AMENDED AND RESTATED GUARANTY
AMENDED
AND RESTATED GUARANTY
ALL
INDEBTEDNESS EVIDENCED BY THIS GUARANTY IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE SUBORDINATION AGREEMENT, DATED AS OF JUNE 21, 2010 (THE
"SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG VALUEACT, THE COMPANY, XXXXXX
CAPITAL MASTER FUND, LTD. AND THE GUARANTOR.
This
Amended and Restated Guaranty (this “Guaranty”)
is given as of June 21, 2010, by NEUMEDIA, INC. formerly known as Mandalay
Media, Inc., a Delaware corporation (the “Guarantor”)
to VALUEACT SMALLCAP MASTER FUND, L.P. (“ValueAct”).
WHEREAS,
Twistbox Entertainment, Inc. (the “Company”)
is indebted to ValueAct in the principal amount of $3,500,000 pursuant to an
Amended and Restated Senior Subordinated Secured Note due June 21, 2013, dated
June 21, 2010, (as amended, supplemented or otherwise modified from time to
time, the “Note”);
WHEREAS,
the Guarantor has agreed to guarantee all the obligations of the Company under
the Note in the terms and conditions set forth in this Guaranty;
and
WHEREAS,
this Guaranty amends and restates that certain Guaranty, given as of February
12, 2008, by the Guarantor to ValueAct, as the same may have been amended,
supplemented or otherwise modified from time to time prior to the date hereof
(the “Original
Guaranty”).
NOW,
THEREFORE, the Guarantor, in consideration of the foregoing, agrees as follows.
Capitalized terms used but not defined herein shall have the meanings set forth
in that certain Amended and Restated Guarantee and Security Agreement, dated as
of June 21, 2010, by and among the Company, the Guarantor, the subsidiaries
party thereto and ValueAct, as collateral agent (as the same may be amended,
supplemented or otherwise modified from time to time, and together with all
other documents, agreements and instruments executed in connection therewith,
the “Guarantee and
Security Agreement”).
1.
Guaranty. Subject to the other terms and the
limitations contained in this Guaranty, the Guarantor does hereby guarantee to
ValueAct the payment by the Company of principal plus all accrued but unpaid
interest (the “Guaranteed
Amount”) under the Note in
accordance in all material respects with the terms, conditions and limitations
contained in the Note (the “Obligations”). In the event of a default in
payment of the Obligations by the Company under the Note, upon receipt of
written notice of such default from ValueAct (which notice shall specify the
nature of such default and any dispute between ValueAct and the Company with
respect thereto), the Guarantor shall forthwith pay the same, provided, however, that the Guarantor may (or may cause
the Company) to cure such default within a period of 5 business days after the
date on which written notice specifying such default shall have been given by
ValueAct to the Guarantor. The Guarantor’s obligations under this Guaranty shall
be subject to the limitation that in no event shall the Guarantor be required to
expend more than the Guaranteed Amount in the performance of its
obligations under this Guaranty and in no event shall the Guarantor be required
to expend any amount with respect to fees, costs, expenses or other
amounts.
2.
Scope and
Duration of Guaranty.
Subject to the limitations set forth herein, this Guaranty shall continue in
full force and effect until the Company or the Guarantor shall have
satisfactorily performed or fully discharged the Obligations. Further, this
Guaranty (a) shall remain in full force and effect without regard to, and shall
not be affected or impaired by any invalidity, irregularity or unenforceability
in whole or in part of this Guaranty, and (b) shall be discharged only by
complete performance of the undertakings contained herein (subject to the
limitations set forth herein); provided, that the Guarantor shall have the full
benefit of all defenses, setoffs, counterclaims, reductions, diminution or
limitations of any Obligations available to the Company pursuant to or arising
from the Note or otherwise.
3.
Waivers and
Acknowledgments. The Guarantor hereby unconditionally and
irrevocably waives:
(a) promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Obligations and this Guaranty and any requirement
that any Investors protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Grantor or
any other Person;
1
(b) any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Obligations, whether existing now or in the
future;
(c) (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Investors that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of the Guarantor or other rights of the
Guarantor to proceed against any of the other Grantors, any other guarantor or
any other Person, and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of the Guarantor
hereunder;
(d) any
duty on the part of any Investors to disclose to the Guarantor any matter, fact
or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Grantor or any of
its Subsidiaries now or hereafter known by such Investors; and
(e) the
Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Note and the
Guaranty and Security Agreement and that the waivers set forth in this Section 3
and Section 4 are knowingly made in contemplation of such benefits.
4.
Guarantee
Absolute. The Guarantor guarantees that the Obligations will
be paid strictly in accordance with the terms of the Note and the Guaranty and
Security Agreement, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Collateral Agent or any Investors with respect thereto. The Obligations of
the Guarantor under or in respect of this Guaranty are independent of the
Obligations or any other obligations of any other Grantor under or in respect of
the Note and the Guaranty and Security Agreement, and a separate action or
actions may be brought and prosecuted against each Grantor to enforce this
Guarantee, irrespective of whether any action is brought against the Company or
any other Grantor or whether the Company or any other Grantor is joined in any
such action or actions. The liability of the Guarantor under this Guaranty
shall be irrevocable, absolute and unconditional irrespective of, and the
Guarantor hereby irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the following:
(a) any
lack of validity or enforceability of the Note, the Guaranty and Security
Agreement or any agreement or instrument relating thereto;
(b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations or any other obligations of any other Grantor under or
in respect of the Note or the Guaranty and Security Agreement, or any other
amendment or waiver of or any consent to departure from the Note or the Guaranty
and Security Agreement, including, without limitation, any increase in the
Obligations resulting from the extension of additional credit to any Grantor or
any of its Subsidiaries or otherwise;
(c) any
taking, release or amendment or waiver of, or consent to departure from, any
other guarantee, for all or any of the Obligations it being understood that any
such amendment, waiver or consent shall be applicable to the
Obligations;
(d) any
change, restructuring or termination of the corporate structure or existence of
any Grantor or any of its Subsidiaries;
(e) any
failure of any Investors to disclose to any Grantor any information relating to
the business, condition (financial or otherwise), operations, performance,
properties or prospects of any other Grantor now or hereafter known to such
Investors (each Subsidiary Guarantor waiving any duty on the part of the
Investors to disclose such information);
(f) the
failure of any other Person to execute or deliver this Guaranty, any supplement
or any other guarantee or agreement or the release or reduction of liability of
the Guarantor or other guarantor or surety with respect to the Obligations;
or
(g) any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by any Investors that
might otherwise constitute a defense available to, or a discharge of, any
Grantor or any other guarantor or surety, in each case other than payment in
full of the Obligations (other than contingent indemnification
obligations).
This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by any Investors or any other Person upon the insolvency, bankruptcy
or reorganization of the Guarantor or any other Grantor or otherwise, all as
though such payment had not been made.
5.
Subrogation. The Guarantor hereby agrees that
until the payment and discharge in full and/or waiver of performance of the
Obligations, it shall not exercise any right or remedy arising by reason of the
performance of any of its obligations under this Guaranty, whether by
subrogation or otherwise, against the Company.
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6.
Transfer of Guaranty.
Upon written notice to the Guarantor, ValueAct may transfer its rights under
this Guaranty to any party to whom it sells, transfers or otherwise disposes of
all or any part of the Note.
7.
Security. This
Guaranty is secured pursuant to the Guarantee and Security
Agreement.
8.
Reaffirmation of
Guaranty. The Guarantor hereby (i) acknowledges receipt of a
copy of the Note; (ii) consents to the execution and delivery thereof by the
Company; (iii) agrees to be bound thereby; (iv) affirms that nothing contained
therein shall modify in any respect whatsoever its guarantee of the obligations
of the Company to ValueAct pursuant to the Note, and (v) reaffirms that the
guarantee of the Note is and shall continue to remain in full force and
effect.
9.
Covenants.
(a) The
Guarantor shall, at all times, own, beneficially and of record, 100% of all of
the Equity Interests of the Company.
(b) For
as long as the Note remains outstanding, the Investor shall have the right, but
not the obligation, to designate one individual reasonably acceptable to the
Guarantor to serve as an observer (the “Observer”)
who shall be entitled to attend all meetings of each of the boards of directors
of the Guarantor, the Company, or any Subsidiary (each, a “Board”),
and any committee thereof in a nonvoting, observer capacity, and to receive (on
a concurrent basis) copies of all notices, minutes, consents and other materials
that the Guarantor provides to its directors; provided, however, that the
Observer shall execute a confidentiality agreement, reasonably satisfactory to
the Guarantor, with respect to the information to be provided or the matters to
be discussed at any meeting of the Board. Notwithstanding the foregoing, the
Guarantor reserves the right to withhold any information and exclude such
Observer from any meeting of the Board, or any portion thereof, if access to
such information or attendance at such meeting could (based on the advice of the
Guarantor’s counsel) adversely affect the attorney-client privilege with respect
to any matters to be discussed or any matters included in the information to be
distributed. The Guarantor hereby approves Xx. Xxxxxxx Xxxxxxxxxx and Mr.
Xxxxx Xxxxx to serve as an Observer.
(c) Until
all principal and interest and any other amounts due and payable under the Note
have been paid in full in cash, the 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:
(i) Indebtedness. Incur,
create, assume or permit to exist any Indebtedness, except
(A) the
senior notes issued by the Guarantor, dated June 21, 2010, in the amount of
$1,500,000 and $1,000,000, respectively (the “NeuMedia Notes”), and guarantees
thereof by the Grantors; provided that the aggregate outstanding principal
amount (and the guaranteed amount permitted under this Section 9(c)(i)(A)) of
the NeuMedia Notes shall not exceed $2,500,000;
(B)
Indebtedness under the Note, this Guaranty, the Guarantee and Security Agreement
and the guarantee given by AMV Holding Limited and the debenture securing such
guarantee each dated August 23, 2008; and
(C)
unsecured Indebtedness, provided the Indebtedness is expressly subordinate
in right of payment to the Note on terms acceptable to ValueAct.
“Indebtedness”
means (i) all indebtedness, whether or not contingent, for borrowed money or for
the deferred purchase price of property or services (but excluding trade
accounts payable in the ordinary course of business not overdue for more than
sixty (60) days), (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.
(ii) Affiliate Transaction.
Excluding (x) the transactions with Affiliates as of the date hereof and as set
forth on Exhibit A1 hereto
(each, an “Existing
Affiliate Transaction”) and (y) transactions between or among the
Company, the Guarantor and its Subsidiaries, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate (each, an “Affiliate
Transaction”), unless
1 Pending
review of exhibit.
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(A) the
Affiliate Transaction is in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor’s or such Subsidiary’s business and
upon fair and reasonable terms no less favorable to the Guarantor or such
Subsidiary than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate; and
(I) if
the Affiliate Transaction or series of related Affiliate Transactions involves
aggregate consideration less than or equal to $250,000, the Guarantor shall
deliver to the Investor a resolution of the Board of Directors of the Guarantor
set forth in an officers’ certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
the Guarantor; and
(II)
if the Affiliate Transaction or series of related Affiliate Transactions
involves aggregate consideration greater than $250,000, the Guarantor shall
either deliver to the Investor an opinion as to the fairness to the Guarantor of
such Affiliate Transaction from financial point of view issued by an accounting,
appraisal or investment banking firm of national standing or shall receive the
Investor’s affirmative written consent.
For the
avoidance of doubt, neither this covenant nor any other shall prohibit or
restrict any distribution of any cash between any direct or indirect
wholly-owned subsidiaries of the Guarantor or to the Guarantor from any direct
or indirect wholly-owned subsidiary of the Guarantor.
(iii) Dividends. Declare or make,
or agree to declare or make, directly or indirectly, any dividends on any Equity
Interests or apply any of its property or assets to the purchase, redemption or
other retirement of, or set apart any sum for the payment of any dividends on,
or for the purchase, redemption or other retirement of, or make any other
distribution by reduction of capital or otherwise in respect of, any Equity
Interests, except repurchases of equity incentive grants issued to employees,
officers, directors and agents of the Guarantor and its Subsidiaries in the
ordinary course of business, provided that such repurchases shall not exceed
$150,000 in any twelve (12) month period.
(iv) Subsidiaries. Create, own or
acquire any Subsidiary (other than any Subsidiary owned as of the date hereof),
except that the Guarantor and its wholly-owned subsidiaries may create or own
wholly-owned Subsidiaries, provided that any such Subsidiary created or owned in
reliance of this Section 9(c)(iv) shall execute a joinder to the Guarantee and
Security Agreement in form and substance satisfactory to the Investor in its
sole discretion.
(v) Management. Pay any
compensation (including, without limitation, base salary, bonus and benefits),
management fees or other payments of any kind to Xxx Xxxxx and/or Xxxxxx Capital
Management, LLC or any of its affiliates in the aggregate in any
twelve (12) month period in excess of $360,000 provided however that
the Guarantor may only make cash payments thereon up to $180,000 in any such
twelve (12) month period and any amounts not paid in cash shall be deferred
until the Note is paid in full; provided further that
all or part of the deferred portion may be paid in kind by issuance of Guarantor
common stock on such terms as may be approved by the disinterested directors of
the Guarantor’s Board of Directors (which shall, for such purposes, not include
Xxx Xxxxx, Xxxxx Xxxxx and Xxxx Xxxxxxxxx).
(vi) Stock Issuance. Issue
or sell any Equity Interests (as defined under the Guarantee and Security
Agreement), or rights to acquire any Equity Interest, other than Equity
Interests that have no cash dividend or payment to be made for as long as the
Note remains outstanding.
(vii) Prepayment of the Note.
In accordance with Section 1(d) of the letter agreement dated as of June 21,
2010, by and among ValueAct, the Guarantor, the Lead Participating Investors
party thereto, Xxxxxxxx Xxxxxxxxx and Xxxxxxxxx XxxXxxxxx (the “Letter Agreement”), if and to
the extent that, the Guarantor or any other Obligor (as defined in the
Subordination Agreement) receives cash proceeds from the sale of the Assets (as
defined in the Letter Agreement) pursuant to Section 1(d)(x) of the Letter
Agreement, the Guarantor or such Obligor shall promptly remit (and the First
Lien Agent and the First Lien Creditors (each as defined in the Subordination
Agreement) consent to such remittance) such cash sales proceeds to Investor to
pay in cash the obligations then outstanding under the Note.
10.
Miscellaneous.
10.1 Limitation. The Guarantor’s obligations under
this Guaranty are to pay the Obligations of the Company under the Note (subject
to the limitations set forth in this Guaranty) and no others. In no event shall
the Guarantor be liable for any damages, direct or indirect, consequential,
punitive or otherwise, as a result of the Company’s failure to perform any of
its obligations under the Note. The Guarantor’s liability shall be limited
solely to actual and direct damages determined by a court of competent
jurisdiction in a proceeding not subject to further appeal to have arisen
primarily and directly as a result of the Guarantor’s failure to perform its
obligations under this Guaranty.
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10.2 Governing
Law. This Guaranty is to
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to its conflicts of laws rules.
10.3 Notices. All notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile transmission, as follows:
Guarantor:
2121
Avenue of the Stars, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxxxxxxx
with a
copy to:
Manatt,
Xxxxxx & Xxxxxxxx, LLP
00000
Xxxx Xxxxxxx Xxxxxxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxx, Xx., Esq.
ValueAct:
000
Xxxxxxx Xxxxxx, 0xx
Xx.
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxxxx Xxxxxxxxxx
with a
copy to:
Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx,
Xxx Xxxx 00000-0000
Attention:
Xxxxxxx Xxxxxxxx, Esq.
Either
the Guarantor or ValueAct may change its address for notices and other
communications hereunder by notice to the other. Each such notice or other
communication shall for all purposes of this Guaranty be treated as effective or
having been given (i) when delivered if delivered personally, (ii) if sent by
registered or certified mail, at the earlier of its receipt or three business
days after registration or certification thereof, (iii) if sent by overnight
courier, on the next business day after the same has been deposited with a
nationally recognized courier service for next day delivery, or (iv) when sent
by confirmed facsimile, on the day sent (if a business day) if sent during
normal business hours of the recipient, and if not, then on the next business
day.
10.4 Amendments
and Waivers. No amendment,
modification, termination or waiver of any provision of this Guaranty or consent
to any departure by the Guarantor therefrom shall be effective absent the
written agreement of the Guarantor and ValueAct.
10.5 Headings. Section and subsection headings
contained in this Guaranty are inserted for convenience of reference only, shall
not be deemed to be a part of this Guaranty for any purpose, and shall not in
any way define or affect the meaning, construction or scope of any of the
provisions hereof.
10.6 Waiver of
Jury Trial. EACH PARTY
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the Guarantor has duly executed and delivered this Guaranty and
ValueAct has executed its acceptance of this Guaranty effective as of the date
first written above.
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NEUMEDIA,
INC. formerly known as Mandalay Media, Inc.
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By:
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Name:
[ ]
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Title:
[ ]
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Accepted:
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VALUEACT
SMALLCAP MASTER FUND, L.P.,
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By
VA Smallcap Partners, LLC, its General Partner
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By:
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Name:
[ ]
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Title:
[ ]
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[Signature
Page to the Amended and Restated Guaranty]
EXHIBIT
A
Existing Affiliate
Transactions
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Xxxxxx
management agreement - $90,000 per quarter through September
2011;
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Xxxxxx
– rental sublet of Century City office – month to month – presently at
$5,000 per month; and
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-
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Berkshire
holdings - rental of Xxxxxxx Oaks office premises - $21,000 per
month through July 15, 2010.
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