THIRD
AMENDMENT TO SENIOR SECURED NOTE

     

     

    This
THIRD AMENDMENT TO SENIOR SECURED NOTE (this “Amendment”)
pertains to that Senior Secured Note due January 30, 2010 issued pursuant to the
Securities Purchase Agreement, dated July 30, 2007 (the “Purchase
Agreement”), as amended by that certain Amendment and Waiver to Senior
Secured Note, dated as of February 12, 2008 (the “First
Amendment”) and by that certain Second Amendment and Waiver to Senior
Secured Note, dated as of October 23, 2008 (the “Second
Amendment”) (the Senior Secured Note as amended by the First Amendment
and the Second Amendment, the “Secured
Note”), by and among TWISTBOX ENTERTAINMENT, INC., a Delaware corporation
(the “Company”),
certain subsidiaries of the Company, MANDALAY MEDIA, INC., a Delaware
corporation (“Mandalay”)
and VALUEACT SMALLCAP MASTER FUND, L.P. (the “Investor”)
and is made and entered into as of August 11, 2009 by and between the Company,
Mandalay and the Investor.  Capitalized terms used and not otherwise
defined in this Amendment are used herein as defined in the Secured
Note.

     

    


     

    W I T N E S S E T
H:

     

    


     

    WHEREAS, the Company and the
Investor desire to amend certain provisions of the Secured Note;

     

    WHEREAS, Section 13 of the
Secured Note provides that the terms thereof may be amended and waived only
pursuant to a written instrument executed by the Company and the holders of 75%
of the aggregate principal amount of all Notes issued pursuant to the Purchase
Agreement; and

     

    WHEREAS, the Investor owns
100% of the aggregate principal amount of all Notes issued pursuant to the
Purchase Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:

     

     

    1.           Amendment.

     

    1.1           Amendment to
Title.  The Secured Note is hereby Amended by replacing the
title with the following:

     

    “TWISTBOX ENTERTAINMENT,
INC.

     

    SENIOR SECURED NOTE DUE JULY 31,
2010”

     

    1.2           Amendment to Section
1.  The Secured Note is hereby amended by replacing the text of
Section 1 in its entirety with the following:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Section
1.             General

     

    FOR VALUE
RECEIVED, TWISTBOX ENTERTAINMENT, INC., a Delaware corporation (the “Company”), hereby promises to
pay to the order of VALUEACT SMALLCAP MASTER FUND, L.P. (the “Investor”), the principal sum
of SIXTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($16,500,000.00), or such lesser
amount as shall then equal the outstanding principal amount hereof, together
with interest (“Interest”) thereon at a rate
(the “Interest Rate”)
equal to 12.5% per annum from, and including, July 14, 2009 to, but excluding,
July 30, 2010, each computed on the basis of a year of 360 days comprised of
twelve 30 day months.  All unpaid principal, together with any then
unpaid and accrued interest and other amounts payable hereunder, shall be due
and payable on the earlier of (i) July 31, 2010 (the “Maturity Date”) or (ii) when
such amounts become due and payable as a result of, and following, an Event of
Default in accordance with Section 3 (the “Default Payment
Date”).

     

    If at any
time prior to January 31, 2010, the Company makes a payment under the Note in an
aggregate amount of not less than fifty percent (50%) of the then unpaid
principal and unpaid and accrued interest (any such date, the “Pre-Payment Date”), then the
balance, after giving effect to such pre-payment, of the unpaid principal and
unpaid and accrued interest and other amounts payable under the Note, shall be
due and payable on the earlier of (i) July 31, 2015 (the “New Maturity Date”) or (ii)
the Default Payment Date.  Commencing upon the Pre-Payment Date, the
Interest Rate on the outstanding principal amount shall be equal to 10.00% per
annum from, and including, the date upon which the Pre-Payment is made to, but
excluding, July 31, 2015.

     

    If the
Company receives any net proceeds from any debt financing arrangement (other
than any proceeds from a Company Receivables Facility) not to exceed $9,000,000
in the aggregate (the “Debt
Proceeds”), at least fifty percent (50%) of all such Debt Proceeds shall
be paid to Investor to satisfy a portion of the then unpaid principal and unpaid
and accrued interest and other amounts payable under the Note (the “Debt
Pre-Payment”).

     

    If the
Guarantor receives any net proceeds from any equity financing (the “Equity Proceeds”), at least
fifty percent (50%) of the Equity Proceeds shall be paid to Investor to satisfy
a portion of the then unpaid principal and unpaid and accrued interest under the
Note (the “Equity
Pre-Payment”).  The balance, after giving effect to the Equity
Pre-Payment, of the unpaid principal and unpaid and accrued interest and other
amounts payable under the Note in an amount equal to the Equity Pre-Payment (the
“Deferred Amount”) shall
be due and payable on the earlier of the New Maturity Date or the Default
Payment Date.  Commencing upon the date of the Equity Pre-Payment, the
Interest Rate on the Deferred Amount shall be equal to 10.00% per annum from,
and including, the date upon which the Equity Pre-Payment is made to, but
excluding, July 31, 2015.

     

    In the
event the Company and/or Guarantor have made, in the aggregate, Debt
Pre-Payments and Equity Pre-Payments in one or more payments equal to or greater
than $9,000,000 (the “Combined
Pre-Payments”), commencing upon the date the Investor receives such
Combined Pre-Payments, then the balance, after giving effect to the Combined
Prepayments, of the unpaid principal and unpaid and accrued interest and other
amounts payable under the Note shall be due and payable on the earlier of the
New Maturity Date or the Default Payment Date.  The Interest Rate on
the balance of all unpaid principal shall be equal to 10.00% per annum from, and
including, the date upon which the Investor receives such Combined Pre-Payments
to, but excluding, July 31, 2015.

     

    
      
        
        

      

      
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    This Note
shall be prepayable without penalty, in whole or in part, at any time at the
Company’s option at 100% of the principal amount plus accrued but unpaid
interest to and including the date of prepayment.  Any prepayments
will be applied first to any accrued but unpaid interest and then to unpaid
principal.

     

    This Note
is one of a duly authorized issue of notes of the Company (this note being
referred to as the “Note” and, collectively, all
similar notes issued by the Company being referred to as the “Notes”), issued in the
aggregate principal amount initially limited to $16,500,000.00 pursuant to the
Securities Purchase Agreement, dated as of July 30, 2007 (as the same may be
amended, supplemented or otherwise modified from time to time, the “Securities Purchase
Agreement”) by and among the Company and the Investor party thereto, and
is entitled to the benefits thereof and to the exercise of the remedies provided
thereby or otherwise available in respect thereof.  Capitalized terms
used herein without definition have the meanings assigned thereto in the
Securities Purchase Agreement.  Unless the context otherwise requires,
an accounting term not otherwise defined has the meaning assigned to it in
accordance with the United States generally accepted accounting principles
(“GAAP”).

     

    Interest
on this Note shall accrue from the last Interest Payment Date (as hereinafter
defined) through and until repayment of the principal amount of this Note and
payment of all Interest in full, and shall be payable in cash semi-annually in
arrears on each January 1 and July 1 that the Notes are outstanding or, if any
such date shall not be a Business Day, on the next succeeding Business Day to
occur after such date (each date upon which interest shall be so payable, an
“Interest Payment
Date”), to holders of record on each preceding December 15 and June 15 to
the applicable Interest Payment Date, beginning on January 1, 2010, by wire
transfer of immediately available funds to an account at a bank designated in
writing by the Investor on reasonable notice.

     

    Notwithstanding
the foregoing provisions of this Section 1, any overdue principal of, overdue
Interest on, and any other overdue amounts payable under, this Note shall bear
interest, payable on demand in immediately available funds, for each day from
the date payment thereof was due to the date of actual payment at a rate equal
to the sum of (i) the Interest Rate and (ii) an additional two percent (2.00%)
per annum.  Subject to applicable law, any interest that shall accrue
on overdue interest on this Note as provided in the preceding sentence and shall
not have been paid in full in cash on or before the next Interest Payment Date
to occur after the date on which the overdue interest became due and payable
shall itself be deemed to be overdue interest on this Note to which the
preceding sentence shall apply.  In addition, notwithstanding the
foregoing provisions of this Section 1, if an Event of Default has occurred and
is continuing, then, so long as such Event of Default is continuing, all
outstanding principal of this Note shall bear interest, after as well as before
judgment, at a rate equal to the sum of (i) the Interest Rate and (ii) an
additional two percent (2.00%) per annum.

     

    
      
        
        

      

      
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    Notwithstanding
anything to the contrary set forth herein, the Company may, at its option, in
lieu of making any cash payment to the Investor with respect to the Interest
Payment Date occurring on January 1, 2010, elect that the amount of any Interest
due and payable on such date be added to the principal amount then due under
this Note.  This election by the Company to pay the Interest on
January 1, 2010 by adding the amount of such payment to the Principal under this
Note is hereafter referred to as the “PIK Election.”  The
Company shall provide written notice of the PIK Election to the Investor by
December 20, 2009.”

     

    1.3           Amendment to Section
5.  The Secured Note is hereby amended by replacing the text
following Section 5(e) in its entirety with the following:

     

    “If the
Earn-Out Payments (as defined in that certain Stock Purchase Agreement dated
October 8, 2008 by and among the Guarantor, Jonathan Creswell, Nathaniel
MacLeitch and the shareholders of AMV Holdings Limited, as amended (the “AMV Purchase Agreement”)) for
the period from October 1, 2008 to March 31, 2009 equal to £768,000.00 in the
aggregate have been paid to Sellers (as defined in the AMV Purchase Agreement)
by July 31, 2009 (the “Earn-Out
Payment Date”), then the Company and Guarantor collectively shall (a)
maintain a cash balance of not less than $1,000,000 from July 14, 2009 until
January 31, 2010 and (b) maintain a cash balance of not less than $4,000,000 on
and after February 1, 2010, to be held in a “deposit account”, as such term is
defined in Article 9 of the Uniform Commercial Code as in effect from time
to time in the State of New York (the “UCC”), free and clear of all Liens except
as set forth in the Guarantee and Security Agreement and will provide the
Investor with reasonable proof of such cash balance as reasonably requested by
the Investor from time to time; provided, however if the
Earn-Out Payments are not paid to the Sellers by the Earn-Out Payment Date, then
the Company and Guarantor collectively shall be required to maintain a cash
balance of not less than $4,000,000 on and after August 1, 2009, to be held in a
“deposit account”, as such term is defined in Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York (the
“UCC”), free and clear of all Liens except as set forth in the Guarantee and
Security Agreement and will provide the Investor with reasonable proof of such
cash balance as reasonably requested by the Investor from time to
time.

     

    Until at
least $8,250,000 of principal has been paid on this Note, Guarantor will not,
without the prior written approval of Investor (which approval will not be
unreasonably withheld after good faith negotiations between Guarantor and
Investor) create, incur, assume or permit to exist (i) all indebtedness, whether
or not contingent, for borrowed money or for the deferred purchase price of
property or services, (ii) any other indebtedness that is evidenced by a note,
bond, debenture or similar instrument, (iii) all obligations under financing
leases or letters of credit, (iv) all obligations in respect of acceptances
issued or created, (v) all liabilities secured by any lien on any property, and
(vi) all guarantee obligations, in each case including the principal amount
thereof, any accrued interest thereon and any prepayment premiums or fees or
termination fees with respect thereto ((i)-(vi)) together, “Guarantor Indebtedness”)
except: (a) Guarantor Indebtedness with respect to trade accounts of the
Guarantor or for services provided to the Guarantor each as arising in the
ordinary course of business; (b) Guarantor Indebtedness in connection with a
receivables facility not in excess of $25,000,000 (a “Guarantor Receivables
Facility”) and (c) Guarantor Indebtedness incurred in connection with
equipment leases entered into in the ordinary course of business subsequent to
the date hereof not exceeding $250,000 in the aggregate.”

     

    
      
        
        

      

      
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    1.4           Amendment to Section
6(a)(v).  The Secured Note is hereby amended by replacing the
text of Section 6(a)(v) with the following:

     

    “Indebtedness
in connection with a receivables facility not in excess of the lesser of (x)
$10,000,000 or (y) 85% of the Net Receivables Balance (as defined in the
Guarantee and Security Agreement) at any point in time, which Indebtedness shall
rank pari passu in right of payment to the Notes; provided, that, notwithstanding
anything to the contrary set forth herein, Investor acknowledges and agrees that
(and shall take all action reasonably necessary to ensure that) the Receivables
(as defined in the Guarantee and Security Agreement) of the Company used to
procure and maintain such receivables facility shall not be subject to any Lien
of Investor (the “Company
Receivables Facility”) during the term of such Company Receivables
Facility; provided, further, that until
all principal and interest and any other amounts due and payable under this Note
have been paid in full in cash, the Company shall not, and shall not permit any
Subsidiary to, without the prior written consent of the Investor holding a
majority in principal amount of the Note, establish any Company Receivables
Facility.”

     

    1.5           Amendment to Section
6(a).  The Secured Note is hereby amended by adding the
following text after Section 6(a)(viii), as follows:

     

    “(ix)                      Indebtedness
incurred in connection with any Debt Prepayment as set forth in Section 1 hereof
(which such Indebtedness may be senior in right of payment to the Note) and
Investor and the Company shall take all necessary actions, at the Company’s cost
and expense, to subordinate to any lender(s) of such financing, in an amount
equal to the Debt Proceeds paid to Investor, Investor’s security interest
pursuant to that certain Guarantee and Security Agreement dated as of July 30,
2007 between Investor and the Company and/or any related agreements or
documents.”

     

    1.6           Amendment to Section
6.  The Secured Note is hereby amended by replacing the
paragraph at the end of Section 6 with the following:

     

    “Until
all principal and interest and any other amounts due and payable under this Note
have been paid in full in cash, Guarantor shall not, and shall not permit any
Subsidiary to, without the prior written approval of the Investor holding a
majority in principal amount of the Notes, prepay any Indebtedness incurred
pursuant to that certain promissory note issued by Guarantor to Nathan
MacLeitch, Jack Cresswell and the shareholders of AMV Holding Limited in the
principal amount of FIVE MILLION EIGHT HUNDRED EIGHTEEN THOUSAND TWO HUNDRED
THIRTY-TWO DOLLARS ($5,818,232.00) on October 23, 2008, as amended on July 14,
2009 (the “Promissory
Note”) other than prepayments with proceeds raised in an equity financing
by Guarantor and subject to the terms and conditions set forth in Section 1(c)
and Section 1(d) of the Promissory Note.”

     

    
      
        
        

      

      
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    2.           Full Force and
Effect.  Except as modified by this Amendment, all other terms
and conditions in the Secured Note shall remain in full force and
effect.

     

    3.           Effect.  Unless
the context otherwise requires, the Secured Note and this Amendment shall be
read together and shall have effect as if the provisions of the Secured Note and
this Amendment were contained in one agreement.  After the effective
date of this Amendment, all references in the Secured Note to “this Note,”
“hereto,” “hereof,” “hereunder,” or words of like import referring to the
Secured Note shall mean the Secured Note as modified by the First Amendment, the
Second Amendment and this Amendment.

     

    4.           Counterparts.  This
Amendment may be executed in separate counterparts, all of which taken together
shall constitute a single instrument.

     

    [SIGNATURE
PAGE FOLLOWS]

    


     

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
parties hereto have executed this Amendment effective as of the day and year
first above written.

     

     

    THE
COMPANY:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 
      	
                                          TWISTBOX
      ENTERTAINMENT, INC.

                                        	 
	 
      	 
      	 
      	 
	 
      	
                                          By:

                                        	
                                          /s/
      Ian Aaron

                                        	 
	 
      	
                                          Name:
      Ian Aaron

                                        	 
	 
      	
                                          Title:
      President/CEO

                                        	 
	 
      	 
      	 
      	 
	
                                          INVESTOR:

                                        	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                                          VALUEACT
      SMALLCAP MASTER FUND, L.P.,

                                        	 
	 
      	
                                          By
      VA Smallcap Partners, LLC, its General Partner

                                        	 
	 
      	 
      	 
      	 
	 
      	
                                          By:

                                        	
                                          /s/ David Lockwood

                                        	 
	 
      	
                                          Name:
      David Lockwood

                                        	 
	 
      	
                                          Title:
      Managing Member

                                        	 
	 
      	 
      	 
      	 
	
                                          MANDALAY:

                                        	 
      	 
      	 
	 
      	
                                          MANDALAY
      MEDIA, INC.

                                        	 
	 
      	 
      	 
      	 
	 
      	
                                          By:

                                        	/s/ James Lefkowitz	 
	 
      	
                                          Name:
      James Lefkowitz

                                        	 
	 
      	
                                          Title:
      President

                                        	 


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    


     

    
      
        
        

      

      
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