AMENDMENT
AND WAIVER TO SENIOR SECURED NOTE
This
AMENDMENT
AND WAIVER TO SENIOR SECURED NOTE
(this
"Amendment")
amends
that Senior Secured Note due January 30, 2010 (the "Secured
Note")
issued
pursuant to the Securities Purchase Agreement, dated July 30, 2007 (the
"Purchase
Agreement")
by and
among TWISTBOX ENTERTAINMENT, INC., a Delaware corporation (the "Company"),
certain subsidiaries of the Company and VALUEACT SMALLCAP MASTER FUND, L.P.
(the
"Investor")
and is
made and entered into as of February 12, 2008 by and between the Company and
the
Investor. Capitalized terms used and not otherwise defined in this Amendment
are
used herein as defined in the Secured Note.
W
I T N E S S E T H:
WHEREAS,
the Company and the Investor desire to amend certain provisions of the Secured
Note and to waive compliance with certain provisions of the Secured
Note.
WHEREAS,
Section 13 of the Secured Note provides that the terms thereof may be amended
or
waived only pursuant to a written instrument executed by the Company and the
holders of 75% of the aggregate principal amount of all Notes issued pursuant
to
the Purchase Agreement.
WHEREAS,
the Investor owns 100% of the aggregate principal amount of all Notes issued
pursuant to the Purchase Agreement.
NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereby agree as follows:
1. Waivers.
1.1 Waiver
of Section 2.
The
Investor hereby waives its rights to require the Company to repurchase the
Secured Note upon the occurrence of a Fundamental Change pursuant to Section
2
of the Secured Note solely with respect to the transactions contemplated by
the
Agreement and Plan of Merger dated as of December 31, 2007, by and among
Mandalay Media, Inc., a Delaware corporation ("Parent"),
Twistbox Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary
of Parent, 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").
1.2 Waiver
of Section 6(l).
The
Investor hereby waives compliance with the covenant set forth in Section 6(l)
of
the Secured Note solely with respect to the transactions contemplated by the
Merger Agreement.
2. Amendments.
2.1 Amendment
to Section 3.
The
Secured Note is hereby amended by adding the following paragraph to Section
3:
“(l)
Guarantor shall fail to observe its covenant contained in Section 5 of this
Note.”
2.2 Amendment
to Section 5.
The
Secured Note is hereby amended by deleting the financial covenants consisting
of
the entire text of Section 5 following Section 5(e) and replacing such text
with
the following:
"The
Company shall maintain a cash balance of not less than $2,500,000 to be held
in
a "deposit account", as such term is defined in Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York (the
"UCC"), free and clear of all Liens except as set forth in the Guarantee and
Security Agreement and will provide the Investor with reasonable proof of such
cash balance as reasonably requested by the Investor from time to time.
Mandalay
Media, Inc., the Company's parent corporation (the “Guarantor”),
shall
maintain a cash balance of not less than $4,000,000 and will provide the
Investor with reasonable proof of such cash balance as reasonably requested
by
the Investor from time to time. Until at least $8,250,000 of principal has
been
paid on this Note, Guarantor will not, without the prior written approval of
Investor (which approval will not be unreasonably withheld after good faith
negotiations between Guarantor and Investor) create, incur, assume or permit
to
exist (i) all indebtedness, whether or not contingent, for borrowed money or
for
the deferred purchase price of property or services, (ii) any other indebtedness
that is evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases or letters of credit, (iv) all obligations
in
respect of acceptances issued or created, (v) all liabilities secured by any
lien on any property, and (vi) all guarantee obligations, in each case including
the principal amount thereof, any accrued interest thereon and any prepayment
premiums or fees or termination fees with respect thereto ((i)-(vi)) together,
“Guarantor
Indebtedness”)
except: (a) Guarantor Indebtedness with respect to trade accounts of the
Guarantor or for services provided to the Guarantor each as arising in the
ordinary course of business; (b) Guarantor Indebtedness in connection with
a
receivables facility not in excess of $25,000,000 and (c) Guarantor Indebtedness
incurred in connection with equipment leases entered into in the ordinary course
of business subsequent to the date hereof not exceeding $250,000 in the
aggregate.”
3. Effectiveness
of this Amendment.
This
Amendment shall have no force or effect until immediately prior to the Effective
Time (as defined in the Merger Agreement).
4. Full
Force and Effect.
Except
as modified by this Amendment, all other terms and conditions in the Secured
Note shall remain in full force and effect.
5. Effect.
Unless
the context otherwise requires, the Secured Note and this Amendment shall be
read together and shall have effect as if the provisions of the Secured Note
and
this Amendment were contained in one agreement. After the effective date of
this
Amendment, all references in the Secured Note to "this Note," "hereto,"
"hereof," "hereunder" or words of like import referring to the Secured Note
shall mean the Secured Note as modified by this Amendment.
6. Counterparts.
This
Amendment may be executed in separate counterparts, all of which taken together
shall constitute a single instrument.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment effective
as of
the day and year first above written.
THE
COMPANY:
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TWISTBOX
ENTERTAINMENT, INC.
By:
/s/ Ian Aaron
Name:
Ian Aaron
Title:
CEO
|
INVESTOR:
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VALUEACT
SMALLCAP MASTER FUND, L.P.,
By
VA Smallcap Partners, LLC, its General Partner
By:
/s/ David Lockwood
Name:
David Lockwood
Title:
Managing Member
With
respect to Section 2 hereof, and
the amendment to Section 5 of the Secured
Note:
MANDALAY
MEDIA, INC.
By:
/s/ Jay Wolf
Name:
Jay Wolf
Title: Chief
Financial Officer
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