GUARANTY
This
Guaranty (the “
Guaranty ”)
is given as of February 12, 2008, by MANDALAY
MEDIA, INC .,
a Delaware corporation (“
Guarantor ”)
to
VALUEACT SMALLCAP MASTER FUND, L.P. (“
ValueAct ”).
WHEREAS,
Guarantor has entered into an Agreement and Plan of Merger
dated as of December 31, 2007, by and among Guarantor,
Twistbox Acquisition, Inc., a Delaware corporation and a
wholly-owned subsidiary of Guarantor, Twistbox Entertainment,
Inc. (the “
Company ”)
and Adi McAbian and Spark Capital, L.P. as representatives of the
stockholders of the Company, as the same may be amended from time
to time (the “
Merger Agreement ”),
pursuant to which Guarantor will acquire all of the capital stock
of the Company;
WHEREAS,
the Company is indebted to ValueAct in the original principal
amount of $16,500,000 pursuant to a Senior Secured Note due
January 30, 2010, dated July 30, 2007, as amended (the
“
Note ”);
WHEREAS,
each of ValueAct, Guarantor and the Company desire to amend
the Note; and
WHEREAS,
ValueAct is willing to enter into such amendment on the
condition that the Guarantor enter into this Guaranty
.
NOW,
THEREFORE, the Guarantor, in consideration of the foregoing,
agrees as follows :
1.
Guaranty .
Subject to the other terms and the limitations contained in this
Guaranty, the Guarantor does hereby guarantee to ValueAct the
payment by the Company of up to $8,250,000 of principal (the
“
Guaranteed Amount ”)
under the Note in accordance in all material respects with the
terms, conditions and limitations contained in the Note (the
“
Obligations ”).
In the event of a default in payment of the Obligations by the
Company under the Note, upon receipt of written notice of such
default from ValueAct (which notice shall specify the nature of
such default and any dispute between ValueAct and the Company with
respect thereto), the Guarantor shall forthwith pay the
same,
provided ,
however ,
that Guarantor may (or may cause the Company) to cure such default
within a period of 5 business days after the date on which written
notice specifying such default shall have been given by ValueAct to
the Guarantor. The
Guarantor’s obligations under this Guaranty shall be subject
to the limitation that in no event shall the Guarantor be required
to expend more than the Guaranteed Amount
in
the performance of its obligations under this Guaranty and in no
event shall the Guarantor be required to expend any amount with
respect to interest, fees, costs, expenses or other
amounts.
2.
Scope and Duration of Guaranty .
Subject to the limitations set forth herein, this Guaranty shall
continue in full force and effect until the Company or the
Guarantor shall have satisfactorily performed or fully discharged
the Obligations. Further, this Guaranty (a) shall remain in full
force and effect without regard to, and shall not be affected or
impaired by any invalidity, irregularity or unenforceability in
whole or in part of this Guaranty, and (b) shall be discharged only
by complete performance of the undertakings contained herein
(subject to the limitations set forth herein); provided, that the
Guarantor shall have the full benefit of all defenses, setoffs,
counterclaims, reductions, diminution or limitations of any
Obligations available to the Company pursuant to or arising from
the Note or
otherwise .
3.
Waivers by Guarantor .
The Guarantor hereby waives, as a condition precedent to the
performance of its obligations hereunder, (a) notice of acceptance
hereof, (b) any requirement that, after a
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