THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE
AMENDS AND RESTATES THAT CERTAIN SENIOR SECURED NOTE DATED AS OF JULY 30, 2007
(AS THE SAME MAY HAVE BEEN AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME
TO TIME PRIOR TO THE DATE HEREOF) ISSUED IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL
TO SIXTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($16,500,000.00)
PURSUANT TO THE SECURITIES PURCHASE AGREEMENT, DATED AS OF JULY 30, 2007 (AS THE
SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
“SECURITIES PURCHASE AGREEMENT”) BY AND AMONG THE COMPANY AND THE INVESTOR PARTY
THERETO, AND THIS NOTE IS ENTITLED TO THE BENEFITS OF THE SECURITIES PURCHASE
AGREEMENT AND TO THE EXERCISE OF THE REMEDIES PROVIDED THEREBY OR OTHERWISE
AVAILABLE IN RESPECT THEREOF.
ALL
INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE SUBORDINATION AGREEMENT, DATED AS OF JUNE 21, 2010 (THE
"SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG THE INVESTOR, THE COMPANY,
TRINAD CAPITAL MASTER FUND, LTD. AND NEUMEDIA, INC.
$
3,500,000
TWISTBOX
ENTERTAINMENT, INC.
Section
1. General.
FOR VALUE RECEIVED, TWISTBOX
ENTERTAINMENT, INC., a Delaware corporation (the “Company”), hereby promises to
pay to the order of VALUEACT SMALLCAP MASTER FUND, L.P. (“ValueAct”, and together with
its successors and assigns, the “Investor”), the principal sum
of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($3,500,000.00),
or such lesser amount as shall then equal the outstanding principal amount
hereof, together with interest (“Interest”) thereon at a rate
(the “Interest Rate”)
equal to 10.0% per annum from, and including, June 21, 2010 to, but excluding,
June 21, 2013, each computed on the basis of a year of 360 days comprised of
twelve 30 day months. All unpaid principal, together with any then
unpaid and accrued interest and other amounts payable hereunder, shall be due
and payable on the earlier of (i) June 21, 2013 (the “Maturity Date”) or (ii) when
such amounts become due and payable as a result of, and following, an Event of
Default in accordance with Section 3.
This Note (the “Note”) shall be prepayable
without penalty, in whole or in part, at any time at the Company’s option at
100% of the principal amount plus accrued but unpaid interest to and including
the date of prepayment. Any prepayments will be applied first to any
accrued but unpaid interest and then to unpaid principal.
Capitalized terms used herein without
definition have the meanings assigned thereto in the Securities Purchase
Agreement. In the event of any conflict between this Note and the Securities
Purchase Agreement, the provisions of this Note shall control. Unless the
context otherwise requires, an accounting term not otherwise defined has the
meaning assigned to it in accordance with the United States generally accepted
accounting principles (“GAAP”).
Interest on this Note shall accrue
from, and including, the date hereof through and until repayment of the
principal amount of this Note and payment of all Interest in full, and shall be
payable in cash semi-annually in arrears on each January 1 and July 1 that the
Notes are outstanding or, if any such date shall not be a Business Day, on the
next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an “Interest Payment Date”), to
holders of record on each preceding December 15 and June 15 to the applicable
Interest Payment Date, beginning on July 1, 2010, by wire transfer of
immediately available funds to an account at a bank designated in writing by the
Investor on reasonable notice.
Notwithstanding the foregoing
provisions of this Section 1, any overdue principal of, overdue Interest on, and
any other overdue amounts payable under, this Note shall bear interest, payable
on demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment at a rate equal to the sum of (i)
the Interest Rate and (ii) an additional two percent (2.00%) per
annum. Subject to applicable law, any interest that shall accrue on
overdue interest on this Note as provided in the preceding sentence and shall
not have been paid in full in cash on or before the next Interest Payment Date
to occur after the date on which the overdue interest became due and payable
shall itself be deemed to be overdue interest on this Note to which the
preceding sentence shall apply. In addition, notwithstanding the
foregoing provisions of this Section 1, if an Event of Default has occurred and
is continuing, then, so long as such Event of Default is continuing, all
outstanding principal of this Note shall bear interest, after as well as before
judgment, at a rate equal to the sum of (i) the Interest Rate and (ii) an
additional two percent (2.00%) per annum.
Notwithstanding
anything to the contrary set forth herein, until (and including) the Interest
Payment Date occurring on January 1, 2012, the Company may, at its option, in
lieu of making any cash payment to the Investor with respect to the Interest
Payment Dates occurring on or before January 1, 2012, elect that the amount of
any Interest due and payable on such date be added to the principal amount then
due under this Note. This election by the Company to pay the Interest
by adding the amount of such payment to the principal under this Note is
hereafter referred to as the “PIK Election.” The
Company shall provide written notice of the PIK Election to the Investor at
least five (5) days before the applicable Interest Payment Date. For the
avoidance of doubt, immediately after each PIK Election, the outstanding
principal amount of the Note shall equal the sum of (i) the outstanding
principal amount of the Note immediately before the PIK Election, and (ii) the
amount of Interest otherwise due and payable on the applicable Interest Payment
Date.
In
accordance with Section 1(d) of the letter agreement dated as of June 21, 2010,
by and among the Investor, the Guarantor, the Lead Participating Investors party
thereto, Jonathan Cresswell and Nathaniel MacLeitch (the “Letter Agreement”), if and to
the extent that, the Guarantor or any other Obligor (as defined in the
Subordination Agreement) receives cash proceeds from the sale of the Assets (as
defined in the Letter Agreement) pursuant to Section 1(d)(x) of the Letter
Agreement, the Guarantor or such Obligor shall promptly: remit (and the First
Lien Agent and the First Lien Creditors (each as defined in the Subordination
Agreement) consent to such remittance) such cash sales proceeds to Investor to
pay in cash the obligations then outstanding under this Note (and Investor
agrees that it will accept such amounts in payment of the Note and, to the
extent such amounts represent a satisfaction in full in cash of the principal
amount of this Note and all interest, fees, and all other amounts then due under
the Note, it will mark this Note “Cancelled” and return it to the
Company).
Section
2. Repurchase Right Upon a
Fundamental Change.
Notwithstanding
anything to the contrary contained herein and in addition to any other right of
the Investor, upon the occurrence of a Fundamental Change the Investor shall
have the right for a period of thirty days, by written notice to the Company, to
require the Company to repurchase all of this Note on the repurchase date that
is five Business Days after the date of delivery of such notice to the Company
at a price equal to 100% of the outstanding principal amount under this Note
plus all accrued and unpaid interest on such principal amount to, but excluding,
the date of such repurchase plus any other amounts due hereunder. A “Fundamental Change” shall be
deemed to have occurred upon the occurrence of any of the following events: (a)
any merger or consolidation of the Company with or into another Person or any
sale of all or substantially all of the stock or assets of the Company, unless
(i) the holders of capital stock of the Company immediately prior to such
transaction are entitled to exercise, directly or indirectly, 50% or more of the
voting power of all shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving corporation, and (ii) such
Fundamental Change does not result in a reclassification, conversion, exchange
or cancellation of the Common Stock, (b) the approval of a plan relating to the
liquidation or dissolution of the Company by its stockholders, (c) the Company’s
first domestic or foreign public offering of its capital stock, (d) a
consolidation or merger of NeuMedia, Inc., formerly known as Mandalay Media,
Inc. (the “Guarantor”)
with or into any other corporation or corporations, (e) a sale of all or
substantially all of the assets of the Guarantor, (f) the issuance and/or sale
by the Guarantor in a single or integrated transaction of shares of common stock
(or securities convertible into shares of common stock) constituting a majority
of the shares of common stock outstanding immediately following such issuance
(treating all securities convertible into shares of common stock as having been
fully converted and all options and other rights to acquire shares of common
stock or securities convertible into shares of common stock as having been fully
exercised), (g) any other form of acquisition or business combination where the
Guarantor is the target of such acquisition and where a change in
control occurs such
that the Person or entity seeking to acquire the Guarantor has the power to
elect a majority of the board of directors of the Company as a result of the
transaction (each such event an "Acquisition"), and (h) any
liquidation, dissolution or winding up of the Guarantor, provided, however, that
(A) any conversion of the two senior notes, dated as of the date hereof, issued
by the Guarantor in the principal amount of $1,500,000 and $1,000,000,
respectively (the “NeuMedia
Notes”) into equity of the Guarantor, (B) the exercise of any rights
under a Warrant Agreement between the Guarantor and each of the purchasers of
the NeuMedia Notes and the issuance of shares of capital stock of the Guarantor
in respect of such exercise or (C) the issuance of any capital stock or options,
rights or warrants to purchase capital stock of the Guarantor to Rob Ellin,
Trinad, Peter Guber, Paul Schaeffer or any of their respective affiliates, shall
not constitute a change of control. A “Person” means any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or government or
other entity.
Section
3. Events of
Defaults.
The
occurrence of any of the following shall constitute an “Event of Default” under this
Note:
(a) The
Company shall fail to pay any principal owing under this Note when due;
or
(b) The
Company shall fail to pay any interest owing under this Note when due, and such
failure shall continue for fourteen (14) days; or
(c) The
Guarantor, the Company or any Subsidiary shall fail to observe or perform any
other covenant, obligation, condition or agreement contained in this Note (other
than those specified in clauses (a) or (b) above), the Amended and Restated
Guaranty, dated as of the date hereof, made by Guarantor in favor of the
Investor (as the same may be amended, supplemented or otherwise modified from
time to time, and together with all other documents, agreements and instruments
executed in connection therewith, the “Guaranty”) or the Amended and
Restated Guarantee and Security Agreement, dated the date hereof, among the
Company, the Guarantor, the subsidiaries party thereto and ValueAct SmallCap
Master Fund, L.P., as Collateral Agent for the benefit of the Investor (as the
same may be amended, supplemented or otherwise modified from time to time, and
together with all other documents, agreements and instruments executed in
connection therewith, the “Guarantee and Security
Agreement”), and, to the extent such failure is capable of being cured,
such failure shall continue for fourteen (14) days after notice is given to the
Company by the Investors holding more than 25% of the aggregate principal
balance of the Notes then outstanding; or
(d) The
Guarantor, the Company or any Subsidiary shall (i) fail to make any payment when
due under the terms of any bond, debenture, note or other evidence of
Indebtedness (as defined below) to be paid by the Guarantor, the Company or such
Subsidiary (excluding this Note, which default is addressed by clauses (a) and
(b) above, but including any other evidence of Indebtedness of the Guarantor,
the Company or such Subsidiary) and such failure shall continue beyond any
period of grace provided with respect thereto, or (ii) default in the observance
or performance of any other agreement, term or condition contained in any such
bond, debenture, note or other evidence of Indebtedness, and the effect of such
failure or default is to cause, or permit the holder thereof to cause,
Indebtedness of the Guarantor, the Company and the Subsidiaries in an aggregate
amount of Two Hundred and Fifty Thousand Dollars ($250,000) or more to become
due prior to its stated date of maturity; or
(e) An
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of the
Guarantor, the Company or any Subsidiary or its debts, or of a substantial part
of its assets, under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Guarantor, the Company or any Subsidiary or for a substantial part of
the Guarantor’s, the Company’s or such Subsidiary’s assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;
or
(f) The
Guarantor, the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (e) of this Section, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Guarantor, the Company or any Subsidiary or for a
substantial part of the Guarantor’s, the Company’s or such Subsidiary’s assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the
foregoing; or
(g) Except
for such matters disclosed on Exhibit A hereto, one or more judgments for the
payment of money in an amount in excess of Two Hundred and Fifty Thousand
Dollars ($250,000) in the aggregate, outstanding at any one time, shall be
rendered against the Guarantor, the Company and the Subsidiaries and the same
shall remain undischarged for a period of sixty (60) days during which execution
shall not be effectively stayed, or any judgment, writ, assessment, warrant of
attachment, or execution or similar process shall be issued or levied against a
substantial part of the property of the Guarantor, the Company or any Subsidiary
and such judgment, writ, or similar process shall not be released, stayed,
vacated or otherwise dismissed within sixty (60) days after issue or levy;
or
(h) Any
Note, the Guarantee and Security Agreement or the Guaranty shall be asserted in
writing by the Guarantor, the Company or any Subsidiary not to be in full force
and effect, or the Guarantor, the Company or any Subsidiary shall disavow any of
its obligations thereunder; or
(i) Any
Lien purported to be created under the Guarantee and Security Agreement shall be
asserted by the Company or any Subsidiary not to be, a valid and perfected Lien
on any Collateral, with the priority required by the Guarantee and Security
Agreement; or
(j) The
Company shall have failed to make filings within sixty (60) days of the date
hereof with the United States Patent and Trademark Office in respect of the
security interests granted in the Company’s Trademarks (as defined in the
Guarantee and Security Agreement) to the Investor under the Guarantee and
Security Agreement; or
(k) Any
Event of Default under and as defined in the Guarantee and Security Agreement
shall have occurred; or
(l) Guarantor
is in default under the NeuMedia Notes.
Section
4. Rights Of Investor Upon
Default.
Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 3(e) or
3(f) hereof) and at any time thereafter during the continuance of such Event of
Default, the Investor may, upon the approval of Investor holding more than 25%
of the aggregate principal balance of the Notes then outstanding, by written
notice to the Company, declare all outstanding amounts payable by the Company
hereunder to be immediately due and payable without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding. Upon the occurrence
or existence of any Event of Default described in Sections 3(e) or 3(f) hereof,
immediately and without notice, all outstanding amounts payable by the Company
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Investor may exercise, upon
the approval of Investor holding more than a majority of the aggregate principal
balance of the Notes, any other right, power or remedy permitted to it by law,
either by suit in equity or by action at law, or both
Section
5. Affirmative Covenant, Board
Observer Rights. For as long as the Note remains outstanding,
the Investor shall have the right, but not the obligation, to designate one
individual reasonably acceptable to the Guarantor to serve as an observer (the
“Observer”) who shall be
entitled to attend all meetings of each of the boards of directors of the
Guarantor, the Company, or any Subsidiary (each, a “Board”), and any committee
thereof in a nonvoting, observer capacity, and to receive (on a concurrent
basis) copies of all notices, minutes, consents and other materials that the
Guarantor provides to its directors; provided, however, that the Observer shall
execute a confidentiality agreement, reasonably satisfactory to the Guarantor,
with respect to the information to be provided or the matters to be discussed at
any meeting of the Board. Notwithstanding the foregoing, the Guarantor reserves
the right to withhold any information and exclude such Observer from any meeting
of the Board, or any portion thereof, if access to such information or
attendance at such meeting could (based on the advice of the Guarantor's
counsel) adversely affect the attorney-client privilege with respect to any
matters to be discussed or any matters included in the information to be
distributed. The Guarantor hereby approves Ms. Allison Bennington and
Mr. Jimmy Price to serve as an Observer.
Section
6. Negative
Covenants.
Until all
principal and interest and any other amounts due and payable under this Note
have been paid in full in cash, the Company (and the Guarantor, in the case of
Section 6(b) and 6(e)) shall not, and shall not permit any Subsidiary to,
without the prior written approval of the Investor holding a majority in
principal amount of the Notes:
(a) Indebtedness. Incur,
create, assume or permit to exist any Indebtedness, except
(i) guarantees
of the NeuMedia Notes by the Company and any Grantor (as defined in the
Guarantee and Security Agreement), provided that the outstanding principal
amount (and the guaranteed amount permitted under this Section 6(a)(i)) of the
NeuMedia Notes does not exceed $2,500,000;
(ii) Indebtedness
under this Note, the Guarantee and Security Agreement, the guarantee given by
AMV Holding Limited and the debenture securing such guarantee dated August 23,
2008; and
(iii) unsecured
Indebtedness, provided the Indebtedness is expressly subordinate in right of
payment to the Note on terms acceptable to ValueAct.
“Indebtedness” means (i) all
indebtedness, whether or not contingent, for borrowed money or for the deferred
purchase price of property or services (but excluding trade accounts payable in
the ordinary course of business not overdue for more than sixty (60) days), (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.
(b) Affiliate
Transaction. Excluding (x) the transactions with Affiliates as
of the date hereof and as set forth on Exhibit B hereto (each, an “Existing Affiliate
Transaction”) and (y) transactions between or among the Company, the
Guarantor and its Subsidiaries, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate (each, an “Affiliate Transaction”),
unless
(i) the
Affiliate Transaction is in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor’s or such Subsidiary’s business and
upon fair and reasonable terms no less favorable to the Guarantor or such
Subsidiary than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate; and
(A) if
the Affiliate Transaction or series of related Affiliate Transactions involves
aggregate consideration less than or equal to $250,000, the Guarantor shall
deliver to the Investor a resolution of the Board of Directors of the Guarantor
set forth in an officers’ certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
the Guarantor; and
(B) if
the Affiliate Transaction or series of related Affiliate Transactions involves
aggregate consideration greater than $250,000, the Guarantor shall either
deliver to the Investor an opinion as to the fairness to the Guarantor of such
Affiliate Transaction from financial point of view issued by an accounting,
appraisal or investment banking firm of national standing or shall receive the
Investor’s affirmative written consent.
For the avoidance of doubt, neither
this covenant nor any other shall prohibit or restrict any distribution of any
cash between any direct or indirect wholly-owned subsidiaries of the Guarantor
or to the Guarantor from any direct or indirect wholly-owned subsidiary of the
Guarantor.
(c) Dividends. Declare or make,
or agree to declare or make, directly or indirectly, any dividends on any Equity
Interests (as defined in the Guarantee and Security Agreement) or apply any of
its property or assets to the purchase, redemption or other retirement of, or
set apart any sum for the payment of any dividends on, or for the purchase,
redemption or other retirement of, or make any other distribution by reduction
of capital or otherwise in respect of, any Equity Interests, except repurchases
of equity incentive grants issued to employees, officers, directors and agents
of the Company and its Subsidiaries in the ordinary course of business, provided
that such repurchases shall not exceed $150,000 in any twelve (12) month
period.
(d) Subsidiaries. Create, own or
acquire any Subsidiary (other than any Subsidiary owned as of the date hereof),
except that the Company and its wholly-owned subsidiaries may create or own
wholly-owned Subsidiaries, provided that any such Subsidiary created or owned in
reliance of this Section 6(d) shall execute a joinder to the Guarantee and
Security Agreement in form and substance satisfactory to the Investor in its
sole discretion.
(e) Management. Pay any
compensation (including, without limitation, base salary, bonus and benefits),
management fees or other payments of any kind to Rob Ellin and/or Trinad Capital
Management, LLC or any of its affiliates in the aggregate in any twelve (12)
month period in excess of $360,000 provided however that
the Guarantor may only make cash payments thereon up to $180,000 in any such
twelve (12) month period and any amounts not paid in cash shall be deferred
until this Note is paid in full; provided further that
all or part of the deferred portion may be paid in kind by issuance of Guarantor
common stock on such terms as may be approved by the disinterested directors of
the Guarantor’s Board of Directors (which shall, for such purposes, not include
Rob Ellin, Peter Guber and Paul Schaeffer).
Section
7. Defenses.
The
obligations of the Company under this Note shall not be subject to reduction,
limitation, impairment, termination, defense, set-off, counterclaim or
recoupment for any reason.
This Note
is a senior secured obligation of the Company. The Company’s
obligations under this Note are (i) guaranteed by the Guarantor and by the
subsidiaries of the Guarantor and (ii) secured by a security interest in
substantially all of the assets of the Guarantor and such Subsidiaries, in each
case pursuant to the terms and provisions of the Guaranty and the Guarantee and
Security Agreement. This Note is subject to the terms and provisions
of the Guaranty and the Guarantee and Security Agreement, and the Investor, by
its acceptance of this Note, hereby acknowledges and agrees to such terms and
provisions.
Section
8. Transfer of Note; Lost or
Stolen Note.
(a) The
Investor may sell, transfer or otherwise dispose of all or any part of this Note
(including without limitation pursuant to a pledge) to any Person or entity as
long as such sale, transfer or disposition is in accordance with the provisions
of the Securities Purchase Agreement. From and after the date of any
such sale, transfer or disposition, the transferee hereof shall be deemed to be
the holder of a Note in the principal amount acquired by such transferee, and
the Company shall, as promptly as practicable, issue and deliver to such
transferee a new Note identical in all respects to this Note, in the name of
such transferee and, if such transferee acquires less than the entire principal
amount of this Note, the Company shall contemporaneously issue to the Investor a
new Note identical in all respects to this Note, representing the outstanding
balance of this Note. The Company shall be entitled to treat the original
Investor as the holder of this entire Note unless and until it receives written
notice of the sale, transfer or disposition hereof.
(b) Upon
receipt by the Company of evidence of the loss, theft, destruction or mutilation
of this Note, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company, and upon surrender and
cancellation of the Note, if mutilated, the Company shall execute and deliver to
the Investor a new Note identical in all respects to this Note.
Section
9. Attorneys’ and Collection
Fees.
Should
the indebtedness evidenced by this Note or any part hereof be collected at law
or in equity or in bankruptcy, receivership or other court proceedings, the
Company agrees to pay, in addition to the principal and interest due and payable
hereon, all costs of collection, including reasonable attorneys’ fees and
expenses, incurred by the Investor or its agent in collecting or enforcing this
Note.
Section
10. Indemnification
(a) The
Company shall indemnify the Investor, and any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Investor (each an “Affiliate” of the Investor)
(each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including the fees, charges, disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee by a third
party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Note, the Securities Purchase Agreement, the Guarantee and
Security Agreement, the Guaranty or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of or the use of the proceeds
therefrom, (ii) the breach by the Company or any Subsidiary of any
representation, warranty, covenant or agreement contained herein, in the
Securities Purchase Agreement, the Guaranty or in the Guarantee and Security
Agreement, or (iii) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by judgment of a court of competent jurisdiction to have
primarily resulted from the gross negligence or willful misconduct of such
Indemnitee.
(b) To
the extent permitted by applicable law, the Company shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of, in
connection with, or as a result of, this Note, the Securities Purchase
Agreement, the Guarantee and Security Agreement or any agreement or instrument
contemplated hereby or thereby, or the use of the proceeds thereof, other than
claims predicated upon the gross negligence or willful misconduct of such
Indemnitee.
Section
11. Waivers.
(a) The
Company hereby waives presentment, demand for payment, notice of dishonor,
notice of protest and all other notices or demands in connection with the
delivery, acceptance, performance or default of this Note. No delay
by the Investor in exercising any power or right hereunder shall operate as a
waiver of any power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof, or the exercise
thereof, or the exercise of any other power or right hereunder or otherwise; and
no waiver whatsoever or modification of the terms hereof shall be valid unless
set forth in writing by the Investor and then only to the extent set forth
therein.
(b) The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Note; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Investor, but shall suffer and permit the
execution of every such power as though no such law has been
enacted.
Section
12. Amendments.
No
amendment, modification or other change to, or waiver of any provision of, this
Note may be made unless such amendment, modification or change is set forth in
writing and is signed by the Company and Investor holding more than 75% of the
aggregate principal balance of the Notes.
Section
13. Governing Law; Jurisdiction;
Consent to Service of Process; Waiver of Jury Trial.
(a) THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY 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).
(b) THE
COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES’ DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT IN CONNECTION WITH THIS NOTE OR THE NEUMEDIA NOTES,
OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT INVESTOR MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COMPANY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) THE
COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT
MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE, THE SECURITIES PURCHASE AGREEMENT OR THE GUARANTEE AND
SECURITY AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 15. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
(e) EACH
PARTY HERETO 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 NOTE, THE SECURITIES PURCHASE
AGREEMENT, THE GUARANTEE AND SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section
14. Successors and
Assigns.
The terms
and conditions of this Note shall inure to the benefit of and be binding upon
the respective successors (whether by merger or otherwise) and permitted assigns
of the Company and the Investor. The Company may not assign its
rights or obligations under this Note.
Section
15. Notices.
Whenever
notice is required to be given under this Note, unless otherwise provided
herein, such notice shall be delivered in accordance with Section 9.4 of the
Securities Purchase Agreement.
Section
16. Entire
Agreement.
The
Securities Purchase Agreement, the Notes, the Guaranty, the Guarantee and
Security Agreement and the other Secured Transaction Documents (as defined in
the Guarantee and Security Agreement) constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereto and thereof.
Section
17. Headings.
The
headings used in this Note are used for convenience only and are not to be
considered in construing or interpreting this Note.
Section
18. Severability.
In case
any one or more of the provisions of this Note shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the fullest
extent permitted by law.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Amended and Restated Senior
Subordinated Secured Note to be duly executed by its duly authorized officer as
of the date indicated below.
Date: June
21, 2010
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TWISTBOX
ENTERTAINMENT, INC.
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By:
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Name:
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Title:
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Consented
by (pursuant to the
Guaranty,
given as of June 21,
2010, by
the Guarantor to the
Investors):
NEUMEDIA,
INC., formerly known as Mandalay Media, Inc.
Note No.
[2]
Amount:
$3,500,000
Investor
Name: ValueAct SmallCap Master Fund, L.P.
Address:
Telephone:
Facsimile:
EXHIBIT
A
Existing
Litigation
1. Any
litigation arising from the conduct of the AMV subsidiaries after the date of
this Note.
2. Any
claim or litigation involving Vivid Media, Inc.
3. Any
claims or litigation involving Penthouse.
4. Any
claims or litigation involving Cardplayer.
5. Any
claims or litigation involving former legal counsel to NeuMedia,
Inc.
EXHIBIT
B
Existing
Affiliate Transactions
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-
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Trinad
management agreement - $90,000 per quarter through September
2011;
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Trinad
– rental sublet of Century City office – month to month – presently at
$5,000 per month; and
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Berkshire
holdings - rental of Sherman Oaks office premises - $21,000 per
month through July 15, 2010.
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