ValueAct SmallCap Master Fund, L.P.
ValueAct SmallCap Master Fund,
L.P.
000
Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
June 21,
2010
0000
Xxxxxx xx xxx Xxxxx
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
Xxxxxx
Management, LLC
0000
Xxxxxx xx xxx Xxxxx
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
Attention: Xxx
Xxxxx
Xxx
Xxxxx
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Xxxxxx xx xxx Xxxxx
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
Re: NeuMedia
Restructuring
Gentlemen:
Reference
is made to that certain Letter Agreement, dated as of the date hereof (the
“Restructuring
Agreement”), between ValueAct SmallCap Master Fund, L.P. (“VAC”), NeuMedia, Inc.,
formerly known as Mandalay Media, Inc. (“NeuMedia”), Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx XxxXxxxxx and the other parties
thereto. Capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to such terms by the Restructuring
Agreement.
In partial consideration of the direct
and/or indirect benefits received by each party hereto pursuant to the
Restructuring Agreement and as part of the transactions contemplated thereby,
the parties hereto agree as follows:
(a) If
(i) an Insolvency Event (as defined below) occurs, (ii) NeuMedia is in material
default under the Amended and Restated Guaranty, which default has not been
cured after any applicable cure period, or (iii) Twistbox Entertainment, Inc. is
in material default under the Amended VAC Note, which default has not been cured
after any applicable cure period, then Xxx Xxxxx will immediately resign from
all positions as an officer or director of NeuMedia and any of its subsidiaries
and shall not thereafter serve as an officer or director of NeuMedia or any of
its subsidiaries until such time as the Amended VAC Note has been repaid in
full.
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(b) Until
such time as the Amended VAC Note has been repaid in cash in full, Xxxxxx
Management, LLC (“Xxxxxx”) shall not elect to
treat (nor accept any liquidation preference or other payment in connection
with) any of the following transactions as a dissolution or winding up of
NeuMedia for purposes of Section 5 of the Certificate of Incorporation of
NeuMedia (and NeuMedia will not pay Xxxxxx any liquidation preference or other
payment in connection with): (i) any conversion of all or any portion of any New
Senior Note into common stock of NeuMedia; (ii) the exercise of any Warrant
Agreement and the issuance of shares of capital stock of NeuMedia in respect of
such exercise; (iii) the issuance of any capital stock or options, rights or
warrants to purchase capital stock of NeuMedia to Rob Xxxxx, Xxxxxx, Xxxxx
Xxxxx, Xxxx Xxxxxxxxx or any of their respective affiliates.
(c) NeuMedia
shall use best efforts to obtain all necessary consents and shareholder
approvals, including recommending an amendment to the Certificate of
Incorporation of NeuMedia, to, no later than three months following the date
hereof, amend Section 5 of the Certificate of Incorporation of NeuMedia to
provide that each of the transactions described under paragraph (b) shall not be
treated as a dissolution or winding up of NeuMedia for purposes thereof the
(“Charter
Amendment”). Xxxxxx and Xxx Xxxxx shall vote or cause to be
voted all shares of capital stock of NeuMedia held by them at such time in favor
of such an amendment.
(d) Until
such time as the Amended VAC Note has been repaid in cash in full, none of Rob
Xxxxx, Xxxxxx nor NeuMedia shall recommend or approve any amendment,
modification or waiver to the Certificate of Incorporation of NeuMedia if such
amendment, modification or waiver would result in (i) any change in the economic
or other rights, preferences or privileges of the Series A Preferred Stock, par
value $0.0001 per share, of NeuMedia (the “Series A Preferred Stock”) or
(ii) the creation or issuance of any capital stock of NeuMedia other than common
stock or preferred stock that has no cash dividend or payment required to be
made, including any change of control, liquidation preference or similar
payment.
(e) Until
such time as the Amended VAC Note has been repaid in cash in full, NeuMedia
shall not issue any additional shares of Series A Preferred Stock.
(f) Until
the earlier of the effective date of the Charter Amendment and such time as the
Amended VAC Note has been repaid in cash in full, Xxxxxx shall not sell,
encumber, mortgage, hypothecate, assign, pledge, transfer or otherwise dispose
of, directly or indirectly, any shares of Series A Preferred Stock held by
Xxxxxx on the date hereof; provided, however, this shall not prohibit conversion
of the Series A Preferred Stock into common stock of NeuMedia.
“Insolvency Event” means any
event whereby NeuMedia or any of its subsidiaries shall be involved in financial
difficulties as evidenced:
(i) by
its commencement of a voluntary case under Title 11 of the United States Code as
from time to time in effect, or by its authorizing, by appropriate proceedings
of its Board of Directors or other governing body, the commencement of such a
voluntary case;
(ii) by
its filing an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material allegations of any
such petition;
(iii) by
the entry of an order for relief in any involuntary case commenced under said
Title 11;
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(iv)
by its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief;
(v) by
the entry of an order by a court of competent jurisdiction (i) by finding it to
be bankrupt or insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its creditors,
or (iii) assuming custody of, or appointing a receiver or other custodian for
all or a substantial part of its property and such order shall not be vacated or
stayed on appeal or otherwise stayed within 60 days; or
(vi) by
its making an assignment for the benefit of, or entering into a composition
with, its creditors, or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial part of its
property.
Each party hereto hereby represents and
warrants, severally and not jointly and solely as to itself and not as to any
other party hereto, to each of the other parties hereto that (i) such party
hereto has all requisite power and authority to execute and deliver this Letter
Agreement and to perform its obligations hereunder and (ii) when this Letter
Agreement is executed and delivered by such party, this Letter Agreement shall
constitute the legal, valid and binding obligations of such party enforceable in
accordance with their terms.
Xxxxxx hereby represents and warrants
that Xxxxxx is the sole beneficiary of and holds, free and clear of any lien,
100,000 shares of Series A Preferred Stock, which constitute all of the issued
and outstanding shares of Series A Preferred Stock.
This Letter Agreement and the
Restructuring Agreement contain the entire understandings of the parties with
respect to the subject matter of each such provision and supersede any prior
agreement between the parties. This Letter Agreement may be executed
in any number of counterparts, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
This Letter Agreement shall be governed
by and construed in accordance with the internal, substantive laws of the State
of Delaware.
The parties hereto agree that any
suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Letter Agreement
or the transactions contemplated hereby shall be brought exclusively in any
Delaware State court in the City of Wilmington, or in the United States District
Court for the District of Delaware, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service
of any process, summons, notice or document by U.S. registered mail to its
address set forth on the signature page hereto shall be deemed effective service
of process for any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Letter
Agreement or the transactions contemplated hereby brought against such party in
any such court as set forth in this paragraph.
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Nothing in this Letter Agreement shall
confer any rights, remedies or claims upon any person not a party or a permitted
assignee of a party to this Letter Agreement
The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Letter Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to seek an injunction or injunctions to prevent
breaches of this Letter Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity. Each party hereto agrees not to
question or otherwise challenge the assertion or enforceability of this remedy,
in and of itself, as described in this paragraph by any other party
hereto.
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Please
indicate your acceptance of the above terms and conditions by executing and
returning the enclosed copy of this letter to us at your first
opportunity.
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Very
truly yours,
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VALUEACT
SMALLCAP MASTER FUND, L.P.
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By:
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Name:
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Title:
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Address:
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Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
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Xxx
Xxxxxxxxx, XX 00000
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This
Letter Agreement sets forth our understanding of the transactions contemplated
herein and related matters.
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By:
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Name:
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Title:
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Address:
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Xxxxxx xx xxx Xxxxx
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Xxxxx
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Xxx
Xxxxxxx, XX 00000
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XXXXXX
MANAGEMENT, LLC
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By:
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Name:
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Title:
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Address:
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Xxxxxx xx xxx Xxxxx
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Xxxxx
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Xxx
Xxxxxxx, XX 00000
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Xxx
Xxxxx
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Address:
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Xxxxxx xx xxx Xxxxx
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Xxxxx
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Xxx
Xxxxxxx, XX 00000
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Signature
Page to Side Letter
