Equity Financing

Binding Term Sheet

June 7, 2012

 

This binding term sheet (this “Term Sheet”), dated as of the date first written
above, is between Mandalay Digital Group, Inc., a Delaware corporation
(“Issuer”), and                          (“Investor”). The parties hereby agree
as follows:

 

Security:                    shares of common stock, par value $0.0001 per share
(“Common Stock”), of Issuer (the “Shares”).     Purchase Price:
                   ($0.70 per share).     Warrant Coverage: Investor shall
receive 25% warrant coverage (i.e., a warrant exercisable for            shares
of Common Stock) (the “Warrant”). The Warrant shall be at the option of Investor
cash or cashless, have a five (5) year term from the date of issuance and an
exercise price equal to $0.70 per share (which shall be adjusted from time to
time for customary dilution and anti-dilution events). The Warrant may be
exercised only following the first anniversary of the date of issuance.    
Closing: As soon as possible after the date of this Term Sheet but in no event
later than June 23, 2012; provided that the transactions contemplated herein
have been duly authorized by Issuer and Issuer has received all requisite third
party consents with respect to the issuance of the Shares.     Registration
Rights: Issuer shall use best efforts to file a Registration Statement on Form
S-3 or, if Issuer is not eligible for Form S-3, on Form S-l (the “Registration
Statement”) covering the Shares and the shares of Common Stock underlying the
Warrant within one hundred twenty (120) calendar days after the date of this
Term Sheet and shall use its best efforts to cause the Registration Statement to
become effective as soon as possible thereafter.     Rights of Participation:
Subject to standard carveouts, Investor shall have a right of participation for
future financings undertaken by Issuer for a period of two (2) years following
the date of issuance of the Shares on a pro rata basis in accordance with
Investor’s ownership interests in Issuer, on a fully diluted basis assuming
exercise of the Warrant.     Voting Agreement: For a period beginning on the
date hereof and ending on the first anniversary of the date of issuance of the
Shares, Investor hereby irrevocably agrees to vote all shares of voting stock
(including the Shares and the shares issued to Investor upon exercise of the
Warrant, if any) held by Investor in favor of any amendment to Issuer’s
Certificate of Incorporation providing for one or more of the following: (x) up
to a 10-for-l reverse stock split affecting all shares of Common Stock, and/or
(y) an increase in the number of authorized shares of any class or series of
capital stock of Issuer.     Transferability: Until the Shares and the shares
issuable to Investor upon exercise of the Warrant have been registered pursuant
to the Registration Statement, Investor may assign its right and interests to
the Shares and shares issued to Investor upon exercise of the Warrant, if any,
subject to the consent of Issuer, which consent shall not be unreasonably
withheld.

 

 

 

This Term Sheet shall be binding on the parties hereto and their respective
successors and assigns. Although the parties anticipate entering into long-form
documents with respect to the terms of this Term Sheet and containing such other
provisions as are customary for transactions of the type contemplated, until
they are able to do so, and in any case in the event they are unable to do so,
the terms of this Term Sheet shall be binding and shall govern the parties’
respective rights and obligations. This Term Sheet will be governed by and
construed in accordance with the laws of the State of California. Any disputes
arising out of or relating to this Term Sheet shall be heard exclusively in
state or federal courts located in California, each party waiving any and all
objections to such venue. This Term Sheet sets forth the entire understanding of
the parties with respect to the subject matter hereof. This Term Sheet shall not
be amended, or any provision hereof waived, except in a writing signed by each
party hereto. This Term Sheet may be executed in any number of original,
facsimile or other electronic counterparts.

 

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Term Sheet as of the
date first above written.

 

Issuer:   Investor:               MANDALAY DIGITAL GROUP, INC.              By:
[ILLEGIBLE]   Signature:         Name:   Name:     Title:   Title:  Trustees

 

Binding Term Sheet

Equity Financing

 

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