EXHIBIT 10.1

 

SECOND AMENDMENT AGREEMENT

 

This Second Amendment Agreement (this “Agreement”) is entered into as of August
13, 2012, by and between Digital Domain Media Group, Inc., a Florida corporation
with offices located at 10250 SW Village Parkway, Port St. Lucie, Florida 34987
(the “Company”), and the investor signatory hereto (the “Investor”), with
reference to the following facts:

 

A.                                   The Company and certain investors
(including the Investor) (the “Buyers”) are parties to that certain Securities
Purchase Agreement, dated as of May 6, 2012 (as amended, restated or otherwise
modified from time to time, the “Existing Securities Purchase Agreement”),
pursuant to which on May 7, 2012 the Company sold, and the Buyers listed on the
Schedule of Buyers attached thereto purchased, certain senior secured
convertible notes (as amended pursuant to those certain First Amendment
Agreements dated as of July 12, 2012 between the Company and each of the Buyers,
and as otherwise amended, restated or otherwise modified from time to time, the
“Notes”) convertible into Conversion Shares (as defined in the Existing
Securities Purchase Agreement) in accordance with the terms of the Notes and
(ii) Warrants (as defined in the Existing Securities Purchase Agreement)
exercisable to purchase Warrant Shares (as defined in the Existing Securities
Purchase Agreement) in accordance with the terms of the Warrants.  Capitalized
terms not defined herein shall have the meaning as set forth in the Existing
Securities Purchase Agreement;

 

B.                                     Section 15(u)(i) of each of the Notes
sets forth an available cash test (the “Available Cash Test”) that the Company
is required to comply with as of certain measurement dates specified therein
(collectively, the “Measurement Dates”);

 

C.                                     The Company has requested that the
Investor amend the Note held by it to change the second Measurement Date from
July 31, 2012 to August 20, 2012, effective as of July 31, 2012 ; and

 

D.                                    Concurrently herewith, the Company has
also requested that each other holder of Notes enter into agreements in form and
substance identical to this Agreement (the “Other Agreements”, and together with
this Agreement, the “Agreements”).

 

NOW, THEREFORE, in consideration of the premises set forth above, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1.                                       Effective Date.  Upon the later of (a)
such date as the Company and each of the holders of Notes shall have executed
and delivered the Agreements and (b) such date as the Company shall have paid
the Legal Fee Payment (as defined below) to Greenberg Traurig, LLP, this
Agreement shall be deemed effective as of July 31, 2012 (the “Effective Date”).

 

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2.                                       Amendments to Notes; Amendments to
Transaction Documents.

 

(a)                                  As of the Effective Date, Section
15(u)(i)(x) of each of the Notes is hereby amended by replacing it in its
entirety with “(x) August 20, 2012, August 31, 2012 and September 28, 2012 shall
equal or exceed $7.5 million,”.

 

(b)                                 As of the Effective Date, the term
“Transaction Documents”, as defined in the Existing Securities Purchase
Agreement, shall be amended to include the Agreements.

 

(c)                                  As of the Effective Date, the term “Notes”
in the Transaction Documents shall be amended to mean the Notes as amended by
the Agreements.

 

3.                                       Acknowledgement; Reaffirmation of
Obligations.

 

(a)                                  The parties hereto acknowledge that,
immediately following the satisfaction of the conditions set forth in Section 1
hereof and the occurrence of the Effective Date hereunder, notwithstanding that
the Notes as issued on May 7, 2012 specified July 31, 2012 as the second
Measurement Date, the second Measurement Date was August 20, 2012.

 

(b)                                 The Company hereby confirms and agrees that,
except as set forth in Section 2 above, (i) the Existing Securities Purchase
Agreement, the Notes, the Securities, the Security Documents, the Guarantees and
each other Transaction Document is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, (ii) to the extent
that the Security Documents, the Guarantees or any other Transaction Document
purports to assign or pledge to the Buyers and the holders of the Securities, or
to grant to the Collateral Agent a security interest in or lien on, any
collateral as security for the obligations of the Company from time to time
existing in respect of the Notes and any other Transaction Document, such
pledge, assignment and/or grant of the security interest or lien is hereby
ratified and confirmed in all respects, and shall apply with respect to the
obligations under the Notes, and (iii) the execution, delivery and effectiveness
of this Agreement shall not operate as an amendment of any right, power or
remedy of the Buyers under any Transaction Document, nor constitute an amendment
of any provision of any Transaction Document.

 

4.                                       Fees and Expenses.  Concurrently
herewith, the Company shall reimburse Greenberg Traurig, LLP (counsel to the
lead Buyer) $[     ] for all reasonable, documented costs and expenses incurred
by it in connection with preparing and delivering this Agreement and the prior
unpaid and outstanding legal fees and expenses incurred by Greenberg Traurig,
LLP to date with respect to the Transaction Documents (including, without
limitation, all reasonable, documented legal fees and disbursements in
connection therewith, and due diligence in connection with the transactions
contemplated thereby) (the “Legal Fee Payment”).  Except as otherwise set forth
in this Agreement and the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the transactions contemplated
hereby.

 

5.                                       Disclosure of Transactions and Other
Material Information.  On or before 8:30 a.m., New York City time, on the first
Business Day following the date of this Agreement, the Company shall file a
Current Report on Form 8-K describing the terms of the transactions contemplated
by this Agreement in the form required by the 1934 Act and attaching the form of

 

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the Agreements as an exhibit to such filing (including all attachments, the “8-K
Filing”).  From and after the filing of the 8-K Filing with the SEC, the
Investor shall not be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents, that is not disclosed in the 8-K
Filing.

 

6.                                       Representations and Warranties.

 

(a)                                  The Investor represents and warrants to the
Company with respect to only itself that, as of the date hereof and as of the
Effective Date:

 

(i)                                     Organization; Authority. The Investor is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with the requisite power and authority
to enter into and to consummate the transactions contemplated by this Agreement.

 

(ii)                                  Validity; Enforcement.  This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Investor and constitutes the legal, valid and binding obligations of the
Investor enforceable against the Investor in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

 

(iii)                               No Conflicts.  The execution, delivery and
performance by the Investor of this Agreement and the consummation by the
Investor of the transactions contemplated hereby will not (I) result in a
violation of the organizational documents of the Investor, (II) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Investor is a party, or (III) result in a violation of
any law, rule, regulation, order, judgment  or decree (including federal and
state securities laws) applicable to the Investor, except in the case of clauses
(II) and (III) above, for such conflicts, defaults, rights or violations which
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Investor to perform its
obligations hereunder.

 

(b)                      The Company represents and warrants to the Investor
that, as of the date hereof and as of the Effective Date:

 

(i)                                     Organization and Qualification. Each of
the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted and as
presently proposed to be conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to

 

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be so qualified or be in good standing would not have a Material Adverse Effect.
As used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any Subsidiary, individually or taken as a whole, (ii) the
transactions contemplated hereby or in any of the other Transaction Documents or
(iii) the authority or ability of the Company or any of its Subsidiaries to
perform any of their respective obligations under any of the Transaction
Documents (as defined below).  Since the date of the Existing Securities
Purchase Agreement, the Company has not formed or acquired any Subsidiaries. 
“Subsidiaries” means any Person in which the Company, directly or indirectly,
(I) owns any of the outstanding capital stock or holds any equity or similar
interest of such Person or (II) controls or operates all or any part of the
business, operations or administration of such Person, and each of the foregoing
is individually referred to herein as a “Subsidiary.”  Each of Digital Domain
Productions (Sydney) Pty Ltd., Digital Domain Media Group (Middle East) FZ LLC
and Digital Domain Emirates LLC are wholly-owned Subsidiaries of the Company and
each has no or nominal assets, liabilities or business (the “Inactive
Subsidiaries”).

 

(ii)                                  Authorization; Enforcement; Validity. The
Company and its Subsidiaries have the requisite power and authority to enter
into and perform their obligations under this Agreement. The execution and
delivery of this Agreement by the Company and its Subsidiaries, and the
consummation by the Company and its Subsidiaries of the transactions
contemplated hereby has, to the extent required by applicable law or the charter
documents of such Person, been duly authorized by the Company’s board of
directors, each Subsidiary’s board of directors or other governing body and no
further filing, consent or authorization is required by the Company, its
Subsidiaries, their board of directors or their shareholders or other governing
body. This Agreement has been duly executed and delivered by the Company and
each of its Subsidiaries and constitutes the legal, valid and binding
obligations of the Company and it Subsidiaries, enforceable against the Company
and its Subsidiaries in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the Existing Securities Purchase Agreement,
the Notes, the Warrants, the Security Documents, the Guarantees, the
Subordination Agreement, the Registration Rights Agreement, the Voting
Agreements, the Irrevocable Transfer Agent Instructions and each of the other
agreements and instruments entered into or delivered by any of the parties
hereto in connection with the transactions contemplated hereby and thereby, as
may be amended from time to time.

 

(iii)                               No Conflicts. The execution, delivery and
performance of this Agreement by the Company and each of its Subsidiaries and
the consummation by the Company and its Subsidiaries of the transactions
contemplated hereby  will not (I) result in a violation of the Articles of
Incorporation or other organizational documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its

 

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Subsidiaries or Bylaws of the Company or any of its Subsidiaries, (II) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (III)
result in a violation of any law, rule, regulation, order, judgment or decree
(including foreign, federal and state securities laws and regulations and the
rules and regulations of The New York Stock Exchange (the “Principal Market”)
and including all applicable federal laws, rules and regulations) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of
clause (II) or (III) above, to the extent that such violations could not
reasonably be expected to have a Material Adverse Effect.

 

(iv)                              Consents.  Neither the Company nor any
Subsidiary is required to obtain any consent from, authorization or order of, or
make any filing or registration with any Governmental Entity (as defined below)
or any regulatory or self-regulatory agency or any other Person in order for it
to execute, deliver or perform any of its respective obligations under or
contemplated hereby.  All consents, authorizations, orders, filings and
registrations which the Company or any Subsidiary is required to obtain pursuant
to the preceding sentence have been obtained or effected on or prior to the date
hereof (or in the case of filings, will be made timely after the date hereof),
and neither the Company nor any of its Subsidiaries are aware of any facts or
circumstances which might prevent the Company or any of its Subsidiaries from
obtaining or effecting any of the registrations, applications or filings
contemplated hereby. The Company is not in violation of the requirements of the
Principal Market and has no knowledge of any facts or circumstances which could
reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.  “Governmental Entity” means any nation, state, county,
city, town, village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal),
multi-national organization or body; or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.

 

(v)                                 SEC Documents; Financial Statements. During
the time the Company has been a reporting Company under the 1934 Act, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”) (other than as set forth on
Schedule 3(k) to the Existing Securities Purchase Agreement). As of their
respective dates, the SEC Documents complied as to form in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents (excluding for this purpose the exhibits thereto), at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact

 

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required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of
filing. Such financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, during the
periods involved (except (I) as may be otherwise indicated in such financial
statements or the notes thereto, or (II) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company and its Subsidiaries as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments which
will not be material, either individually or in the aggregate). No other
information provided by or on behalf of the Company to any of the Buyers which
is not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein not misleading, in the light of the circumstance under which
they are or were made.

 

(vi)                              Absence of Certain Changes. Since the date of
the Company’s most recent audited financial statements contained in a Form 10-K,
there has been no material adverse change and no material adverse development in
the business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
of its Subsidiaries that would reasonably be expected to result in a material
adverse change. Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, neither the Company nor any of its
Subsidiaries has (I) declared or paid any dividends, (II) sold any assets,
individually or in the aggregate, outside of the ordinary course of business or
(III) made any material capital expenditures, individually or in the aggregate.
Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or
any Subsidiary have any knowledge or reason to believe that any of their
respective creditors intend to initiate involuntary bankruptcy proceedings or
any actual knowledge of any fact which would reasonably lead a creditor to do
so. The Company and its Subsidiaries, individually and on a consolidated basis,
are not as of the date hereof, and after giving effect to the transactions
contemplated hereby, will not be Insolvent (as defined below). For purposes of
this Section 6(b)(vi), “Insolvent” means, (I) with respect to the Company and
its Subsidiaries, on a consolidated basis, (A) the present fair saleable value
of the Company’s and its Subsidiaries’ assets is less than the amount required
to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined
below), (B) the Company and its Subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Company and its Subsidiaries
intend to incur or believe that they will incur debts that would be beyond their
ability to pay as such debts mature; and (II) with respect to the Company and
each Subsidiary, individually, (A) the present fair saleable value of the
Company’s or such Subsidiary’s (as the case may be) assets is less than the
amount required to pay its

 

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respective total Indebtedness, (B) the Company or such Subsidiary (as the case
may be) is unable to pay its respective debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured or (C) the Company or such Subsidiary (as the case may be) intends to
incur or believes that it will incur debts that would be beyond its respective
ability to pay as such debts mature. Neither the Company nor any of its
Subsidiaries has engaged in any business or in any transaction, and is not about
to engage in any business or in any transaction, for which the Company’s or such
Subsidiary’s remaining assets constitute unreasonably small capital.

 

(vii)                           No Undisclosed Events, Liabilities, Developments
or Circumstances. No event, liability, development or circumstance has occurred
or exists or, to the Company’s knowledge, is reasonably expected to exist or
occur with respect to the Company, any of its Subsidiaries or any of their
respective businesses, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that (I) would be
required to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
announced, (II) could have a material adverse effect on the transactions
contemplated hereby or (III) could have a Material Adverse Effect.

 

(viii)                        Off Balance Sheet Arrangements. There is no
transaction, arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

 

(ix)                                Disclosure.  The Company confirms that
neither it nor any other Person acting on its behalf has provided any of the
Buyers or their agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the
transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company and its
Subsidiaries, their businesses and the transactions contemplated hereby,
including the schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.  All of the written information
furnished after the date hereof by or on behalf of the Company or any of its
Subsidiaries to the Investor pursuant to or in connection with this Agreement
and the other Transaction Documents, taken as a whole, will be true and correct
in all material respects as of the date on which such information is so provided
and will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading.  Each
press release issued by the Company or any of its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not

 

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at the time of release contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.  No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed.  Any
financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to the Investor have
been prepared in good faith based upon reasonable assumptions and represented,
at the time each such financial projection or forecast was delivered to the
Investor, the Company’s best estimate of future financial performance (it being
recognized that such financial projections or forecasts are not to be viewed as
facts and that the actual results during the period or periods covered by any
such financial projections or forecasts may differ from the projected or
forecasted results).

 

7.                                       Remedies.  The Investor and each holder
of the Securities issued to the Investor shall have all rights and remedies set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law.  Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.  Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Investor.  The Company therefore agrees that the
Investor shall be entitled to seek temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages and without
posting a bond or other security.

 

8.                                       Independent Nature of Investor’s
Obligations and Rights.  The obligations of the Investor under this Agreement or
any other Transaction Document are several and not joint with the obligations of
any other Buyer, and the Investor shall not be responsible in any way for the
performance of the obligations of any other Buyer under any Transaction Document
or Other Agreement.  Nothing contained herein or in any Other Agreement or any
other Transaction Document, and no action taken by the Investor pursuant hereto,
shall be deemed to constitute the Investor and other Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investor and other Buyers are in any way acting in concert
or as a group with respect to such obligations or the transactions contemplated
by this Agreement, any Other Agreement or any other Transaction Document and the
Company acknowledges that the Buyers are not acting in concert or as a group
with respect to such obligations or the transactions contemplated by this
Agreement, any Other Agreement and any other Transaction Document.  The Company
and the Investor confirm that the Investor has independently participated in the
negotiation of the transactions contemplated hereby with the advice of its own
counsel and advisors.  The Investor shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement, any

 

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Other Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.

 

9.                                       No Third Party Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

10.                                 Counterparts.  This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.  In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.

 

11.                                 No Strict Construction.  The language used
in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.

 

12.                                 Headings.  The headings of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

13.                                 Severability.  If any provision of this
Agreement is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

 

14.                                 Amendments.  No provision of this Agreement
may be amended other than by an instrument in writing signed by the Company and
the Investor.

 

15.                                 Further Assurances.  Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

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16.                                 Notice.  Whenever notice is required to be
given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the terms of the Existing Securities Purchase
Agreement.

 

17.                                 Successors and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns in accordance with the terms of the Existing
Securities Purchase Agreement.

 

18.                                 Governing Law; Jurisdiction; Jury Trial. 
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.  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, 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 brought
in an inconvenient forum or that the venue of 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 to such party at the address for such 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. 
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS CONSENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

19.  Most Favored Nation.  The Company hereby represents and warrants as of the
date hereof and covenants and agrees from and after the date hereof that none of
the terms offered to any Person with respect to any consent, release, amendment,
settlement or waiver relating to the terms, conditions and transactions
contemplated hereby, is or will be more favorable to such Person than those of
the Investor and this Agreement (each a “Settlement Document”).  If, and
whenever on or after the date hereof, the Company enters into a Settlement
Document, then (i) the Company shall provide notice thereof to the Investor
immediately following the occurrence thereof and (ii) the terms and conditions
of this Agreement and the Securities (other than any limitations on conversion
or exercise set forth therein) shall be, without any further action by the
Investor or the Company, automatically amended and modified in an economically
and legally equivalent manner such that the Investor shall receive the benefit
of the more favorable terms and/or conditions (as the case may be), provided
that upon written notice to the Company at any time the Investor may elect not
to accept the benefit of any such amended or modified term or condition, in
which event the term or condition contained in this Agreement or the Securities
(as the case may be) shall apply to the Investor as it was in effect immediately
prior to such amendment or modification as if such amendment or modification
never occurred with respect to

 

10

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the Investor.  The provisions of this Section 19 shall apply similarly and
equally to each Settlement Document.

 

[Signature Pages Follow]

 

11

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IN WITNESS WHEREOF, this Second Amendment Agreement has been executed as of the
date first written above.

 

 

 

THE INVESTOR:

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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IN WITNESS WHEREOF, this Second Amendment Agreement has been executed as of the
date first written above.

 

 

 

THE COMPANY:

 

 

 

DIGITAL DOMAIN MEDIA GROUP, INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

 

ACKNOWLEDGED AND ACCEPTED BY:

 

 

 

 

 

D2 SOFTWARE, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DDH LAND HOLDINGS, LLC

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DDH LAND HOLDINGS II, LLC

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DIGITAL DOMAIN

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

 

ACKNOWLEDGED AND ACCEPTED BY:

 

 

 

 

 

DIGITAL DOMAIN INSTITUTE, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DIGITAL DOMAIN INTERNATIONAL, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DIGITAL DOMAIN PRODUCTIONS, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DIGITAL DOMAIN STEREO GROUP, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

 

ACKNOWLEDGED AND ACCEPTED BY:

 

 

 

 

 

DIGITAL DOMAIN TACTICAL, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

MOTHERSHIP MEDIA, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

TRADITION STUDIOS, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DIGITAL DOMAIN PRODUCTIONS (VANCOUVER) LTD.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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