PROMISSORY
      NOTE

    


    
      	 	 	
              Date
                of Issuance

            
	
              $5,375,000.00

            	 	
              October
                23, 2008

            


    

    


    FOR
      VALUE
      RECEIVED, Mandalay
      Media, Inc.,
      a
      Delaware corporation (the “Company”), hereby promises to pay to the order of
      Nathaniel MacLeitch, as trustee for the Sellers (as defined below), with an
      address of c/o AMV Holding Limited, 65 High Street, Marlow, Buckinghamshire,
      United Kingdom (the “Holder”), the aggregate principal sum of Five Million Three
      Hundred Seventy Five Thousand Dollars ($5,375,000.00), together with interest
      thereon from the date of this Note. Interest shall accrue on the unpaid
      principal balance at an initial rate of five percent (5%) per annum, subject
      to
      adjustment as provided in Section 1(e), and shall accrue on a daily basis from
      the date of this Note until paid. Interest shall be calculated on the basis
      of a
      three hundred and sixty (360) day year. This Note shall be non-assignable by
      the
      Company. 

    


    This
      Note
      has been issued pursuant to that certain Stock Purchase Agreement, dated as
      of
      October 8, 2008 (the “Purchase Agreement”), between the Company, the Holder,
      Jack Cresswell (“Cresswell”) and the shareholders of AMV Holding Limited (“AMV”)
      signatories thereto (together with the Holder and Cresswell, the “Sellers”), in
      connection with the acquisition of 100% of the share capital of AMV and 80%
      of
      the share capital of Fierce Media Limited. The Holder is holding this Note
      as
      trustee on behalf of Sellers, pursuant to the Purchase Agreement.

    


    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings ascribed to such terms in the Purchase Agreement.

    


    The
      principal amount of this Note is subject to adjustment in accordance with the
      terms of Sections 2.1, 2.7, 2.9 and Article X of the Purchase Agreement. In
      the
      event of such an adjustment, the Holder and the Company agree to take all
      reasonably necessary actions to replace this Note with a new Note that reflects
      the adjusted principal amount. Other than as set forth in the Purchase
      Agreement, this Note is not subject to any set-off, counterclaim or deduction.
      

    


    This
      Note
      is secured by the security interests granted pursuant to a certain Debenture,
      by
      and between AMV and the Holder, dated as of even date herewith, and the Holder
      of this Note, on behalf of the Sellers, is entitled to the benefits thereof.
      

    


    1. Payment;
      Prepayment.
      

     

    (a) Unless
      earlier paid, the entire outstanding principal balance and interest of this
      Note
      shall be payable on or before January 30, 2010. The Company shall have the
      right
      of prepayment on this Note.

     

    (b) Payment
      of principal and interest on this Note shall be made by wire transfer of
      immediately available funds to an account designated by the Holder or by check
      sent to the Holder as the Holder may designate for such purpose from time to
      time by written notice to the Company, in such coin or currency of the United
      States of America as at the time of payment shall be legal tender for the
      payment of public and private debts. 


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (c) In
      the
      event that the Company completes an equity financing (the “Financing”) that
      results in gross proceeds to the Company of over $6,000,000 (including the
      amount of any financing raised in connection with the acquisition of AMV),
      then,
      within ten days of completion of such Financing, the Company shall prepay to
      Holder an amount equal to one-third of the excess of the gross proceeds of
      the
      Financing over $6,000,000, provided that in no event shall such prepayment
      exceed the aggregate principal sum then outstanding under the Note, plus accrued
      interest thereon.

    


    (d) If,
      prior
      to July 23, 2009, the Company completes a Financing that results in gross
      proceeds to the Company of over $15,000,000 (which is in addition to the
      Financing described in subsection (c) above), then the Company shall prepay
      to
      Holder the entire aggregate principal sum then outstanding under the Note,
      plus
      accrued interest thereon, within ten days of completion of such Financing.
      

    


    (e) If,
      prior
      to July 23, 2009 the entire aggregate principal sum then outstanding under
      the
      Note, plus accrued interest thereon, has not been prepaid in accordance with
      Sections 1(c) or 1(d), then on and after July 23, 2009, interest shall accrue
      on
      the unpaid principal balance of the Note at a rate of seven percent (7%) per
      annum until paid.

    


    2. Default.
      

     

    (a) The
      occurrence of any one or more of the following events shall constitute an “Event
      of Default”:

     

    (i) Nonpayment.
      The
      Company shall fail to make, on or before the due date, in the manner required,
      any payment of principal, interest or any other sums due under this Note and
      the
      Company shall not have remedied such default within ten (10) days after notice
      of such default;

     

    (ii) Other
      Defaults; Cure Period.
      The
      Company shall fail to observe or perform any of its covenants contained in
      this
      Note, and the Company shall have not remedied such default within ten (10)
      days
      after notice of such default;

     

    (iii) Insolvency.
      The
      Company shall generally not pay its debts as such debts become due, or shall
      admit in writing its inability to pay its debts generally, or shall make a
      general assignment for the benefit of creditors; or the Company shall commence
      any voluntary bankruptcy proceeding, or there shall be commenced against the
      Company by another party any such case, proceeding or other action in bankruptcy
      which remains unstayed, undismissed or undischarged for a period of thirty
      (30)
      days; or

     

    (iv) The
      Company shall be dissolved, liquidated or reorganized.

     


    
      
         

      

      
        2

        
          

        

      

      
         

      

    


    (b) Acceleration.
      Upon an
      Event of Default, the interest rate payable hereunder shall increase by four
      (4)
      percentage points and there shall immediately be due and payable to the Holder
      the full amount of the unpaid principal balance of this Note, plus accrued
      interest and all other amounts owed by the Company pursuant to this Note. All
      amounts under this Section 2 are due and payable without presentment, demand,
      protest and all other notices of any kind are hereby expressly waived by the
      Company.

     

    (c) Remedies
      Upon Event of Default.

     

    (i) General.
      Upon an
      Event of Default, the
      Holder
      may proceed to protect and enforce its rights as holder of this Note, and may
      proceed to enforce the payment of all amounts due upon this Note, and the costs
      and expenses of collection (including, without limitation, reasonable attorneys
      fees and disbursements) or to enforce any other legal or equitable right as
      holder of this Note shall be paid by Company. 

     

    (ii) Remedies
      Cumulative.
      No
      remedy conferred in this Note upon the Holder is intended to be exclusive of
      any
      other remedy and each and every such remedy shall be cumulative and shall be
      in
      addition to every other remedy given hereunder or now or hereafter existing
      at
      law or in equity or otherwise.

     

    (iii) Remedies
      Not Waived.
      No
      course of dealing between the Company and the Holder, and no delay or failure
      in
      exercising any rights hereunder shall operate as a waiver of any of the rights
      of the Holder.

     

    3. Subordination.

    


    (a) The
      Company and the Holder, as trustee for the Sellers, agree that the indebtedness
      evidenced by this Note is subordinated in right of payment, to the extent and
      manner provided in this Section 3, to the prior payment in full of all Senior
      Debt, and that the subordination is for the benefit of all holders of Senior
      Debt.

    


    (b) Upon
      any
      distribution to creditors of the Company or any of its subsidiaries in a
      liquidation or dissolution of the Company or any of its subsidiaries or in
      a
      bankruptcy, reorganization, insolvency, receivership or similar proceeding
      relating to the Company or any of its subsidiaries or any of the Company’s or
      its subsidiaries’ property, an assignment for the benefit of creditors or any
      marshalling of the Company's or its subsidiaries’ assets and liabilities,
      holders of Senior Debt shall be entitled to receive payment in full of all
      obligations due in respect of such Senior Debt (including interest accruing
      after the commencement of any such proceeding at the rate specified in the
      applicable Senior Debt, whether or not allowed or allowable as a claim in such
      proceeding) before the Holder, as trustee for the Sellers, shall be entitled
      to
      receive any payment with respect to this Note, and until all obligations with
      respect to Senior Debt are paid in full, any distribution to which the Holder,
      as trustee for the Sellers, would be entitled shall be made to the holders
      of
      Senior Debt.

    


    (c) Neither
      the Company nor any of its subsidiaries may make any payment pursuant to this
      Note if (i) a default in the payment of principal, premium, if any, or interest
      on Senior Debt occurs and is continuing beyond any applicable period of grace
      in
      the agreement or other document governing such Senior Debt, or (ii) any other
      default occurs and is continuing with respect to the Senior Debt that permits
      holders of the Senior Debt as to which such default relates to accelerate its
      maturity.


    
      
         

      

      
        3

        
          

        

      

      
         

      

    


    (c) In
      the
      event that the Holder or any Seller receives any payment of any obligations
      with
      respect to this Note at a time when the Holder or any Seller, as applicable,
      has
      actual knowledge that such payment is prohibited by this Section 3, such payment
      shall be held by Holder or any Seller in trust for the benefit of, and shall
      be
      paid forthwith over and delivered upon written request to, the holders of the
      Senior Debt for application to the payment of all obligations with respect
      to
      the Senior Debt remaining unpaid and to the extent necessary to pay such
      obligations in full in accordance with their terms, after giving effect to
      any
      concurrent payment or distribution to or for the holders of the Senior
      Debt.

    


    (d) For
      the
      purposes of this Section 3, “Senior Debt” shall mean that certain guaranty given
      as of February 12, 2008 by the Company to ValueAct SmallCap Master Fund, L.P.
      (“ValueAct”) pursuant to which the Company guaranteed to ValueAct the payment by
      the Company of up to $8,250,000 of principal under that certain Senior Secured
      Note issued by ValueAct to Twistbox Entertainment, Inc., a wholly-owned
      subsidiary of the Company, due January 30, 2010, dated July 30, 2007, as
      amended.

    


    4. Amendments
      and Waivers.
      This
      Note may not be modified, amended, waived, extended, changed, discharged or
      terminated orally or by any act or failure to act on the part of Company, but
      only by an agreement in writing signed by the party against whom enforcement
      of
      any modification, amendment, waiver, extension, change, discharge or termination
      is sought.

     

    5. Replacement
      Note.
      Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Note, and (in case of loss, theft
      or
      destruction) of indemnity reasonably satisfactory to it, and upon reimbursement
      to the Company of all reasonable expenses incidental thereto, and upon surrender
      and cancellation of any Note, if mutilated, the Company will make and deliver
      a
      new Note of like tenor in the principal amount of this Note then outstanding
      in
      lieu of such Note. Any Note so made and delivered shall be dated as of the
      date
      to which interest shall have been paid on the Note lost, stolen, destroyed
      or
      mutilated.

     

    6. Successors
      and Assigns.
      This
      Note applies to, inures to the benefit of, and binds the successors and
      permitted assigns of the parties hereto. 

     

    7. Governing
      Law and Venue.
      The
      Note shall be construed in accordance with the laws of the State of New York.
      The Company hereby consents to the jurisdiction of and venue in any court of
      competent jurisdiction in the State of New York. 

     

    8. Unenforceable
      Provision.
      If any
      provision of this Note shall be deemed unenforceable under applicable law,
      such
      provision shall be ineffective, but only to the extent of such unenforceability,
      without invalidating the remainder of such provision or the remaining provisions
      of this Note.


    
      
         

      

      
        4

        
          

        

      

      
         

      

    


    9. Notice.
      Any
      notice to the Company provided for in this Note shall be in writing and shall
      be
      given and be effective upon (a) delivery to the Company, (b) receipt if
      sent by facsimile transmission (with confirmation of such receipt by the sender)
      or (c) mailing such notice by certified mail, return receipt requested,
      addressed to the Company at the Company’s address stated below, or to such other
      address as the Company may designate by written notice to the Holder. Any notice
      to the Holder shall be in writing and shall be given and be effective upon
      (i) delivery to the Holder, (ii) receipt if sent by facsimile transmission
      (with confirmation of such receipt by the sender) or (iii) by mailing such
      notice by certified mail, return receipt requested, to the Holder at the address
      stated above, or to such other address as the Holder may designate by written
      notice to Company.

     

    The
      Company: 

    


    Mandalay
      Media, Inc. 

    2121
      Avenue of the Stars, Suite 2550

    Los
      Angeles, California 90067

    Attention:
      James Lefkowitz

    Telephone:
      (310)
      601-2500


    


    with
      a
      copy to:

    


    Mintz
      Levin Cohn Ferris Glovsky & Popeo, P.C.

    666
      Third
      Avenue

    New
      York,
      New York 10017

    Attention:
      Kenneth R. Koch, Esq.

    Fax:
      212-983-3115

    


    9. Jury
      Trial Waiver.
      Each of
      the Company and the Holder of this Note (by accepting this Note) hereby waives,
      to the fullest extent permitted by applicable law, any right it may have to
      a
      trial by jury in respect to any litigation directly or indirectly arising out
      of, under or in connection with this Note. Each of the Company and the Holder
      of
      this Note (by accepting this Note) (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 issue or accept this Note, as the case may be, by, among other
      things, the mutual waivers and certifications in this paragraph.

    


    [Remainder
      of page intentionally left blank. Signature page to
      follow.]


    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      the
      Company has caused this Note to be executed and dated the day and year first
      above written. 

    


    
      	
              MANDALAY
                MEDIA, INC.

            
	 
	
              By:

            	
              /s/
                James Lefkowitz

            
	 	
              Name:
                James Lefkowitz

            
	 	
              Title:
                President

            


    

    


    
      	
              Acknowledged
                and agreed:

            
	 	 
	
              By:

            	
              /s/
                Nathaniel MacLeitch

            
	 	
              Nathaniel
                MacLeitch