued and the rights to exercise such Option or to convert or exchange such Convertible Securities shall have expired or terminated, the Exercise Price then in effect will be readjusted to the Exercise Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination (other than in respect of the actual number of shares of Class A Common Stock issued upon exercise or conversion thereof), never been issued.

 

 (vi)           Calculation of Consideration Received.  If any Class A Common Stock, Options or Convertible Securities are issued, granted or sold for cash, the consideration received therefor for purposes of the holder’s Note will be the amount received by the Corporation therefor, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Corporation in connection with such issuance, grant or sale.  In case any Class A Common Stock, Options or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Corporation will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Corporation will be the Market Price thereof as of the date of receipt.  In case any Class A Common Stock, Options or Convertible Securities are issued in connection with any acquisition, merger or consolidation in which the Corporation is the surviving corporation, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving corporation as is attributable to such Class A Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or securities will be determined in good faith by the Board of Directors of the Corporation.

 

 

 

 

 

 

 

 

then, in each such case, the Corporation shall give to the Holder of this Warrant (a) notice of the date on which the books of the Corporation shall close or a record shall be taken for determining the holders of Class A Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Class A Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other such fundamental change, notice of the date (or, if not then known, a reasonable approximation thereof by the Corporation) when the same shall take place.  Such notice shall also specify the date on which the holders of Class A Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Class A Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be.  Such notice shall be given at least thirty (30) days prior to the record date or the date on which the Corporation’s books are closed in respect thereto.  Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.

 

Section 5. Issue Tax.

 

The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder of this Warrant.

 

Section 6. No Rights or Liabilities as a Stockholder.

 

This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Corporation.  No provision of this Warrant, in the absence of affirmative action by the Holder to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Exercise Price or as a stockholder of the Corporation, whether such liability is asserted by the Corporation or by creditors of the Corporation.

 

Section 7. Transfer, Exchange, and Replacement of Warrant.

 

 a.           Restriction on Transfer.  This Warrant and the rights granted to the Holder are transferable, in whole or in part, upon surrender of this Warrant, together with a properly executed assignment in the form attached hereto, at the office or agency of the Corporation referred to in Section 7(e) below, provided, however, that any transfer or assignment shall be subject to the conditions set forth in Section 7(f) hereof and to the applicable provisions of the Loan Agreement.  Until due presentment for registration of transfer on the books of the Corporation, the Corporation may treat the registered holder hereof as the owner and holder hereof for all purposes, and the Corporation shall not be affected by any notice to the contrary.

 

 b.           Warrant Exchangeable for Different Denominations.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the office or agency of the Corporation referred to in Section 7(e) below, for new Warrants of like tenor representing in the aggregate the right to purchase the number of shares of Class A Common Stock, in not less than 1,000 increments, which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

 

 c.           Replacement of Warrant.  Upon receipt of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Corporation, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Corporation, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

 

 

 

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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed by its duly authorized officer.

By: /s/  Gregory Webster

Name:  Gregory Webster,

Title:  CEO

Dated as of ___________ __, 2009

 

 

 

 

 

FORM OF EXERCISE AGREEMENT

Dated:  ________ __, 200_

To:                          Fund.com Inc.

455 Broadway, 4th floor

New York, New York 10012

Attn: President

The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase ________ shares of Class A Common Stock covered by such Warrant, and makes payment herewith in full therefor at the price per share provided by such Warrant:

[check applicable box]

___                      in cash or by certified or official bank check or by wired funds in the amount of, or,

___                      by surrender of securities issued by the Corporation (including a portion of the Warrant) having a market value (in the case of a portion of this Warrant, determined in accordance with the cashless exercise provisions set forth in Section 1b of the Warrant) equal to $_________.

Please issue a certificate or certificates for such shares of Class A Common Stock in the name of and pay any cash for any fractional share to:

 

 

 

and, if said number of shares of Class A Common Stock shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned covering the balance of the shares purchasable thereunder less any fraction of a share paid in cash.

 

 

 

 

 

 

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to the number of shares of Class A Common Stock covered thereby set forth herein below, to:

 

 

, and hereby irrevocably constitutes and appoints ___________________________________ as agent and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with full power of substitution in the premises.