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, TRINAD
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;

 
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(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 Ms. Allison Bennington and Mr. Jimmy
Price 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

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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 Rob Ellin and/or Trinad 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 Rob
Ellin, Peter Guber and Paul Schaeffer).

(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, Jonathan Cresswell
and Nathaniel MacLeitch (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: 

NeuMedia, Inc.
2121 Avenue of the Stars, Suite 2550
Los Angeles, California 90067
Attention: James Lefkowitz

with a copy to:

Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, CA  90064
Attention: Richard J. Maire, Jr., Esq.

ValueAct:
 
435 Pacific Avenue, 4th Fl.
San Francisco, CA 94133
Attention: Allison Bennington

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Valerie Radwaner, 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.
 

 
NEUMEDIA, INC. formerly known as Mandalay Media, Inc.
       
By: 
  
 
Name:  [   ]
 
Title: [   ]

Accepted:

 
VALUEACT SMALLCAP MASTER FUND, L.P.,
 
By VA Smallcap Partners, LLC, its General Partner
       
By: 
  
 
Name:  [   ]
 
Title: [   ]

 
[Signature Page to the Amended and Restated Guaranty]

 
 

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EXHIBIT A
 
Existing Affiliate Transactions

 
-
Trinad management agreement - $90,000 per quarter through September 2011;

 
-
Trinad – rental sublet of Century City office – month to month – presently at
$5,000 per month; and

 
-
Berkshire holdings  - rental of Sherman Oaks office premises - $21,000 per month
through July 15, 2010.

 
 

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