Document:

Exhibit 10.1

 

EIGHTH AMENDMENT TO

THIRD
AMENDED AND RESTATED CREDIT AGREEMENT

AND
CONSENT OF GUARANTORS

 

This EIGHTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND
CONSENT OF GUARANTORS (this “Amendment”) is dated as of October 21,
2008, and entered into by and among FLEETWOOD
ENTERPRISES, INC.  (“Fleetwood”),
FLEETWOOD HOLDINGS INC. (“Holdings”)  and its Subsidiaries listed on the signature pages hereof
(collectively, “Borrowers”), the banks and other financial institutions
signatory hereto that are parties as Lenders to the Credit Agreement referred
to below (the “Majority Lenders”), and BANK OF
AMERICA, N.A., as administrative agent and collateral agent (in such
capacity, the “Agent”) for the Lenders.

 

Recitals

 

Whereas,
Fleetwood, the Borrowers, the Lenders, and the Agent have entered into that
certain Third Amended and Restated Credit Agreement dated as of January 5,
2007, as amended by that certain First Amendment to Third Amended and Restated
Credit Agreement and Consent of Guarantors dated as of May 25, 2007, that
certain Second Amendment to Third Amended and Restated Credit Agreement and
Consent of Guarantors dated as of October 18, 2007, that certain Third
Amendment to Third Amended and Restated Credit Agreement and Consent of
Guarantors dated as of January 16, 2008, that certain Fourth Amendment to
Third Amended and Restated Credit Agreement and Consent of Guarantors dated as
of March 5, 2008, that certain Fifth Amendment to Third Amended and
Restated Credit Agreement and Consent of Guarantors dated as of April 9,
2008, that certain Sixth Amendment to Third Amended and Restated Credit
Agreement and Consent of Guarantors dated as of April 24, 2008, and that
certain Seventh Amendment to Third Amended and Restated Credit Agreement and
Consent of Guarantors dated as of August 6, 2008 (as amended, amended and
restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Any terms defined in the Credit Agreement and
not defined in this Amendment are used herein as defined in the Credit
Agreement;

 

Whereas,
the Borrowers have requested the amendments to the Credit Agreement as further
set forth herein; and

 

Whereas,
the Majority Lenders and the Agent are willing to agree to the amendments
requested by the Borrowers, on the terms and conditions set forth in this
Amendment;

 

Now Therefore, in consideration of the premises
and the mutual agreements set forth herein, Fleetwood, the Borrowers, the Majority
Lenders and the Agent agree as follows:

 

1

 

1.     AMENDMENTS TO CREDIT
AGREEMENT.  Subject to the
conditions and upon the terms set forth in this Amendment and in reliance on
the representations and warranties of Fleetwood and the Borrowers set forth in
this Amendment, the Credit Agreement is hereby amended as follows:

 

1.1   Amendments to Annex A to Credit
Agreement (Definitions). 
The definitions of “Minimum Liquidity
Event” in Annex A of the Credit Agreement are amended to read as
follows:

 

“Minimum Liquidity Event” means, (1) as of any calculation
date, either (a) Fleetwood, on a consolidated basis, has Fleetwood
Liquidity of $50,000,000 or less for the calendar month immediately preceding
such calculation date or (b) other than as to any date of calculation from
September 21, 2008 through October 31, 2008, inclusive, for
the calendar month immediately preceding such
calculation date, the average daily Availability during such calendar
month was $20,000,000 or less or (2) on
any date from and after the Closing Date, Fleetwood, on a consolidated basis,
had Fleetwood Liquidity of $25,000,000 or less

 

2.     ACKNOWLEDGEMENTS AND AGREEMENTS. 
For the avoidance of doubt, the Loan Parties, the Agent and
the Majority Lenders acknowledge and agree that, (a) upon satisfaction of
the condition precedent set forth in Section 5.3 below and as of
the Effective Time,  the Term Loans shall
have been prepaid in full and no portion of any
Lender’s Term Loan shall be outstanding, (b) Section 11.1(a)(ii) of the Credit Agreement
provides that no waiver, amendment, or consent under the Credit Agreement shall
release any Term Loan Collateral other than as permitted by Section 2.8,
Section 2.9, Section 7.9 or Section 12.11
(provided that the Term Loan Collateral may be released with the consent of the
Term Lenders) unless in writing and signed by
all the Term Lenders, the Majority Revolving Lenders, Fleetwood and the
Borrowers and acknowledged by the Agent, (c) after the Effective time,
in accordance with the definition of “Term Lenders,” there shall no longer be
any Term Lenders for any purpose under the Credit Agreement, (d) accordingly, under Section 11.1(a)(ii) of the
Credit Agreement, the Majority Revolving Lenders shall have the authority to
consent to the release of any Term Loan Collateral (which such release must be
countersigned by Fleetwood, the Borrowers and acknowledged by the Agent) and (e) in
light of the foregoing, such Real Estate as
constituted Term Loan Collateral immediately prior to the Effective Time shall
continue to constitute Term Loan Collateral immediately after the Effective
Time, subject to Agent’s Liens, for all purposes under the Credit Agreement until
such time, if any, as the Majority Revolving Lenders agree (with Fleetwood and
the Borrower and the Agent) that any one or more items of such Term Loan
Collateral shall be released.

 

3.     WAIVERS.  Notwithstanding the provisions of Section 3.4(a) if
the Credit Agreement, the Majority Lenders agree that Borrowers may prepay the
principal of the Term Loan in whole on the Effective Date, without any
requirement of advance notice thereof, but otherwise in accordance with Section 3.4(a) and
without prejudice to any requirement to pay any accrued interest to such date
of prepayment, any fees, any penalties or any other amounts due and payable in
connection with such prepayment, including, without limitation, to the extent
required by Section 4.4 of the Credit Agreement.

 

2

 

4.     REPRESENTATIONS AND
WARRANTIES OF FLEETWOOD AND THE BORROWERS. 
In order to induce the Majority Lenders and the Agent to
enter into this Amendment, each of Fleetwood and each Borrower represents and
warrants to each Majority Lender and the Agent that the following statements
are true, correct and complete:

 

4.1   Power and Authority.  Each of the Loan Parties has all corporate
power and authority to enter into this Amendment and, as applicable, the
Consent of Guarantors attached hereto (the “Consent”), and to carry out
the transactions contemplated by, and to perform its obligations under or in
respect of, the Credit Agreement.

 

4.2   Corporate Action.  The execution and delivery of this Amendment
and the Consent and the performance of the obligations of each Loan Party under
or in respect of the Credit Agreement as amended hereby have been duly
authorized by all necessary corporate action on the part of each of the Loan
Parties.

 

4.3   No Conflict or Violation or Required Consent or
Approval.  The execution
and delivery of this Amendment and the Consent, the performance of the obligations
of each Loan Party under or in respect of the Credit Agreement as amended
hereby and the transactions contemplated hereby (including, without limitation,
with respect to the prepayment of the Term Loans as set forth in Section 5.3
below) do not and will not conflict with or violate (a) any provision of
the governing documents of any Loan Party or any of its Subsidiaries, (b) any
Requirement of Law, (c) any order, judgment or decree of any court or
other governmental agency binding on any Loan Party or any of its Subsidiaries,
or (d) any indenture, agreement or instrument to which any Loan Party or
any of its Subsidiaries is a party or by which any Loan Party or any of its
Subsidiaries, or any property of any of them, is bound, and do not and will not
require any consent or approval of any Person.

 

4.4   Execution, Delivery and Enforceability.  This Amendment and the Consent have been duly
executed and delivered by each Loan Party which is a party thereto and are the
legal, valid and binding obligations of such Loan Party, enforceable in
accordance with their terms, except as enforceability may be affected by
applicable bankruptcy, insolvency, and similar proceedings affecting the rights
of creditors generally, and general principles of equity.  The Agent’s Liens in the Collateral continue
to be valid, binding and enforceable first priority Liens (except for Permitted
Liens) which secure the Obligations.

 

4.5   No Default or Event of Default.  No event has occurred and is continuing or
will result from the execution and delivery of this Amendment or the Consent
that would constitute a Default or an Event of Default.

 

4.6   Representations and Warranties.  Each of the representations and warranties
contained in the Loan Documents is and will be true and correct in all material
respects on and as of the date hereof and as of the effective date of this
Amendment, except to the extent that such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects as of such earlier date.

 

3

 

5.     CONDITIONS TO
EFFECTIVENESS OF THIS AMENDMENT.  This
Amendment, and the consents and approvals contained herein, shall be effective
only if and when signed by, and when counterparts hereof shall have been
delivered to the Agent (by hand delivery, mail or telecopy) by, Fleetwood, the
Borrowers and each Majority Lender and only if and when each of the following
conditions is satisfied:

 

5.1   Consent of Guarantors.  Each of the Guarantors shall
have executed and delivered to the Agent the Consent.

 

5.2   No Default or Event of Default; Accuracy of
Representations and Warranties. 
No Default or Event of Default shall exist and each of the
representations and warranties made by the Loan Parties herein and in or
pursuant to the Loan Documents shall be true and correct in all material
respects as if made on and as of the date on which this Amendment becomes
effective (except that any such representation or warranty that is expressly
stated as being made only as of a specified earlier date shall be true and
correct as of such earlier date).

 

5.3   .
Prepayment of Term Loan.  The Borrowers shall have prepaid
the Term Loan in whole in accordance with Section 3.4(a) of the
Credit Agreement (subject to the waiver provisions set forth above), together
with all accrued but unpaid interest on the Term Loan to the date of such
prepayment.

 

6.     EFFECTIVE TIME.  This
Amendment shall become effective (the “Effective Time”) on the date and
time of the satisfaction of the conditions set forth in Section 5.

 

7.     EFFECT OF AMENDMENT;
RATIFICATION.  This Amendment
is a Loan Document.  From and after the
date on which this Amendment becomes effective, all references in the Loan
Documents to the Credit Agreement shall mean the Credit Agreement as amended
hereby.  Except as expressly amended
hereby or waived herein, the Credit Agreement and the other Loan Documents,
including the Liens granted thereunder, shall remain in full force and effect,
and all terms and provisions thereof are hereby ratified and confirmed.

 

8.     Each of Fleetwood and the Borrowers
confirms that as amended hereby, each of the Loan Documents is in full force
and effect, and that none of the Credit Parties has any defenses, setoffs or
counterclaims to its Obligations.

 

9.     APPLICABLE LAW.  THE VALIDITY, INTERPRETATIONS AND
ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION
WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

 

10.   NO WAIVER.  The execution, delivery and
effectiveness of this Amendment does not constitute a waiver of any Default or
Event of Default, amend or modify any provision of any Loan Document except as
expressly set forth herein or constitute a course of dealing or any other basis
for altering the Obligations of any Loan Party.

 

4

 

11.   COMPLETE AGREEMENT.  This Amendment sets forth the
complete agreement of the parties in respect of any amendment to any of the
provisions of any Loan Document or any waiver thereof.  The execution, delivery and effectiveness of
this Amendment do not constitute a waiver of any Default or Event of Default,
amend or modify any provision of any Loan Document except as expressly set
forth herein or constitute a course of dealing or any other basis for altering the
Obligations of any Loan Party.

 

12.   CAPTIONS;
COUNTERPARTS.  The catchlines
and captions herein are intended solely for convenience of reference and shall
not be used to interpret or construe the provisions hereof.  This Amendment may be executed by one or more
of the parties to this Amendment on any number of separate counterparts
(including by telecopy), all of which taken together shall constitute but one
and the same instrument.

 

[signatures follow; remainder of page intentionally
left blank]

 

5

 

IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Amendment as of the date set forth above.

 

	
  BORROWERS

  	
   

  	
  FLEETWOOD HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF CALIFORNIA, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF FLORIDA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF GEORGIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF IDAHO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF KENTUCKY, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF NORTH 

  CAROLINA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF OREGON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF 

  PENNSYLVANIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF TENNESSEE, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF TEXAS, L.P.

  
	
   

  	
   

  	
  By:

  	
  FLEETWOOD GENERAL PARTNER

  
	
   

  	
   

  	
  OF TEXAS, INC., its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF VIRGINIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF WASHINGTON, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF 

  CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF 

  INDIANA, INC.

  

 

Eighth Amendment and Consent of
Guarantors

 

S-1

 

	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF 

  PENNSYLVANIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  KENTUCKY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  MARYLAND, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  OHIO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  OREGON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF 

  TEXAS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLD SHIELD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLD SHIELD OF INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HAUSER LAKE LUMBER OPERATION, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONTINENTAL LUMBER PRODUCTS, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD GENERAL PARTNER OF 

  TEXAS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES INVESTMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Andrew M. Griffiths

  
	
   

  	
   

  	
  Name:

  	
  Andrew M. Griffiths

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  GUARANTOR

  	
   

  	
  FLEETWOOD ENTERPRISES, INC.,
  as the 

  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Andrew M. Griffiths

  
	
   

  	
   

  	
  Name:

  	
  Andrew M. Griffiths

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

S-2

 

IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Amendment as of the date set forth above.

 

 

	
   

  	
   

  	
  BANK OF AMERICA, N.A., as the
  Agent and 

  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Todd Eggertsen

  
	
   

  	
   

  	
  Name:

  	
  Todd Eggertsen

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

S-3

 

	
   

  	
   

  	
  WELLS FARGO FOOTHILL, INC., fka 

  FOOTHILL CAPITAL CORPORATION, as 

  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Juan Barrera

  
	
   

  	
   

  	
  Name:

  	
  Juan Barrera

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

S-4

 

	
   

  	
   

  	
  TEXTRON FINANCIAL CORPORATION, 

  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

S-5

 

	
   

  	
   

  	
  PNC BANK, NATIONAL ASSOCIATION, as 

  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

S-6

 

	
   

  	
   

  	
  WACHOVIA CAPITAL FINANCE 

  CORPORATION (WESTERN),
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

S-7

 

CONSENT
OF GUARANTORS

 

Each
of the undersigned is a Guarantor of the Obligations of the Borrowers under the
Credit Agreement and hereby (a) consents to the foregoing Amendment, (b) acknowledges
that notwithstanding the execution and delivery of the foregoing Amendment, the
obligations of each of the undersigned Guarantors are not impaired or affected
and the Guaranties continue in full force and effect, and (c) ratifies its
Guaranty and each of the Loan Documents to which it is a party.

 

IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this
CONSENT OF GUARANTORS as of the 21st day of October, 2008.

 

 

	
  GUARANTORS

  	
   

  	
  FLEETWOOD ENTERPRISES, INC.

  
	
   

  	
   

  	
  FLEETWOOD CANADA LTD.

  
	
   

  	
   

  	
  FLEETWOOD INTERNATIONAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Andrew M. Griffiths

  
	
   

  	
   

  	
  Name:

  	
  Andrew M. Griffiths

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

S-8SECOND
      AMENDMENT AND WAIVER TO SENIOR SECURED NOTE

     

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

     

    WITNESSETH:

     

    WHEREAS,
      the Company and the Investor desire to amend certain provisions of the Secured
      Note and to waive compliance with certain provisions of the Secured
      Note.

     

    WHEREAS,
      Section 13 of the Secured Note provides that the terms thereof may be amended
      or
      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.

     

    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. Waiver.

    

    1.1 Waiver
      of Section 5.
      The
      Investor hereby waives compliance with the covenants set forth in Section 5
      of
      the Secured Note with respect to the issuance by Guarantor to the Sellers (as
      defined below) of that certain promissory note in the principal amount of
      $5,375,000 in connection with that certain Stock Purchase Agreement, entered
      into by and among Guarantor, Jack Cresswell (“Cresswell”),
      Nathaniel MacLeitch (“MacLeitch”)
      and
      the shareholders of AMV Holding Limited (“AMV”)
      signatories thereto (together with Cresswell and MacLeitch, the “Sellers”),
      dated
      as of October 8, 2008, relating to Guarantor’s acquisition of 100% of the share
      capital of AMV and 80% of the share capital of Fierce Media Limited (the
“Purchase
      Agreement”).

     

    2. Amendment.

    

    2.1 Amendment
      to Section 1.
      Section
      1 of the Secured Note is hereby amended by adding the following new paragraph
      after the fourth paragraph of Section 1: 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “PIK
      Election.
      Notwithstanding anything to the contrary set forth herein, the Company may,
      at
      its option, in lieu of making any cash payments to the Investor with respect
      to
      the two Interest Payment Dates occurring on January 1, 2009 and July 1, 2009,
      elect that the amount of any Interest due and payable on such dates be added
      to
      the principal amount then due under this Note. An election by the Company to
      pay
      the Interest on any Interest Payment Date by adding the amount of such payment
      to the Principal under this Note is hereafter referred to as a “PIK
      Election.”
The
      Company shall provide written notice of a PIK Election to the Investor not
      less
      than five days prior to the Interest Payment Date to which such PIK Election
      relates.” 

     

    2.2
       Amendment
      to Section 1.
      Section
      1 of the Secured Note is hereby amended by adding the following language to
      the
      end of Section 1: 

     

    “If
      the
      Company makes any payments of principal due under the Note on October 23, 2008
      up to an aggregate principal payment of FIVE MILLION DOLLARS ($5,000,000),
      an
      equivalent amount of principal shall automatically be converted into fully
      paid
      and nonassessable shares of common stock, par value $0.0001 per share (the
      “Mandalay Common Stock”)
      of
      Mandalay Media, Inc., the Company’s parent company, at a price per share equal
      to $2.67 (the “Conversion”).

    

    In
      connection with any Conversion, the Company shall send a written conversion
      notice to the Investor. Such notice shall state the date on which the Conversion
      became effective and all instructions and materials necessary to enable Investor
      to receive the certificate(s) representing the shares of Mandalay Common Stock
      into which such principal amount due under this Note has been
      converted.

    

    If
      required by the Company, Investor shall deliver an instrument of cancellation
      executed by the Investor in form and substance reasonably acceptable to the
      Company evidencing the payment of the principal amount due under this Note
      that
      has been converted into Mandalay Common Stock. 

    

    The
      Company shall, promptly after the date of Conversion, issue and deliver to
      such
      holder of this Note, or to his or its nominees, a certificate or certificates
      for the number of shares of Mandalay Common Stock to which such holder shall
      be
      entitled. The Investor shall not have, solely on account of such status as
      a
      holder of this Note, any rights of a stockholder of Mandalay Media, Inc., either
      at law or in equity, except as provided in this Note.

    

    2.3 Amendment
      to Section 3. The
      Secured Note is hereby amended by adding the following paragraph to Section
      3:

    

    “(m)
      Guarantor shall fail to observe its covenant contained in Section 6 of this
      Note.”

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.4 Amendment
      to Section 5.
      The
      Secured Note is hereby amended by deleting the first two sentences following
      Section 5(e) and replacing such text with the following:

    

    “The
      Company and Mandalay Media, Inc., the Company’s parent corporation (the
“Guarantor”),
      collectively shall (a) not be required to maintain any minimum cash balance
      until April 23, 2009, (b) maintain a cash balance of not less than $4,000,000
      from April 24, 2009 until July 23, 2009 and (c) maintain a cash balance of
      not
      less than $5,000,000 on and after July 24, 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.”

     

    2.5 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 “Receivables Facility”)
      during
      the term of such Receivables Facility,”

     

    2.6 Amendment
      to Section 6. The
      Secured Note is hereby amended by adding the following language to the end
      of
      Section 6:

    

    “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 THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
      ($5,375,000)
      on
      October 23, 2008 (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.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3. Costs
      and Expenses.
      The
      Company agrees to pay for the reasonable legal expenses of the Investor for
      the
      negotiation and preparation of this Amendment in the aggregate amount of up
      to
      $100,000.

     

    4. Effectiveness
      of this Amendment.
      This
      Amendment shall have no force or effect until immediately prior to the Closing
      (as defined in the Purchase Agreement). 

     

    5. 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.

     

    6. 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 this Amendment.

     

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

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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
                      and Chief Executive Officer

                  
	
                     

                  	
                     

                  
	
                    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
                      MEDIA, INC.

                  
	
                     

                  	
                     

                  
	
                     

                  	
                    By:

                  	
                    /s/
                      James Lefkowitz

                  
	
                     

                  	
                    Name:

                  	
                    James
                      Lefkowitz

                  
	
                     

                  	
                    Title:

                  	
                    President

                  

          

        

      

    

    
       

      
        
          
          

        

        
          5

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