GUARANTY
This
Guaranty (the “Guaranty”)
is
given as of February 12, 2008, by MANDALAY
MEDIA, INC.,
a
Delaware corporation (“Guarantor”)
to
VALUEACT SMALLCAP MASTER FUND, L.P. (“ValueAct”).
WHEREAS,
Guarantor has entered into an Agreement and Plan of Merger dated as of December
31, 2007, by and among Guarantor, Twistbox Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Guarantor, Twistbox Entertainment,
Inc. (the “Company”)
and
Adi McAbian and Spark Capital, L.P. as representatives of the stockholders
of
the Company, as the same may be amended from time to time (the “Merger
Agreement”),
pursuant to which Guarantor will acquire all of the capital stock of the
Company;
WHEREAS,
the Company is indebted to ValueAct in the original principal amount of
$16,500,000 pursuant to a Senior Secured Note due January 30, 2010, dated July
30, 2007, as amended (the “Note”);
WHEREAS,
each of ValueAct, Guarantor and the Company desire to amend the Note;
and
WHEREAS,
ValueAct is willing to enter into such amendment on the condition that the
Guarantor enter into this Guaranty.
NOW,
THEREFORE, the Guarantor, in consideration of the foregoing, agrees as
follows:
1. Guaranty.
Subject
to the other terms and the limitations contained in this Guaranty, the Guarantor
does hereby guarantee to ValueAct the payment by the Company of up to $8,250,000
of principal (the “Guaranteed
Amount”)
under
the Note in accordance in all material respects with the terms, conditions
and
limitations contained in the Note (the “Obligations”).
In
the event of a default in payment of the Obligations by the Company under the
Note, upon receipt of written notice of such default from ValueAct (which notice
shall specify the nature of such default and any dispute between ValueAct and
the Company with respect thereto), the Guarantor shall forthwith pay the same,
provided,
however,
that
Guarantor may (or may cause the Company) to cure such default within a period
of
5 business days after the date on which written notice specifying such default
shall have been given by ValueAct to the Guarantor.
The
Guarantor’s obligations under this Guaranty shall be subject to the limitation
that in no event shall the Guarantor be required to expend more than the
Guaranteed Amount in
the
performance of its obligations under this Guaranty and in no event shall the
Guarantor be required to expend any amount with respect to interest, fees,
costs, expenses or other amounts.
2. Scope
and Duration of Guaranty.
Subject
to the limitations set forth herein, this Guaranty shall continue in full force
and effect until the Company or the Guarantor shall have satisfactorily
performed or fully discharged the Obligations. Further, this Guaranty (a) shall
remain in full force and effect without regard to, and shall not be affected
or
impaired by any invalidity, irregularity or unenforceability in whole or in
part
of this Guaranty, and (b) shall be discharged only by complete performance
of
the undertakings contained herein (subject to the limitations set forth herein);
provided, that the Guarantor shall have the full benefit of all defenses,
setoffs, counterclaims, reductions, diminution or limitations of any Obligations
available to the Company pursuant to or arising from the Note
or
otherwise.
3. Waivers
by Guarantor.
The
Guarantor hereby waives, as a condition precedent to the performance of its
obligations hereunder, (a) notice of acceptance hereof, (b) any requirement
that, after a default by the Company, ValueAct exhaust any right, power or
remedy or proceed against the Company under the Note or any other agreement
or
instrument referred to therein, and (c) any defense arising by reason of
disability, lack of authority or power. Without limiting the generality of
the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not affect the liability of the Guarantor hereunder:
(i) at
any
time or from time to time, without notice to the Guarantor, the time for any
performance of or compliance with any of the Obligations shall be
extended;
or
(ii) any
of
the Obligations shall be modified, supplemented or amended in any respect in
accordance with the terms of the Note.
Notwithstanding anything contained herein to the contrary, no modification,
supplement or amendment to the Note shall be made without the Guarantor’s prior
written consent.
4. Subrogation.
The
Guarantor hereby agrees that until the payment
and discharge
in full
and/or
waiver of performance
of the
Obligations, it shall not exercise any right or remedy arising by reason of
the
performance of any of its obligations under this Guaranty, whether by
subrogation or otherwise, against the Company.
5. Transfer
of Guaranty.
Upon
written notice to the Guarantor, ValueAct may transfer its rights under this
Guaranty to any party to whom it sells, transfers or otherwise disposes of
all
or any part of the Note.
6. Miscellaneous.
6.1 Limitation.
The
Guarantor’s obligations under this Guaranty are to pay the Obligations of the
Company under the Note (subject to the limitations set forth in this Guaranty)
and no others. In no event shall the Guarantor be liable for any damages, direct
or indirect, consequential, punitive or otherwise, as a result of the Company’s
failure to perform any of its obligations under the Note.
Guarantor’s liability shall be limited solely to actual
and direct damages determined by a court of competent jurisdiction in a
proceeding not subject to further appeal to have arisen
primarily and directly as a result of Guarantor’s failure to perform its
obligations under this Guaranty.
6.2 Governing
Law.
This
Guaranty is to be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to its conflicts of laws rules.
6.3 Notices.
All
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified
or
registered mail or sent by facsimile transmission, as follows:
Guarantor:
Mandalay
Media, Inc.
2121
Avenue of the Stars, Suite 2550
Los
Angeles, California 90067
Attention:
James Lefkowitz
with
a
copy to:
Kenneth
R. Koch, Esq.
Mintz
Levin Cohn Ferris Glovsky and Popeo, P.C.
666
Third
Avenue
New
York,
New York 10017
ValueAct:
435
Pacific Avenue, 4th
Fl.
San
Francisco, CA 94133
Attention:
Jimmy Price
Either
the Guarantor or ValueAct may change its address for notices and other
communications hereunder by notice to the other. Each such notice or other
communication shall for all purposes of this Guaranty be treated as effective
or
having been given (i) when delivered if delivered personally, (ii) if sent
by
registered or certified mail, at the earlier of its receipt or three business
days after registration or certification thereof, (iii) if sent by overnight
courier, on the next business day after the same has been deposited with a
nationally recognized courier service for next day delivery, or (iv) when sent
by confirmed facsimile, on the day sent (if a business day) if sent during
normal business hours of the recipient, and if not, then on the next business
day.
6.4 Amendments
and Waivers.
No
amendment, modification, termination or waiver of any provision of this Guaranty
or consent to any departure by the Guarantor therefrom shall be effective absent
the written agreement of the Guarantor and ValueAct.
6.5 Headings.
Section
and subsection headings contained in this Guaranty are inserted for convenience
of reference only, shall not be deemed to be a part of this Guaranty for any
purpose, and shall not in any way define or affect the meaning, construction
or
scope of any of the provisions hereof.
6.6 Waiver
of Jury Trial.
EACH
PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Guarantor has duly executed and delivered this Guaranty
and
ValueAct has executed its acceptance of this Guaranty effective as of the date
first written above.
| |
MANDALAY
MEDIA, INC.
By: /s/
Jay Wolf
Name:
Jay Wolf
Title:
Chief Financial Officer
|
Accepted:
| |
VALUEACT
SMALLCAP MASTER FUND, L.P.,
By
VA Smallcap Partners, LLC, its General Partner
By: /s/
David Lockwood
Name:
David Lockwood
Title:
Managing Member
|