SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement, dated as of October 23, 2008 (this “Agreement”),
is
entered into by and among Mandalay Media, Inc., a Delaware corporation with
headquarters located at c/o Trinad Capital, L.P., 2121 Avenue of the Stars,
Suite 2550, Los Angeles, California 90067 (the “Company”),
and
the investors listed on the Schedule of Investors attached hereto as
Exhibit A
(each
individually, an “Investor”
and
collectively, the “Investors”).
BACKGROUND
WHEREAS,
the Company is offering in a private placement (the “Offering”)
to
“accredited investors” (as such term is defined in Regulation D (“Regulation
D”)
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”)),
the
opportunity to purchase a minimum of 1,685,393 shares (the “Minimum
Shares”)
and a
maximum of up to an aggregate of 3,370,786 shares (the “Maximum
Shares”)
of its
common stock, $0.0001 par value per share (the “Common
Stock”),
at a
purchase price of $2.67 per share (the “Purchase
Price”)
and,
in connection therewith and in consideration thereof, warrants to purchase
Common Stock in the form attached hereto as Exhibit
B
(the
“Warrants”);
WHEREAS,
the Investors desire to purchase that number of shares of Common Stock (the
“Shares”)
and
Warrants to purchase that number of shares of Common Stock (the “Warrant
Shares”)
(the
Shares and Warrants together, the “Securities”)
as are
set forth on Exhibit
A
hereto,
subject to the terms and conditions set forth herein;
NOW,
THEREFORE, in consideration of the premises and the mutual representations
and
covenants hereinafter set forth, the parties hereto agree as
follows:
1. Sale
of Securities.
1.1 Sale
of Securities; Subscription for Securities.
Subject
to the terms and conditions of this Agreement, at the applicable Closing
(as
hereinafter defined), the Company will sell and issue to each of the Investors,
and each of the Investors will purchase, that number of Shares and Warrants
to
purchase that number of Warrant Shares as set forth opposite such Investor’s
name on Exhibit A
in
exchange for the “Aggregate Purchase Price” set forth opposite such Investor’s
name on Exhibit
A
(the
“Aggregate
Purchase Price”).
To
purchase the Securities, this Agreement must be duly executed by each Investor
and the Aggregate Purchase Price delivered by each Investor in the form of
wire
transfer to (i) the account designated in the escrow agreement entered into
by
and among the Company, the Initial Closing Investors (as hereinafter defined)
and American Stock Transfer Company, LLC as escrow agent (the “Escrow
Agent”),
attached hereto as Exhibit
K
(the
“Escrow
Agreement”),
provided,
that
the
amount to be delivered by VAC (as hereinafter defined) shall be net of any
reasonable legal expenses of VAC incurred in the negotiation and preparation
of
this Agreement and the transactions contemplated hereby, in any event not
to
exceed $100,000, or (ii) the account designated in writing to each Investor
by
the Company at any Closing subsequent to the Initial Closing. The Investors
participating in the Initial Closing are referred to herein as the “Initial
Closing Investors.”
1.2 Use
of
Proceeds.
The
Company will use the net proceeds from the sale of the Securities to fund
the
business of the Company and for working capital and general corporate purposes,
including potential acquisitions.
2. The
Closing.
The
initial closing hereunder shall occur upon the delivery by each of the Initial
Closing Investors of the Aggregate Purchase Price sufficient to purchase
the
Minimum Shares and Warrants issued in connection therewith to the account
designated in the Escrow Agreement, and shall take place at such time and
place
as the Company may designate which shall be no later than the first business
day
following the satisfaction or waiver of all the conditions set forth in Section
5 and Section 6 of this Agreement (the “Initial Closing,”
and
the date on which the Initial Closing occurs, the “Initial
Closing Date”).
Following the Initial Closing Date, the Company may hold additional closings
(each, with the Initial Closing, a “Closing,”
and
each such date, with the Initial Closing Date, a “Closing
Date”)
at
such places and times as designated by the Company, until the earlier of
(i)
such time as the Company has sold up to the Maximum Shares and the Warrants
issued in connection therewith or (ii) forty-five (45) days after the Initial
Closing Date.
Within
three business days following the release by the Escrow Agent to the Company
of
the Aggregate Purchase Price sufficient to purchase the Minimum Shares, the
Company shall deliver to each Initial Closing Investor (i) a certificate
for the
Shares being purchased by such Initial Closing Investor and (ii) Warrants
for
the Warrant Shares being purchased by such Initial Closing Investor, registered
in the name of such Initial Closing Investor.
Within
three business days following each Closing subsequent to the Initial Closing,
the Company shall deliver to each Investor (i) a certificate for the Shares
being purchased by such Investor and (ii) Warrants for the Warrant Shares
being
purchased by such Investor, registered in the name of such Investor, against
payment of the Aggregate Purchase Price therefor in accordance with Section
1.1
above.
Each
Investor hereby authorizes and directs the Company to deliver the Securities
to
be issued to such Investor pursuant to this Agreement directly to the
residential or business address indicated on such Investor’s signature page
hereto.
3. Representations
of the Company.
A
Schedule of Exceptions, attached hereto as Exhibit
C
(each, a
“Schedule
of Exceptions”),
shall
be delivered to the Investors in connection with each Closing. The Schedule
of
Exceptions shall be arranged in sections corresponding to the numbered and
lettered sections and subsections contained in this Section 3, and the
disclosures in any section or subsection of the Schedule of Exceptions shall
qualify other sections and subsections in this Section 3 to the extent it
is
reasonably apparent from a reading of the disclosure that such disclosure
is
applicable to such other sections and subsections. Except as set forth in
the
Schedule of Exceptions delivered to the Investors at the applicable Closing,
the
Company hereby represents and warrants to the Investors as
follows:
3.1 Organization,
Good Standing and Qualification.
Each of
the Company and its subsidiaries has been duly incorporated and organized,
and
is validly existing in good standing, under the laws of its state of
incorporation and qualified to do business in any state or other jurisdiction
in
which the nature of the business conducted or property owned by it makes
such
qualification necessary except where the failure to be so qualified or in
good
standing, as the case may be, would not reasonably be expected to individually
or in the aggregate, (i) materially and adversely affect the legality, validity
or enforceability of any Transaction Document (as hereinafter defined), (ii)
have or result in a material adverse effect on the results of operations,
assets, business, prospects or financial condition of the Company or any
Company
subsidiary or (iii) materially and adversely impair the Company’s ability
to perform its obligations under any of the Transaction Documents (any of
(i),
(ii) or (iii), a “Material
Adverse Effect”).
3.2 Corporate
Power and Authority.
The
Company has all requisite corporate power and authority to execute, deliver,
and
perform, this Agreement, the Escrow Agreement and the Warrants (together,
the
“Transaction
Documents”),
to
sell and issue the Securities (including the underlying Warrant Shares)
hereunder, and to own and operate its properties and assets and to carry
on its
business as currently conducted and as presently proposed to be
conducted.
3.3 Authorization
and Enforcement.
The
execution and delivery of the Transaction Documents and the consummation
of the
transactions contemplated hereby and thereby have been duly authorized by
all
necessary corporate action on the part of the Company, its officers, directors
and stockholders. Each of the Transaction Documents has been duly executed
and
delivered by the Company and, assuming that this Agreement constitutes a
valid
and binding agreement of the other parties hereto, each such Transaction
Document constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and remedies
generally and subject, as to enforceability, to general principles of equity,
regardless of whether enforceability is considered in a proceeding at law
or in
equity.
3.4 Subsidiaries.
The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, association,
or
other entity other than the subsidiaries scheduled on Section 3.4 of the
Schedule of Exceptions. Except as set forth in Section 3.4 of the Schedule
of
Exceptions, the Company owns, directly or indirectly, all of the capital
stock
or comparable equity interests of each subsidiary free and clear of any liens
and all the issued and outstanding shares of capital stock or comparable
equity
interest of each subsidiary are, to the extent applicable, validly issued,
fully
paid, non-assessable and free of preemptive and similar rights.
3.5 No
Conflicts.
The
execution, delivery and performance of the Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby will not
result
in any violation or default under, or result in a violation or breach of,
with
or without the passage of time or the giving of notice or both, (i) the
Company’s or any Company subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) any judgment, order
or
decree of any court or arbitrator to which the Company or any Company subsidiary
is a party or is subject, (iii) any agreement or contract of the Company
or any
Company subsidiary, or (iv) to the Company’s knowledge, a violation of any
statute, law, regulation or order, or an event which results in the creation
of
any lien upon any asset of the Company or any Company subsidiary, in any
such
case which would have a Material Adverse Effect.
3.6 Valid
Issuance of Securities.
(a) The
Shares, if and when issued and delivered in accordance with the terms of
this
Agreement for the consideration expressed herein, will be duly and validly
issued and outstanding, fully paid, and non-assessable and will be free of
restrictions on transfer other than restrictions on transfer under applicable
state and federal securities laws.
(b) The
Warrants have been duly and validly authorized by the Company and, if and
when
paid for and then issued in accordance with the terms of this Agreement for
the
consideration expressed herein, will be validly executed and delivered by
the
Company. The Warrant Shares have been duly and validly authorized and reserved
for issuance upon exercise of the Warrants and when issued upon such exercise
in
accordance with the Warrants, will be duly and validly issued and outstanding,
fully paid and non-assessable and will be free of restrictions on transfer
other
than restrictions on transfer under applicable state and federal securities
laws.
(c) Assuming
the truth and accuracy of the representations made by each Investor in Section
4
hereof, the offer and sale of the Securities solely to each Investor in
accordance with this Agreement and (assuming no change in currently applicable
law, no transfer of Securities by any holder thereof and no commission or
other
remuneration is paid or given, directly or indirectly, for soliciting the
issuance of Warrant Shares upon exercise of the Warrants) the issuance of
the
Warrant Shares on a cashless basis are exempt from the registration and
prospectus delivery requirements of the Securities Act and the securities
registration and qualification requirements of the currently effective
provisions of the securities laws of the State of California and the states
in
which the Investor is a resident based upon its address set forth on the
Schedule of Investors attached hereto as Exhibit
A.
3.7 Capitalization.
The
capitalization of the Company immediately prior to the Initial Closing consists
of the following:
(a) Common
Stock. A total of 100,000,000 shares of Common Stock are authorized, of which
37,338,554 shares are issued and outstanding.
(b) Preferred
Stock. A total of 1,000,000 shares of preferred stock, par value $0.0001
per
share (the “Preferred
Stock”),
are
authorized, of which 100,000 shares are designated as Series A Convertible
Preferred Stock, par value $0.0001 per share, all of which are issued and
outstanding.
(c) Options.
A total of 7,000,000 shares of Common Stock are reserved for issuance to
employees, consultants and directors pursuant to the Company’s 2007 Employee
Director and Consultant Stock Plan (the “Plan”),
of
which options to purchase 6,201,864 Common Stock are issued and outstanding,
and
an additional 2,463,422 shares of Common Stock are reserved for issuance
under
the Twistbox Entertainment, Inc. 2006 Stock Incentive Plan. 798,136 shares
of
Common Stock remain available for future issuance under the Plan.
(d) Warrants.
A total of 2,495,243 shares of Common Stock are reserved for issuance pursuant
to outstanding warrants.
(e) Senior
Secured Note. A portion of the principal amount due under the $16.5 million
senior secured note issued by Twistbox Entertainment, Inc. to
ValueAct Smallcap Master Fund, L.P., due January 30, 2010, as amended, may
be repaid by the Company in shares of Common Stock.
(f) Except
as
set forth in this Section 3.7, there are no outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Company of any shares of its capital stock
or
any securities convertible into or ultimately exchangeable or exercisable
for
any shares of the Company’s capital stock. Apart from the exceptions noted
herein or in the Schedule of Exceptions, no shares of the Company’s outstanding
capital stock, or stock issuable upon exercise or exchange of any outstanding
options, warrants or rights, or other stock issuable by the Company, are
subject
to any preemptive rights, rights of first refusal or other rights to purchase
such stock (whether in favor of the Company or any other person), pursuant
to
any agreement or commitment of the Company. The Company has not made any
representations regarding equity incentives to any officer, employee, director
or consultant that are inconsistent with the share amounts and terms set
forth
in the Company’s board or director meeting minutes and/or actions by written
consent of the Company’s board of directors.
(g) The
outstanding shares of the capital stock of the Company (i) are duly authorized
and validly issued, fully paid and nonassessable, and have been approved
by all
requisite stockholder action, and (ii) assuming the accuracy of the
representations and warranties and the compliance with the covenants made
by the
original purchasers of such shares, were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities.
3.8 Consents.
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, (i) any federal, state or local
governmental authority having jurisdiction over the Company or any Company
subsidiary, or (ii) any other person or entity, is required on the part of the
Company or any Company subsidiary in order to enable the Company or any Company
subsidiary to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party except (A) where
the
failure to obtain the same would not have a Material Adverse Effect, (B)
for
such qualifications or filings under applicable securities laws as may be
required in connection with the transactions contemplated by this Agreement
and
(C) for such board of director and stockholder consents that have been obtained
prior to the Closing. All such qualifications and filings will, in the case
of
qualifications, be effective on the Closing and will, in the case of filings,
be
made within the time prescribed by law.
3.9 Absence
of Litigation.
There
is no action, suit, proceeding, claim, arbitration or investigation pending
(or,
to the Company’s knowledge, currently threatened) against the Company or any
Company subsidiary, its respective activities or its respective properties
before any court or governmental agency. There is no action, suit, proceeding
or
investigation by the Company or any Company subsidiary currently pending
or
which the Company or any Company subsidiary intends to initiate.
3.10 Compliance.
Neither
the Company nor any Company subsidiary (i) is in violation of any term of
its
certificate or articles of incorporation, bylaws or other organizational
or
charter documents, (ii) is in violation of any material term or provision
of any
indebtedness, instrument, judgment or decree or any material agreement and
(iii)
to its knowledge, is in violation of any order, statute, rule or regulation
applicable to the Company where such violation would have a Material Adverse
Effect.
3.11 Title
to Assets.
The
Company and each Company subsidiary owns and has good and marketable title
to
its respective tangible properties and assets, free and clear of all mortgages,
deeds of trust, liens, encumbrances and security interests except for statutory
liens for the payment of current taxes that are not yet delinquent and liens,
encumbrances and security interests which arise in the ordinary course of
business and which do not affect material properties and assets of the Company
or any Company subsidiary. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company or any
Company subsidiary are in good operating condition and repair, ordinary wear
and
tear excepted.
3.12 Indebtedness.
Except
as scheduled on Section 3.12 of the Schedule of Exceptions, neither the Company
nor any Company subsidiary has (i) any indebtedness for borrowed money or
for
the deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business consistent with past
practice and payable in accordance with customary practices), (ii) any other
indebtedness that is evidenced by a note, bond, debenture or similar instrument,
(iii) any obligations under financing leases, (iv) any obligations in respect
of
acceptances issued or created, (v) any liabilities secured by any lien on
any
property or (vi) any guarantee obligations.
3.13 No
General Solicitation; Brokers or Finders.
Except
as provided in Section 10 of this Agreement, neither the Company, nor any
of its
affiliates, nor any person or entity acting on its or their behalf, has (i)
engaged in any form of general solicitation or general advertising (within
the
meaning of Regulation D) in connection with the offer or sale of the Securities
or (ii) any liability to pay any fees or commissions to any broker, finder
or
agent with respect to the transactions contemplated by this Agreement or
any of
the other Transaction Documents.
3.14 Private
Placement.
None of
the Company, the Company subsidiaries, any of their affiliates, or any person
or
entity acting on their behalf has, directly or indirectly, at any time within
the past six (6) months, made any offer or sale of any security or solicitation
of any offer to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under Regulation D under
the
Securities Act in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities
pursuant to the Transaction Documents to be integrated with prior offerings
by
the Company for purposes of any applicable law, regulation or stockholder
approval provisions, including, without limitation, under the rules and
regulations of any securities exchange, market or trading or quotation facility
on which the Common Stock is listed or quoted.
3.15 Registration
Rights.
Except
as contemplated by this Agreement, the Company is not under any obligation
to
register under the Securities Act any of its currently outstanding securities
or
any securities issuable upon exercise or conversion of its currently outstanding
securities nor is the Company obligated to register or qualify any such
securities under any state securities or blue sky laws.
3.16 Disclosure.
This
Agreement, the exhibits hereto, the other Transaction Documents and any
certificate expressly delivered by the Company or any Company subsidiary
to the
Investors or their attorneys or agents in connection herewith or therewith
or
with the transactions contemplated hereby or thereby, taken as a whole, neither
contain any untrue statement of a material fact nor, to the Company’s knowledge,
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
4. Representations
of the Investors.
Each of
the Investors severally represents and warrants to the Company as
follows:
4.1 Authorization.
This
Agreement constitutes the Investor’s valid and legally binding obligation,
enforceable against the Investor in accordance with its terms except as may
be
limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws
of general application relating to or affecting the enforcement of creditors’
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies. The Investor represents that it has full power and
authority to execute and deliver the Transaction Documents to which it is
a
party and perform its obligations thereunder.
4.2 Regulation D.
(a) The
Investor understands and acknowledges that (i) the Securities acquired pursuant
to this Agreement have not been registered under the Securities Act and are
being sold in reliance upon an exemption from registration afforded by
Regulation D and that such Securities have not been registered with any
state securities commission or authority, (ii) pursuant to the requirements
of
Regulation D, the Securities may not be transferred, sold or otherwise
exchanged unless in compliance with the provisions of Regulation D and/or
pursuant to registration under the Securities Act, or pursuant to an available
exemption thereunder and (iii) other than as set forth in Section 7 of this
Agreement, the Company is under no obligation to register the Securities
under
the Securities Act or any state securities law, or to take any action to
make
any exemption from any such registration provisions available.
(b) The
Investor is an “accredited investor” within the meaning of Rule 501 of
Regulation D, is knowledgeable, sophisticated and experienced in making,
and is
qualified to make, decisions with respect to investment shares representing
an
investment decision like that involved in the purchase of the
Securities.
(c) The
Securities to be purchased by the Investor hereunder will be acquired for
investment for the Investor’s own account, not as a nominee or agent, and not
with a view to the public resale or distribution thereof with the meaning
of the
Securities Act, and the Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same. If not an individual,
the Investor also represents that the Investor has not been formed for the
specific purpose of acquiring the Securities. The Investor recognizes that
an
investment in the Securities involves a high degree of risk, including a
risk of
total loss of the Investor. The Investor understands, acknowledges and agrees
that it must bear the economic risk of its investment in the Securities for
an
indefinite period of time and has knowledge and experience in financial and
business matters such that it is capable of evaluating the risks of the
investment in the Securities and the Investor understands, acknowledges and
agrees that prior to any such offer or sale, the Company may require, subject
to
the fulfillment of the Company’s obligations under Section 7 of this Agreement,
as a condition to effecting a transfer of the Securities, an opinion of counsel,
acceptable to the Company, as to the registration or exemption therefrom
under
the Securities Act and any state securities acts, if applicable.
(d) At
no
time was the Investor presented with or solicited by any publicly issued
or
circulated newspaper, mail, radio, television or other form of general
advertising or solicitation in connection with the offer, sale and purchase
of
the Securities. To the knowledge of such Investor, such Investor has received
or
has had full access to all the information it requested in connection with
its
investment decision with respect to the Securities to be purchased by such
Investor under this Agreement, including without limitation, the Company’s
filings with the United States Securities and Exchange Commission. Investor
further has had a reasonable opportunity to ask questions of and receive
answers
from the directors, officers and management of the Company concerning the
Company and the transactions contemplated by this Agreement and the Company’s
business, management and financial affairs.
(e) The
Investor acknowledges that the Securities will bear a legend in substantially
the following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR MANDALAY MEDIA, INC. SHALL HAVE RECEIVED AN OPINION
OF
ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND
UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
(f) Neither
the Investor, nor
any
affiliate of the Investor or any person acting on his, her or its behalf,
has
recently sold shares of unregistered Common Stock of the Company.
5. Conditions
to the Closing.
5.1 Conditions
to the Obligations of the Company.
The
obligations of the Company under Section 1 of this Agreement are subject to
the fulfillment, or waiver, of the following conditions on or before the
Closing:
(a) The
representations and warranties of the Investors contained in Section 4
shall be true on and as of the date hereof and the Closing Date with the
same
effect as though such representations and warranties had been made on and
as of
such date (except that any representation or warranty expressly stated to
have
been made or given as of a specific date need be true only as of such
date).
(b) The
Investors shall have delivered payment to the Company for the Securities
pursuant to this Agreement.
(c) The
Investors shall have duly executed and delivered the Transaction Documents
to
which they are parties.
5.2. Conditions
to the Obligations of Each of the Investors.
The
obligations of each of the Investors under Section 1 of this Agreement are
subject to the fulfillment, or waiver, of the following conditions on or
before
each Closing:
(a) The
representations and warranties of the Company contained in Section 3 shall
be true on and as of the date hereof and the Closing Date with the same effect
as though such representations and warranties had been made on and as of
such
date (except that any representation or warranty expressly stated to have
been
made or given as of a specific date need be true only as of such
date).
(b) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(c) The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or prior to the Closing Date.
(d) The
Company shall have duly executed and delivered to each Investor such other
documents relating to the transaction contemplated by this Agreement as such
Investor or its counsel may reasonably request.
(e) The
Company shall have delivered to each Investor an officer’s certificate duly
executed by the Company’s Chief Executive Officer certifying to the fulfillment
of the conditions specified in Sections 5.2(a) through 5.2(c).
6. Additional
Conditions to the Initial Closing.
6.1 Conditions
to the Obligations of the Initial Closing Investors.
In
addition to the conditions set forth in Section 5.2, the obligations of the
Initial Closing Investors under Section 1 of this Agreement are subject to
the fulfillment, or the waiver, of the following conditions on or before
the
Initial Closing.
(a) The
Company shall have duly executed and delivered to ValueAct SmallCap Master
Fund,
L.P. (“VAC”)
the
allonge to the warrant to purchase 1,092,621 shares of Common Stock in the
form
as set forth on Exhibit
D
hereto.
(b) The
Company shall have duly executed and delivered to VAC the allonge to the
warrant
to purchase 1,092,622 shares of Common Stock in the form as set forth on
Exhibit
E
hereto.
(c) The
Company shall have delivered to VAC a duly executed copy of that certain
promissory note issued by the Company to the shareholders of AMV Holdings
Limited, Jack Creswell and Nathan MacLeitch in the form as set forth on
Exhibit
F
hereto.
(d) AMV
Holding Limited shall have duly executed and delivered to VAC that certain
debenture in the form as set forth on Exhibit
G
hereto.
(e) AMV
Holding Limited shall have duly executed and delivered to VAC that certain
guarantee in the form as set forth on Exhibit
H
hereto.
(f) AMV
Holding Limited, Nathaniel MacLeitch in his capacity as Junior Agent (as
defined
therein) and the Junior Lenders (as defined therein) shall have duly executed
and delivered to VAC that certain priority deed in the form as set forth
on
Exhibit
I
hereto.
(g) The
Company and Twistbox Entertainment, Inc. shall have duly executed and delivered
to VAC that certain Second Amendment and Waiver to the Senior Secured Note
due
January 10, 2010 in the form as set forth on Exhibit
J
hereto.
(h) The
Company shall have delivered to the Initial Closing Investors an officer’s
certificate duly executed by the Company’s Chief Executive Officer certifying to
the completion of the acquisition by the Company of 100% of the share capital
of
AMV Holdings Limited and 80% of the share capital of Fierce Media
Limited.
(i) The
Company shall have duly executed and delivered to each Initial Closing Investor
the Escrow Agreement in the form as set forth on Exhibit
K
hereto.
7.Covenants
of the Company.
7.1 Piggyback
Registration Rights. If
at any
time the Company shall determine to register under the Securities Act any
of its
securities (other than on Form S-8 or Form S-4 or their then equivalents
and
other than shares to be issued solely (i) in connection with any acquisition
of
any entity or business, (ii) upon the exercise of stock options, or (iii)
pursuant to employee benefit plans), it shall send to each holder of Registrable
Shares (as defined below), including each holder who has the right to acquire
Registrable Shares, written notice of such determination and, if within thirty
(30) days after receipt of such notice, such holder shall so request in writing,
the Company shall use its commercially reasonable efforts to include in such
registration statement all or any part of the Registrable Shares such holder
requests to be registered therein; provided that, if, in connection with
any
offering involving an underwriting of Common Stock to be issued by the Company,
the managing underwriter shall prohibit the inclusion of shares of Common
Stock
by selling holders in such registration statement or shall impose a limitation
on the number of shares of such Common Stock which may be included in any
such
registration statement because, in its judgment, such limitation is necessary
to
effect an orderly public distribution, and such limitation is imposed pro
rata
with respect to all securities whose holders have a contractual, incidental
(“piggyback”)
right
to include such securities in the registration statement and as to which
inclusion has been requested pursuant to such right and there is first excluded
from such registration statement all shares of Common Stock sought to be
included therein by (i) any holder thereof not having any such contractual,
incidental registration rights, and (ii) any holder thereof having contractual,
incidental registration rights subordinate and junior to the rights of the
holders of Registrable Shares, the Company shall then be obligated to include
in
such registration statement only such limited portion (which may be none)
of the
Registrable Shares with respect to which such holder has requested inclusion
hereunder. “Registrable
Shares”
means
the Shares and the Warrant Shares; provided, however, that any of such shares
shall cease to be Registrable Shares upon any sale of such shares pursuant
to
(i) a registration statement filed under the Securities Act, or (ii) Rule
144
promulgated under the Securities Act.
7.2 Reservation
of Common Stock.
The
Company shall reserve and maintain, from its duly authorized shares of Common
Stock, a sufficient number of shares of Common Stock for issuance hereunder
and
upon exercise of all of the Warrants to be issued hereunder. In the event
that
at any time the then authorized shares of Common Stock are insufficient for
the
Company to satisfy its obligations in full under the Transaction Documents,
the
Company shall promptly take such actions as may be required to increase the
number of authorized shares.
8. Transfer
of Securities.
Each
Investor is aware that the Company will make a notation in its appropriate
records and issue “stop transfer” instructions to its transfer agent with
respect to the restrictions on the transferability of such
Securities.
9. Anti-Dilution.
The
Shares are subject to standard anti-dilution provisions in the event of forward
or reverse stock splits or recapitalizations. For example, if the Company
engages in a two for one reverse stock split, a holder of 100,000 Shares
will be
affected as follows:
Pre-Split
Ownership:
100,000
Shares
Post-Split
Ownership:
50,000
Shares
10. Broker’s
Fees.
The
Investor is aware that, in connection with the Offering, the Company may
pay a
broker’s fee or fees totaling cash fees of 6% of the gross proceeds received by
the Company from the Offering above an aggregate of $4,500,000.
11. Miscellaneous.
11.1 Termination.
This
Agreement may be terminated by the Company or any Investor, by written notice
to
the other parties, if the Initial Closing has not been consummated within
60
days from the date hereof, provided that no such termination will affect
the
right of any party to sue for any breach by the other party (or
parties).
11.2 Successors
and Assigns.
This
Agreement and any rights and obligations hereunder may not be transferred
or
assigned by either party without the prior written consent of the other party.
This Agreement shall inure to the benefit of, and be binding upon the Company
and the Investors and their respective heirs, legal representatives and
permitted assigns.
11.3 Survival.
All
representations, warranties, covenants and agreements contained herein shall
survive the Closing.
11.4 Notices.
All
notices or other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed by certified
or
registered mail, return receipt requested, postage prepaid, as follows:
(a) If
to the
Company, to Mandalay Media, Inc., c/o Trinad Capital L.P., 2121 Avenue of
the
Stars, Suite 2550, Los Angeles, CA 90067, Attention: Chief Financial Officer,
or
to such other address as the Company shall have designated to the Investors
in
writing.
(b) If
to an
Investor, at his, her or its address set forth on Exhibit A,
or at
such other address or addresses as may have been furnished to the Company
in
writing by such Investor.
11.5 Entire
Agreement.
This
Agreement and the Warrant, together with all schedules and exhibits thereto,
embody the entire agreement and understanding between the parties hereto
with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, relating to such subject matter, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and each Investor will execute and deliver such further documents
as may
be reasonably requested in order to give effect to the intention of the parties
under the Transaction Documents.
11.6 Amendments
and Waivers.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either
retroactively or prospectively) with the written consent of (i) the Company,
(ii) VAC and (iii) the other Investors holding a majority of the Shares and
Warrant Shares on an as-converted basis issued hereunder. Subject to the
preceding sentence, any amendment or waiver effected in accordance with this
Section 11.6 shall be binding upon all parties to this Agreement including,
without limitation, any Investor who may not have executed such amendment
or
waiver.
11.7 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall be one and the
same
document.
11.8 Section
Headings.
The
section headings are for the convenience of the parties and in no way alter,
modify, amend, limit, or restrict the contractual obligations of the parties.
11.9 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that
is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
11.10 Governing
Law; Venue; Waiver of Jury Trial.
ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL
PRACTICE LAWS AND RULES 327(b). EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF
NEW YORK, BOROUGH OF MANHATTAN, 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 ANY SUCH COURT, THAT 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 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 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. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY
JURY.
11.11 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever an Investor exercises
a right, election, demand or option owed to such Investor by the Company
under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then, prior to the performance
by the Company of the Company’s related obligation, such Investor may rescind or
withdraw, in its sole discretion from time to time upon written notice to
the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
11.12 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction
and
the execution by the holder thereof of a customary lost certificate affidavit
of
that fact and an agreement to indemnify and hold harmless the Company for
any
losses in connection therewith. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.
11.13 No
Promotion.
Except
as otherwise required by law, the Company agrees that it will not, without
the
prior written consent of VAC in each instance, (i) use in advertising,
publicity, press release or otherwise the name of VAC or any affiliate of
VAC
(each a “VAC
Entity”),
or
any partner or employee of any VAC Entity, nor any trade name, trademark,
trade
device, service mark, symbol or any abbreviation, contraction or simulation
thereof owned by any VAC Entity or (ii) represent, directly or indirectly,
that
any product or any service provided by the Company has been approved or endorsed
by any VAC Entity. This provision shall survive termination of the Transaction
Documents.
[Signature
page to follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first written above.
| |
COMPANY:
|
| |
|
| |
MANDALAY
MEDIA, INC.
|
| |
|
| |
By:
|
/s/
James Lefkowitz
|
| |
|
Name:
|
James
Lefkowitz
|
| |
|
Title:
|
President
|
[Signature
page to Securities Purchase Agreement]
| |
INVESTOR:
VALUEACT
SMALLCAP MASTER FUND, L.P.,
|
| |
By
VA Smallcap Partners, LLC, its General Partner
|
| |
|
| |
By:
|
/s/
David Lockwood
|
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Name:
|
David
Lockwood
|
| |
Title:
|
Managing
Member
|
| |
|
|
| |
TRINAD
CAPITAL MASTER FUND, LTD.
|
| |
|
| |
By:
|
/s/
Robert Ellin
|
| |
Name:
|
Robert
Ellin
|
| |
Title:
|
Director
|
| |
|
|
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|
|
| |
GUBER
FAMILY TRUST
|
| |
|
| |
By:
|
/s/
Peter Guber
|
| |
Name:
|
Peter
Guber
|
| |
Title:
|
Trustee
|
[Signature
page to Securities Purchase Agreement]
Exhibit
C
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE 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. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.
MANDALAY
MEDIA, INC.
WARRANT
|
Warrant
No. [●]
|
Date
of Original Issuance: _____________
|
Mandalay
Media, Inc.,
a
Delaware corporation (the "Company"),
hereby
certifies that, for value received, ______________ or its registered assigns
(the "Holder"),
is
entitled to purchase from the Company up to a total of [●][FIFTY PERCENT OF THE
NUMBER OF SHARES PURCHASED] shares
of
common stock, $0.0001 par value per share (the "Common
Stock"),
of the
Company (each such share, a "Warrant
Share"
and all
such shares, the "Warrant
Shares"),
at an
exercise price equal to $2.67 per share (as adjusted from time to time as
provided in Section 9,
the
"Exercise
Price"),
at any
time and from time to time from and after the date hereof and through and
including October [●], 2013 (the "Expiration
Date"),
and
subject to the following terms and conditions:
1. Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein shall have the meanings given to such terms
in
the Securities Purchase Agreement of even date herewith to which the Company
and
the original Holder are parties (the "Securities
Purchase Agreement").
This
warrant is one of a series of warrants (collectively, the “Warrants”)
issued
pursuant to and in connection with the Securities Purchase
Agreement.
2. Registration
of Warrant.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the "Warrant
Register"),
in the
name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof
for the
purpose of any exercise hereof or any distribution to the Holder, and for
all
other purposes, absent written notice to the contrary.
3. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company at its address
specified herein. Upon any such registration or transfer, a new Warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new
Warrant, a "New
Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to
the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
4. Exercise
and Duration of Warrants.
(a) This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the date hereof to and including the Expiration Date.
At
5:30 p.m., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value;
provided that,
on the
Expiration Date, if the closing price of the Common Stock as reported on
the New
York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market,
the NASDAQ Capital Market or the OTC Bulletin Board, as applicable (the
“Trading
Market”),
exceeds the then applicable Exercise Price, this Warrant shall be deemed
to have
been exercised in full (to the extent not previously exercised) on a "cashless
exercise" basis immediately prior to expiration thereof.
(b) A
Holder
may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached hereto (the "Exercise
Notice")
(with
the attached Warrant Shares Exercise Log), appropriately completed and duly
signed along with the Warrant, and (ii) payment of the then applicable
Exercise Price for the number of Warrant Shares as to which this Warrant
is
being exercised (which may take the form of (x) cash or (y) a "cashless
exercise" pursuant to Section
10
below),
and the date such items are delivered to the Company (as determined in
accordance with the notice provisions hereof) is a "Date
of Exercise."
Execution and delivery of the Exercise Notice shall have the same effect
as
cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.
5. Delivery
of Warrant Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly issue or cause to be
issued
and cause to be delivered to or upon the written order of the Holder a
certificate for the Warrant Shares issuable upon such exercise.
(b) This
Warrant is exercisable, either in its entirety or, from time to time, in
part.
Upon surrender of this Warrant following one or more partial exercises, the
Company shall issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant
Shares.
(c) The
Company's obligations to issue and deliver Warrant Shares in accordance with
the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person
(as
defined herein) or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by
the
Holder or any other Person of any obligation to the Company or any violation
or
alleged violation of law by the Holder or any other Person, and irrespective
of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares.
Nothing
herein shall limit a Holder's right to pursue any other remedies available
to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock
upon
exercise of the Warrant as required pursuant to the terms hereof. "Person"
shall
mean any individual, corporation (including any non-profit corporation),
general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint
stock
company), firm or other enterprise, association, organization, entity or
governmental entity
6. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue
or
transfer tax, withholding tax, transfer agent fee or other incidental tax
or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in
respect
of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall
be
responsible for all other tax liability that may arise as a result of holding
or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall
not
include a surety bond), if requested. Applicants for a New Warrant under
such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company
may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company
as
a condition precedent to the Company's obligation to issue the New
Warrant.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares
which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of persons
other
than the Holder (taking into account the adjustments and restrictions of
Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable. The Company will take all such action as may be necessary
to
assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of
any
securities exchange, over-the-counter bulletin board or automated quotation
system upon which the Common Stock may be listed.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction
of
which the numerator shall be the number of shares of Common Stock 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 clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to
clause
(ii) or (iii) of this paragraph shall become effective immediately after
the
effective date of such subdivision or combination.
(b) Fundamental
Transactions.
If, at
any time while this Warrant, or any portion hereof, is outstanding and unexpired
there shall be (i) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), (ii) a
merger
or consolidation of the Company with or into another Person in which the
Company
is not the surviving entity, or a reverse triangular merger in which the
Company
is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, (iii) a sale of all or substantially all of the Company's assets
to
another Person in one or a series of related transactions, (iv) any tender
offer
or exchange offer (whether by the Company or another Person) completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (v) any reclassification
of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash
or
property (each of (i)-(v), a "Fundamental
Transaction"),
then,
as a part of such Fundamental Transaction, lawful provision shall be made
so
that the Holder shall thereafter be entitled to receive upon exercise of
this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property resulting from a Fundamental Transaction that a Holder upon exercise
of
this Warrant would have been entitled to receive in such Fundamental Transaction
if this Warrant had been exercised immediately before such Fundamental
Transaction, all subject to further adjustment as provided in this Section
9.
The
foregoing provision of this Section
9(b)
shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that
are
at the time receivable upon the exercise of this Warrant. If holders of Common
Stock are given any choice as to the securities, cash or security to be received
in a Fundamental Transaction, then the Holder shall be given the same choice.
If
the per share consideration payable to the Holder for shares in connection
with
any such transaction is in a form other than cash or marketable securities,
then
the value of such consideration shall be determined in good faith by the
Company's Board of Directors. If the per share consideration payable to the
Holder for shares in connection with any such transaction is in a form other
than cash or marketable securities, appropriate adjustment (as determined
in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant with respect to the rights and interests
of
the Holder after the transaction (including provisions for adjustment to
the
Exercise Price), to the end that the provisions of this Warrant shall be
applicable after that event, as near as reasonably may be, in relation to
any
shares or other property deliverable after that event upon exercise of this
Warrant. The terms of any agreement pursuant to which a Fundamental Transaction
is effected shall include terms requiring any such successor or surviving
entity
to comply with the provisions of this Section
9(b)
and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
(c) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) of this Section
9,
the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.
(d) Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th
of a
share, as applicable. The number of shares of Common Stock outstanding at
any
given time shall not include shares owned or held by or for the account of
the
Company, and the disposition of any such shares shall be considered an issue
or
sale of Common Stock.
(e) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will promptly compute such adjustment in accordance
with
the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise
of
this Warrant (as applicable), describing the transactions giving rise to
such
adjustments and showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company's transfer agent.
(f) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver
to the
Holder a notice describing the material terms and conditions of such
transaction, at least ten business days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order
to
participate in or vote with respect to such transaction, and the Company
will
take all steps reasonably necessary in order to insure that the Holder is
given
the practical opportunity to exercise this Warrant prior to such time so
as to
participate in or vote with respect to such transaction; provided,
however,
that
the failure to deliver such notice or any defect therein shall not affect
the
validity of the corporate action required to be described in such
notice.
10. Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise.
The
Holder may deliver immediately available funds to an account designated by
the
Company; or
(b) Cashless
Exercise.
The
Holder may notify the Company in an Exercise Notice of its election to utilize
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
average of the closing bid and asked prices of the Common Stock quoted in
the
Over-The-Counter Market Summary or the last reported sale price of Common
Stock
or the closing price quoted on any other Trading Market on which the Common
Stock is listed, whichever is applicable, for the five trading days immediately
prior to (but not including) the Exercise Date.
B
= the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder,
and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
11. No
Rights as Stockholder.
Until
the exercise of this Warrant, the Holder shall not have or exercise any rights
by virtue hereof as a stockholder of the Company.
12. No
Fractional Shares.
No
fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would otherwise
be issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the closing price of one Warrant Share as reported by the
applicable Trading Market on the date of exercise.
13. Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed
given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section
13
prior to
5:30 p.m. (New York City time) on a business day, (ii) the next business
day
after the date of transmission, if such notice or communication is delivered
via
facsimile at the facsimile number specified in this Section
13
on a day
that is not a business day or later than 5:30 p.m. (New York City time) on
any
business day, (iii) the business day following the date of mailing, if sent
by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for
such
communications shall be: (i) if to the Company, to Mandalay Media, Inc.,
2121
Avenue of the Stars, Suite 2550, Los Angeles, CA 90067 Attention: President,
Facsimile No.: 310-277-2741 or such other address as the Company shall so
notify
the Holder, or (ii) if to the Holder, to the address or facsimile number
appearing on the Warrant Register or such other address or facsimile number
as
the Holder may provide to the Company in accordance with this Section
13.
14. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 10 business
days'
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged
or any
corporation resulting from any consolidation to which the Company or any
new
warrant agent shall be a party or any corporation to which the Company or
any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as shown
on
the Warrant Register.
15. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the
Company and the Holder and their successors and assigns.
(b) ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES
327(b).
EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND
FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, 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 ANY SUCH COURT,
THAT
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 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 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. THE COMPANY HEREBY WAIVES
ALL
RIGHTS TO A TRIAL BY JURY.
(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) This
Warrant may be executed and acknowledged in one or more counterparts by the
different parties hereto, each of which when executed shall be deemed to
be an
original but all of which taken together shall constitute one and the same
instrument.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its
authorized officer as of the date first indicated above.
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MANDALAY
MEDIA, INC.
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By:
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Name:
|
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Title:
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Acknowledged
and accepted:
[●]
[Signature
Page to Warrant]
FORM
OF EXERCISE NOTICE
To
be
executed by the Holder to exercise the right to purchase shares of Common
Stock
under the foregoing Warrant.
To:
MANDALAY MEDIA, INC.
The
undersigned is the Holder of Warrant No. _______ (the "Warrant")
issued
by Mandalay Media, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.
|
(1)
|
The
Warrant is currently exercisable to purchase a total of ______________
Warrant Shares.
|
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(2)
|
The
undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the
Warrant.
|
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(3)
|
The
Holder intends that payment of the Exercise Price shall be made
as (check
one):
|
____ "Cash
Exercise" under Section 10
____ "Cashless
Exercise" under Section 10
|
(4)
|
If
the Holder has elected a Cash Exercise, the holder shall pay the
sum of
$____________ to the Company in accordance with the terms of the
Warrant.
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(5)
|
Pursuant
to this exercise, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the
Warrant.
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(6)
|
Following
this exercise, the Warrant shall be exercisable to purchase a total
of
______________ Warrant Shares.
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Dated: ,
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Name
of Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on
the face of
the Warrant)
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Warrant
Shares Exercise Log
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Date
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Number of Warrant
Shares Available to be
Exercised
|
|
Number of Warrant Shares
Exercised
|
|
Number of
Warrant Shares
Remaining to
be Exercised
|
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MANDALAY
MEDIA, INC.
WARRANT
ORIGINALLY ISSUED OCTOBER
[●], 2008
WARRANT
NO. [●]
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase ____________ shares of Common Stock to which such Warrant
relates and appoints ________________ attorney to transfer said right on
the
books of the Company with full power of substitution in the
premises.
Dated: _______________,
____
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(Signature
must conform in all respects to name of holder as specified on
the face of
the Warrant)
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Address
of Transferee
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