CONTROL
AGREEMENT
July
30,
2007
East
West
Bank
9300
Flair Drive
El
Monte,
CA 91731
Ladies
and Gentlemen:
The
undersigned, WAAT Media Corp. (the “Grantor”)
has
entered into a Guarantee and Security Agreement, dated as of July 30, 2007
(as
the same may be amended, restated, supplemented or otherwise modified from
time
to time, the “Guarantee
and Security Agreement”),
among
Twistbox Entertainment, Inc. (the “Company”),
each
of
the Subsidiaries of the Company party thereto and ValueAct SmallCap Master
Fund,
L.P., as Collateral Agent for the benefit of the Secured Parties referred to
therein (in such capacity, the “Collateral
Agent”)
as
required by (i) that certain Securities Purchase Agreement, dated as of July
30,
2007 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Securities
Purchase Agreement”),
among
the
Company and ValueAct SmallCap Master Fund, L.P. (the “Investor”),
and
(ii)
the Senior Secured Note, dated as of July 30 2007, among the Company and the
Investor (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Senior
Secured Note”).
Pursuant
to the Guarantee and Security Agreement and related documents, the Grantor
has
granted to the Collateral Agent, for the benefit of the Secured Parties (as
defined therein), a security interest in the accounts set forth on Schedule
I
hereto (individually the “Collateral
Account”,
together
the “Collateral
Accounts”)
and
all
present and future Assets in the Collateral Account.
1.
Instructions
of the Grantor.
The
Grantor hereby instructs you (the “Control
Account Bank”)
to,
and
you hereby agree that you will:
(a)
maintain the Collateral Account, as “Collateral Account No.: _______ - Twistbox
Entertainment, Inc. Collateral Account”;
(b)
hold
in the Collateral Account the assets, including all cash and other financial
assets and property and rights now or hereafter received in such Collateral
Account (collectively the “Assets”);
(c)
provide to the Collateral Agent, with a duplicate copy to the Grantor, a monthly
statement of Assets including a confirmation statement of each transaction
effected in the Collateral Account; and
(d)
honor
only the written instructions or entitlement orders in regard to or in
connection with the Collateral Account given by the Collateral Agent, except
that until such time as the Collateral Agent gives a written notice to the
Control Account Bank substantially in the form of Annex 1 hereto (a
“Event
of Default Notice”)
that
the
Grantor’s rights under this Control Account Agreement (the “Control
Account Agreement”)
have
been
terminated, the Grantor may request the withdrawal of, or transfer of, Assets
from any Collateral Account (each a “Withdrawal
Request”),
and
the
Control Account Bank shall honor such Withdrawal Requests. The Collateral Agent
agrees with the Grantor that it shall not give (i) instructions or entitlement
orders in regard to or in connection with the Collateral Account or (ii) an
Event of Default Notice to the Control Account Bank unless, in each case, an
Event of Default has occurred and is continuing under the Senior Secured Note.
The Control Account Bank shall be entitled to rely and shall be fully protected
in relying on the due authorization of any such written notice without inquiry.
At the time the Collateral Agent gives an Event of Default Notice to the Control
Account Bank it shall deliver a copy of such Event of Default Notice to the
Grantor.
2.
Agreements
of the Control Account Bank.
(a)
By
its signature below, the Control Account Bank agrees to comply with the written
entitlement orders and instructions of the Collateral Agent directing transfer
of the Assets relating to the Collateral Account (including any instructions
with respect to transfers and withdrawals of cash or other of the Assets)
without the consent of the Grantor or any other person (it being understood
and
agreed by the Grantor that the Control Account Bank shall have no duty or
obligation whatsoever of any kind or character to have knowledge of the terms
of
the Guarantee and Security Agreement or the Securities Purchase Agreement or
to
determine whether or not an Event of Default exists thereunder). The Grantor
hereby agrees to indemnify and hold harmless the Control Account Bank, its
affiliates, officers and employees from and against any and all claims, causes
of action, liabilities, lawsuits, demands and/or damages, including any and
all
court costs and reasonable attorney’s fees, that may result by reason of the
Control Account Bank complying with such instructions of the Collateral Agent.
In the event that the Control Account Bank is sued or becomes involved in
litigation as a result of complying with the above stated written instructions,
the Grantor and the Collateral Agent agree that the Control Account Bank shall
be entitled to charge all costs and fees it incurs in connection with such
litigation to the Assets in the Collateral Account and withdraw such sums as
the
costs and charges accrue.
(b)
Except with respect to the obligations and duties as set forth herein, this
Control Account Agreement shall not impose or create any obligations or duties
upon the Control Account Bank greater than or in addition to the customary
and
usual obligations and duties of the Control Account Bank to the
Grantor.
(c)
During the term of this Control Account Agreement, the Control Account Bank
agrees that, except for Liens resulting from customary, fees, or charges based
upon transactions in the Collateral Account, it subordinates in favor of the
Collateral Agent any security interest, lien or right of setoff the Control
Account Bank may have. The Control Account Bank acknowledges that it has not
received notice of any other security interest in the Collateral Account or
the
Assets. In the event any such notice is received, the Control Account Bank
will
promptly notify the Collateral Agent.
3.
Binding
Agreement.
This
Control Account Agreement shall be binding upon and inure to the benefit of
the
parties hereto and their respective successors and permitted assigns and it
and
the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, and the law of the Control Account
Bank’s jurisdiction for the purposes of Sections 9-301, 9-304 and 9-307 of the
UCC shall be, the law of the State of New York.
4.
Control.
The
Grantor, Collateral Agent and Control Account Bank are entering into this
Control Account Agreement to provide for the Collateral Agent’s control of the
Assets and to confirm the first and exclusive priority of the Collateral Agent’s
security interest in the Assets. The Control Account Bank agrees to promptly
make and thereafter maintain all necessary entries or notations in its books
and
records to reflect the Collateral Agent’s security interest in the
Assets.
5.
Severability.
If any
term or provision of this Control Account Agreement is determined to be invalid
or unenforceable, the remainder of this Control Account Agreement shall be
construed in all respects as if the invalid or unenforceable term or provision
were omitted. This Control Account Agreement may not be altered or amended
in
any manner without the express written consent of the Grantor, the Collateral
Agent and the Control Account Bank. This Control Account Agreement may be
executed in any number of counterparts, all of which shall constitute one
original agreement.
6.
Termination.
This
Control Account Agreement shall be terminated upon the earlier of (i) thirty
(30) days following the date of the Control Account Bank’s delivery of written
notice to the Grantor and the Collateral Agent or (ii) written notice by the
Collateral Agent to the Control Account Bank and the Grantor. The Collateral
Agent shall deliver such notice promptly upon the termination of the Collateral
Agent’s security interest in the Assets.
7.
Miscellaneous.
(a)
The
Grantor acknowledges that this Control Account Agreement supplements any
existing agreements of the Grantor with the Control Account Bank and, except
as
expressly provided herein, is in no way intended to abridge any rights that
the
Control Account Bank might otherwise have.
(b)
Any
action arising out of or relating to this Control Account Agreement shall be
litigated in, and only in, courts located in New York City, New York, Borough
of
Manhattan, and the parties hereby submit to the exclusive jurisdiction of such
courts and agree that they are a convenient forum. Each party hereby waives
the
right to trial by jury in any action arising out of or relating to this Control
Account Agreement.
(c)
This
Control Account Agreement may be executed in any number of counterparts and
by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Control Account Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Control Account
Agreement.
(d)
This
Control Account Agreement supersedes all prior agreements, oral or written,
with
respect to the subject matter hereof. There are no third party beneficiaries
to
this Control Account Agreement, other than as specifically referred to
herein.
(e)
This
Control Account Agreement shall be governed by, and construed in accordance
with, the law of the state of New York.
(f)
Upon
acceptance of this Control Account Agreement, it will be the valid and binding
obligation of the Grantor, the Collateral Agent, and you, in accordance with
its
terms.
[Remainder
of Page is Intentionally Blank]
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Very
truly yours,
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TWISTBOX
ENTERTAINMENT, INC.
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By:
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/s/
Ian Aaron
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Name:
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IAN
AARON
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Title:
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PRES.
/CEO
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VALUEACT
SMALLCAP MASTER FUND, L.P.,
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as
Collateral Agent
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By:
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/s/
David Lockwood |
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Name:
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David
Lockwood |
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Title:
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Managing
Member |
Acknowledged
and agreed to as of the date first above written:
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EAST
WEST BANK
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By:
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/s/
Phillip Leung |
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Phillip
Leung, SVP
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