ESCROW AGREEMENT
 
ESCROW AGREEMENT, made as of the 23rd day of October, 2008, by and between
Mandalay Media, Inc., a Delaware corporation (the “Company”), the investors
listed on the Schedule of Investors attached hereto as Exhibit A (each
individually, an “Investor” and collectively, “Investors”) and American Stock
Transfer and Trust Company, LLC, as Escrow Agent (the “Escrow Agent”).
 
WITNESSETH:
 
WHEREAS, the Company is offering in a private placement (the “Offering”) a
minimum of up to an aggregate of 1,685,393 shares (the “Minimum Shares”) of its
common stock, $0.0001 par value per share (“Common Stock”) and a maximum of up
to an aggregate of 3,370,786 shares of Common Stock (the “Maximum Shares” and
collectively with the Minimum Shares, the “Shares”), at a purchase price of
$2.67 per share (the “Purchase Price”) and warrants to purchase a maximum of up
to an aggregate of 1,685,393 shares of Common Stock (the “Warrants”) (the Shares
and the Warrants collectively, the “Securities”), pursuant to a Securities
Purchase Agreement entered into by and among the Company and certain investors,
as may be amended, modified or otherwise supplemented from time to time (the
“Purchase Agreement”);
 
WHEREAS, the Company desires that all funds received in payment for the
Securities from each Investor, as applicable (the “Aggregate Subscription
Payments”) will be placed into a segregated account with the Escrow Agent (the
“Escrow Account”) until such time as the release or return of such Aggregate
Subscription Payments are required pursuant to Section 4 hereof;
 
WHEREAS, the Escrow Agent has consented to act as escrow agent in connection
with the Offering, subject to the terms and conditions hereinafter set forth;
 
NOW, THEREFORE, in consideration of the premises and mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:
 
1. The Company hereby appoints the Escrow Agent to serve as escrow agent in
connection with the Offering in accordance with the terms and conditions herein
set forth, and the Escrow Agent hereby accepts such appointment.
 
2. Funds received from time to time from Investors in payment for the Securities
for which they have subscribed pursuant to the Purchase Agreement (each such
payment, a “Subscription Payment”) shall be deposited with the Escrow Agent as
follows:
 
(a) The Company shall direct Investors to wire transfer each respective
Subscription Payment, in immediately available funds, to: 

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JP Morgan Chase Bank
55 Water Street
New York, NY
ABA# 021 000 021
Account # 323-062539
Attention: Henry Reinhold

The Escrow Agent shall advise the Company in writing as to the name of each
Investor from whom a Subscription Payment by wire transfer has been received,
and shall notify the Company orally (confirming such notice in writing) when the
Aggregate Subscription Payments so received equals or exceeds $4,400,000.
 
3. The Escrow Account shall not be an interest-bearing account.
 
4. The Aggregate Subscription Payments to be held in the Escrow Account shall be
subject to, and distributed to the Company in accordance with, the following
provisions:
 
Following the receipt by the Escrow Agent of an amount of cash equal to or
exceeding $4,400,000, the Escrow Agent shall deliver the Aggregate Subscription
Payments to the Company by wire transfer to the Company’s designated account, as
detailed below, upon the earliest of (a) delivery of written instructions from
any of the Investors to the Escrow Agent directing the Escrow Agent to deliver
the Aggregate Subscription Payments to the Company, (b) delivery of written
notice from the Company to the Escrow Agent, advising that the Company had
received lock-up agreements from its current stockholders in a number that is
satisfactory to the Investors and directing the Escrow Agent to deliver the
Aggregate Subscription Payments to the Company, and (c) 14 days after the
Initial Closing Date, as defined below; provided, however, if an amount of cash
equal to or exceeding $4,400,000 has not been received by the Escrow Agent and
deposited into the Escrow Account within 24 hours following the execution of
this Agreement or if the Escrow Agent has refunded Subscription Payments to any
of the Investors, then the Escrow Agent will promptly return to each of the
Investors its respective Subscription Payment. “Initial Closing Date” shall mean
the date of the initial closing of the transaction contemplated by the Purchase
Agreement.
 
Company’s account:
 
Bank:
1st Century Bank
 
1875 Century Park East, Suite 1400
 
Los Angeles, CA 90067
   
ABA Number:
122-243-761
   
Account Number:
2100012273
   
Account Name:
Mandalay Media, Inc.

 
5. The Company shall promptly notify the Escrow Agent of any termination of the
Offering.
 
6. To induce the Escrow Agent to act hereunder, the Company agrees that:

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(a) Distribution of the Escrow Account pursuant to Section 4 of this Agreement
by the Escrow Agent shall operate to divest all right, title, interest, claim,
and demand, either at law or in equity, of any party to this Agreement (other
than the distributee) in and to the Escrow Account and shall be a perpetual bar
both at law and in equity as against the Escrow Agent and against any person
claiming or attempting to claim such distributed Escrow Account from, through,
or under the Escrow Agent.
 
(b) The Escrow Agent shall not be under any duty to give the monies held by it
hereunder any greater degree of care than it gives its own similar property and
shall not be required to invest any funds held hereunder except as directed in
this Escrow Agreement. Uninvested funds held hereunder shall not earn or accrue
interest.
 
(c) This Escrow Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not be bound by the provisions of any agreement except this
Escrow Agreement.
 
(d) The Escrow Agent shall not be liable, except for its own gross negligence or
willful misconduct and, except with respect to claims based upon such gross
negligence or willful misconduct that are successfully asserted against the
Escrow Agent, the Company shall indemnify and hold harmless the Escrow Agent
(and any successor Escrow Agent) from and against any and all losses,
deficiencies, liabilities, claims, suits, actions, damages, settlements and
expenses, including reasonable attorneys fees and disbursements, arising out of
and in connection with this Escrow Agreement. Without limiting the foregoing,
the Escrow Agent shall in no event be liable in connection with its investment
or reinvestment of any cash held by it, if any, hereunder in good faith, in
accordance with the terms hereof, including, without limitation, any liability
for any delays (not resulting from gross negligence or willful misconduct) in
any such investment or reinvestment of any Subscription Payment, or any loss of
interest incident to any such delays.
 
(e) The Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
 
(f) The Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Escrow Agreement and shall not be liable for any
action taken or omitted in accordance with such advice.
 
(g) The Escrow Agent does not have any interest in the amounts deposited
hereunder but is serving as escrow holder only and having only possession
thereof. The Company shall pay or reimburse the Escrow Agent upon request for
any transfer taxes or other taxes relating to the escrowed property incurred in
connection herewith and shall indemnify and hold harmless the Escrow Agent from
any amounts that it is obligated to pay in the way of such taxes. Any payments
of income from this Escrow Account shall be subject to withholding regulations
then in force with respect to United States taxes. The parties hereto will
provide the escrow agent with appropriate W-9 forms for tax I.D., number
certifications, or W-8 forms for non-resident alien certifications. It is
understood that the Escrow Agent shall be responsible for income reporting only
with respect to income, if any, earned on investment of funds deposited in the
Escrow Account and is not responsible for any other reporting. This Section 6(g)
and Section 6(d) shall survive notwithstanding any termination of this Escrow
Agreement or the resignation of the Escrow Agent.

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(h) The Escrow Agent shall have no duties or responsibilities except those
expressly set forth herein. The Escrow Agent shall not be bound by any notice of
a claim, or demand with respect thereto, or any waiver, modification, amendment,
termination, cancellation, or revision of this Agreement, unless in writing and
signed by the other parties hereto and received by the Escrow Agent, and, if the
Escrow Agent’s duties as escrow agent hereunder are affected, unless the Escrow
Agent shall have given its prior written consent thereto. The Escrow Agent shall
not be bound by any assignment by the Company of its rights hereunder unless the
Escrow Agent shall have received written notice thereof from the assignor. The
Escrow Agent is authorized to comply with and obey laws, orders, judgments,
decrees, and regulations of any governmental authority, court, tribunal, or
arbitrator. If the Escrow Agent complies with any such law, order, judgment,
decree, or regulation, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person even if such law, order, judgment, decree,
or regulation is subsequently reversed, modified, annulled, set aside, vacated,
found to have been entered without jurisdiction, or found to be in violation of
or beyond the scope of a constitution or a law.
 
(i) If the Escrow Agent (i) shall be uncertain as to the Escrow Agent’s duties
or rights hereunder, (ii) shall receive any notice, advice, direction, or other
document from any other party with respect to the Escrow Account which, in the
Escrow Agent’s opinion, is in conflict with any of the provisions of this
Agreement, or with any notice, advice, direction or other document it has
received from another party, or (iii) should be advised that a dispute has
arisen with respect to the payment, ownership, or right of possession of the
Escrow Account or any part thereof (or as to the delivery, non-delivery, or
content of any notice, advice, direction, or other document), the Escrow Agent
shall be entitled, without liability to anyone, to refrain from taking any
action other than to use the Escrow Agent’s best efforts to keep safely the
Escrow Account until the Escrow Agent shall be directed otherwise in (x) a
writing executed by each of the Company and the Investors or (y) by an order,
decree, or judgment of a court of competent jurisdiction which has been finally
affirmed on appeal or which by lapse of time or otherwise is no longer subject
to appeal, but the Escrow Agent shall be under no duty to institute or to defend
any proceeding, although the Escrow Agent may, in the Escrow Agent’s discretion
and at the expense of the Company as provided in Section 6(o), institute or
defend such proceedings.
 
(j) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
 
(k) The Company authorizes the Escrow Agent, if threatened with litigation or
sued, to interplead all interested parties in any court of competent
jurisdiction and to deposit the Escrow Account with the clerk of that court.

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(l) The Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
 
(m) The Escrow Agent (and any successor Escrow Agent) may at any time resign as
such by delivering the Aggregate Subscription Payments received by the Escrow
Agent and all interest and other income earned thereon to any successor Escrow
Agent designated by the Escrow Agent, in writing, or to any court of competent
jurisdiction, whereupon the Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Escrow Agreement. The
resignation of the Escrow Agent will take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction), or
(ii) the day which is ten (10) days after the date of delivery of its written
notice of resignation to the Company. If at that time the Escrow Agent has not
designated a successor Escrow Agent, the Escrow Agent’s sole responsibility
after that time shall be to safekeep the Subscription Payments received by the
Escrow Agent and all interest and other income earned thereon until receipt of a
designation of successor Escrow Agent or a final order of a court of competent
jurisdiction.
 
(n) The Escrow Agent shall have no responsibility for the contents of any
writing of the arbitrators or any third party contemplated herein as a means to
resolve disputes and may rely without any liability upon the contents thereof.
 
(o) The Company shall pay Escrow Agent $2,500 for Escrow Agent’s services
hereunder.
 
(p) The Company hereby irrevocably submits to the jurisdiction of any New York
State or federal court sitting in New York City in any action or proceeding
arising out of or relating to this Escrow Agreement, and hereby irrevocably
agrees that all claims in respect of such action or proceeding shall be heard
and determined in such a New York State or federal court, without regard to its
rules respecting conflicts of law. The Company hereby consents to and grants to
any such court jurisdiction over the Company and over the subject matter of any
such dispute and agrees that delivery or mailing of any process or other papers
in the manner provided herein, or in such manner as may be permitted by law,
shall be valid and sufficient service thereof.
 
(q) No printed or other matter in any language (including, without limitation,
prospectuses, notices, reports and promotional material) which mentions the
Escrow Agent’s name or the rights, powers, or duties of the Escrow Agent shall
be issued by the Company or on the Company’s behalf unless the Escrow Agent
shall first have given its specific written consent thereto.
 
(r) The Company authorizes the Escrow Agent, for any securities held hereunder,
if any, to use the services of any United States central securities depository
it deems appropriate, including, but not limited to, the Depositary Trust
Company and the Federal Reserve Book Entry System.

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(s) The Escrow Agent’s responsibilities and liabilities hereunder, except as a
result of the Escrow Agent’s own bad faith or gross negligence, will terminate
upon the delivery by the Escrow Agent of the Escrow Account under any provision
of this Agreement.
 
7. This Escrow Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors and assigns, and shall not
be enforceable by or inure to the benefit of any third party except as provided
in Section 6(m) with respect to a resignation by the Escrow Agent. No party may
assign any of its rights or obligations under this Escrow Agreement without the
written consent of the other party.
 
8. This Agreement may only be modified by a writing signed by the parties
hereto, and no waiver hereunder shall be effective unless in writing and signed
by the party to be charged.
 
9. This Escrow Agreement shall be construed in accordance with the laws of the
State of New York, without regard to its rules respecting conflicts of laws. It
may be executed in several counterparts, each of which shall be deemed an
original, and all of which shall constitute but one instrument.
 
10. Any notice, consent or request to be given in connection with any of the
terms or provisions of this Escrow Agreement shall be in writing and shall be
sent by certified mail, return receipt requested, or delivered against written
receipt:
 

(a)
if to the Escrow Agent, to:

 
American Stock Transfer and Trust Company, LLC
59 Maiden Lane
New York, NY 10038
Attention: Henry Reinhold
Telephone:   718-921-8225
Facsimile:     718-234-5001
 

(b)
if to the Company, to:

Mandalay Media, Inc.
c/o Trinad Capital, L.P.
2121 Avenue of the Stars, Suite 2550
Los Angeles, California 90067
Telephone:   310-601-2500
Facsimile:     310-277-2741

(c)
if to the Investors, to:

ValueAct SmallCap Master Fund, L.P.
435 Pacific Avenue, 4th Fl.
San Francisco, CA 94133
Attention: Jimmy Price

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Trinad Capital Master Fund, Ltd.
2121 Avenue of the Stars, Suite 2550
Los Angeles, California 90067
Attention: Jay Wolf
 
Guber Family Trust
c/o Peter Guber
4751 Wilshire Boulevard
3rd Floor
Los Angeles, CA 90010  

Any notice, consent or request given by certified mail shall be deemed given at
the time of certification thereof.

 
11. This Agreement shall terminate upon the date on which the Aggregate
Subscription Payments have been fully disbursed from the Escrow Account in
accordance with Section 4 of this Escrow Agreement.
 
[Signature page to follow]

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IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as of
the date first above written.
 
AMERICAN STOCK TRANSFER AND TRUST COMPANY, LLC
     
By:
/s/ Herbert J. Lemmer
 
Name:
Herbert J. Lemmer
 
Title:
Vice President
     
MANDALAY MEDIA, INC.
     
By:
/s/ James Lefkowitz
 
Name:
James Lefkowitz
 
Title:
President

 
INVESTORS:.
     
ValueAct SmallCap Master Fund, L.P.
By VA Smallcap Partners, LLC, its General Partner
   
  By:
/s/ David Lockwood
Name: 
David Lockwood
Title: 
Managing Member
     
Trinad Capital Master Fund, Ltd.
     
  By:
/s/ Robert Ellin
Name:  
Robert Ellin
Title:
Director
     
Guber Family Trust
     
  By:
/s/ Peter Guber
Name:  
Peter Guber
Title:
Trustee

[Signature Page to Escrow Agreement]

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