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: 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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:


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    (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.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    (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.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    (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.


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    (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


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    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]


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    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]