THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
 
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBJECT TO THE TERMS OF, THE
SUBORDINATION AGREEMENT, DATED AS OF JUNE 21, 2010, AS THE SAME MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG TRINAD
CAPITAL MASTER FUND, LTD., AS AGENT, VALUEACT SMALLCAP MASTER FUND, L.P., AS
SUBORDINATED CREDITOR, AND EACH OF THE COMPANY AND TWISTBOX ENTERTAINMENT, INC.,
AS OBLIGOR AND ALL OTHER PARTIES THERETO.
 
$___________
 
NEUMEDIA, INC.
 
SENIOR SECURED CONVERTIBLE NOTE DUE JUNE 21, 2013
 
Section 1.
General.

 
FOR VALUE RECEIVED, NEUMEDIA, INC., a Delaware corporation (the “Company”),
hereby promises to pay to the order of ___________________ (“Investor”) the
principal sum of _____________________________ ($________________), or such
lesser amount as shall then equal the outstanding principal amount hereof,
together with interest (“Interest”) thereon at a rate (the “Interest Rate”)
equal to 10.0% per annum from, and including, June 21, 2010 to, but excluding,
June 21, 2013, each computed on the basis of a year of 360 days comprised of
twelve 30 day months.  All unpaid principal, together with any then unpaid and
accrued interest and other amounts payable hereunder, shall be due and payable
on the earlier of (i) June 21, 2013 (the “Maturity Date”) or (ii) when such
amounts become due and payable as a result of, and following, an Event of
Default in accordance with Section 3.
 
This Note (the “Note”) shall be prepayable without penalty, in whole or in part,
at any time at the Company’s option at 100% of the principal amount plus accrued
but unpaid interest to and including the date of prepayment.  The Company shall
provide written notice to the Investor at least ten (10) days before any
prepayment of this Note.  Any prepayments will be applied first to any accrued
but unpaid interest and then to unpaid principal.
 
Unless the context otherwise requires, an accounting term not otherwise defined
has the meaning assigned to it in accordance with the United States generally
accepted accounting principles (“GAAP”).
 
Interest on this Note shall accrue from, and including, the date hereof through
and until repayment of the principal amount of this Note and payment of all
Interest in full, and shall be payable in cash semi-annually in arrears on each
January 1 and July 1 that the Notes are outstanding or, if any such date shall
not be a Business Day, on the next succeeding Business Day to occur after such
date (each date upon which interest shall be so payable, an “Interest Payment
Date”), to holders of record on each preceding December 15 and June 15 to the
applicable Interest Payment Date, beginning on July 1, 2010, by wire transfer of
immediately available funds to an account at a bank designated in writing by the
Investor on reasonable notice.

 

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Notwithstanding the foregoing provisions of this Section 1, any overdue
principal of, overdue Interest on, and any other overdue amounts payable under,
this Note shall bear interest, payable on demand in immediately available funds,
for each day from the date payment thereof was due to the date of actual payment
at a rate equal to the sum of (i) the Interest Rate and (ii) an additional two
percent (2.00%) per annum.  Subject to applicable law, any interest that shall
accrue on overdue interest on this Note as provided in the preceding sentence
and shall not have been paid in full in cash on or before the next Interest
Payment Date to occur after the date on which the overdue interest became due
and payable shall itself be deemed to be overdue interest on this Note to which
the preceding sentence shall apply.  In addition, notwithstanding the foregoing
provisions of this Section 1, if an Event of Default has occurred and is
continuing, then, so long as such Event of Default is continuing, all
outstanding principal of this Note shall bear interest, after as well as before
judgment, at a rate equal to the sum of (i) the Interest Rate and (ii) an
additional two percent (2.00%) per annum.
 
Notwithstanding anything to the contrary set forth herein, until (and including)
the Interest Payment Date occurring on January 1, 2012, the Company may, at its
option, in lieu of making any cash payment to the Investor with respect to the
Interest Payment Dates occurring on or before January 1, 2012, elect that the
amount of any Interest due and payable on such date be added to the principal
amount then due under this Note.  This election by the Company to pay the
Interest by adding the amount of such payment to the principal under this Note
is hereafter referred to as the “PIK Election.”  The Company shall provide
written notice of the PIK Election to the Investor at least five (5) days before
the applicable Interest Payment Date. For the avoidance of doubt, immediately
after each PIK Election, the outstanding principal amount of this Note shall
equal the sum of (i) the outstanding principal amount of this Note immediately
before the PIK Election, and (ii) the amount of Interest otherwise due and
payable on the applicable Interest Payment Date.
 
Section 2.
Repurchase Right Upon a Fundamental Change.

 
Notwithstanding anything to the contrary contained herein and in addition to any
other right of the Investor, upon the occurrence of a Fundamental Change the
Investor shall have the right for a period of thirty days, by written notice to
the Company, to require the Company to repurchase all of this Note on the
repurchase date that is five Business Days after the date of delivery of such
notice to the Company at a price equal to 100% of the outstanding principal
amount under this Note plus all accrued and unpaid interest on such principal
amount to, but excluding, the date of such repurchase plus any other amounts due
hereunder.  A “Fundamental Change” shall be deemed to have occurred upon the
occurrence of any of the following events: (a) a consolidation or merger of the
Company with or into any other corporation or corporations, (b) a sale of all or
substantially all of the assets of the Company, (c) the issuance and/or sale by
the Company in a single or integrated transaction of shares of common stock (or
securities convertible into shares of common stock) constituting a majority of
the shares of common stock outstanding immediately following such issuance
(treating all securities convertible into shares of common stock as having been
fully converted and all options and other rights to acquire shares of common
stock or securities convertible into shares of common stock as having been fully
exercised), (d) any other form of acquisition or business combination where the
Company is the target of such acquisition and where a change in control
occurs such that the Person or entity seeking to acquire the Company has the
power to elect a majority of the board of directors of the Company as a result
of the transaction (each such event an "Acquisition"), and (e) any liquidation,
dissolution or winding up of the Company, provided, however, that (A) any
conversion of this Note into equity of the Company, (B) the exercise of any
rights under a Warrant Agreement between the Company and each of the purchasers
of this Note and the issuance of shares of capital stock of the Company in
respect of such exercise or (C) the issuance of any capital stock or options,
rights or warrants to purchase capital stock of the Company to Rob Ellin,
Trinad, Peter Guber, Paul Schaeffer or any of their respective affiliates, shall
not constitute a change of control. A “Person” means any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or government or
other entity.

 
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Section 3. 
Events of Defaults.

 
The occurrence of any of the following shall constitute an “Event of Default”
under this Note:
 
(a)           The Company shall fail to pay any principal owing under this Note
when due; or
 
(b)           The Company shall fail to pay any interest owing under this Note
when due, and such failure shall continue for fourteen (14) days; or
 
(c)           The Company, Twistbox Entertainment, Inc., a Delaware corporation
(a wholly owned subsidiary of the Company and defined herein as the “Guarantor”)
or any Subsidiary shall fail to observe or perform any other covenant,
obligation, condition or agreement contained in this Note (other than those
specified in clauses (a) or (b) above), the Guarantee and Security Agreement,
dated the date hereof, among the Company, the Guarantor, the Subsidiaries party
thereto, Investor and Trinad Capital Management, LLC (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”), and, to the extent such
failure is capable of being cured, such failure shall continue for fourteen (14)
days after notice is given to the Company by the Investors holding more than 25%
of the aggregate principal balance of the Notes then outstanding; or
 
(d)           The Guarantor, the Company or any Subsidiary shall (i) fail to
make any payment when due under the terms of any bond, debenture, note or other
evidence of Indebtedness (as defined below) to be paid by the Guarantor, the
Company or such Subsidiary (excluding this Note, which default is addressed by
clauses (a) and (b) above, but including any other evidence of Indebtedness of
the Guarantor, the Company or such Subsidiary) and such failure shall continue
beyond any period of grace provided with respect thereto, or (ii) default in the
observance or performance of any other agreement, term or condition contained in
any such bond, debenture, note or other evidence of Indebtedness, and the effect
of such failure or default is to cause, or permit the holder thereof to cause,
Indebtedness of the Guarantor, the Company and the Subsidiaries in an aggregate
amount of One Million Dollars ($1,000,000) or more to become due prior to its
stated date of maturity; or
 
(e)           An involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Guarantor, the Company or any Subsidiary or its debts, or of a
substantial part of its assets, under any federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Guarantor, the Company or any Subsidiary or for a
substantial part of the Guarantor’s, the Company’s or such Subsidiary’s assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered; or
 
(f)           The Guarantor, the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (e) of this Section, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Guarantor, the Company or any Subsidiary
or for a substantial part of the Guarantor’s, the Company’s or such Subsidiary’s
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing; or

 
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(g)           One or more judgments for the payment of money in an amount in
excess of Five Million Dollars ($5,000,000) in the aggregate, outstanding at any
one time, shall be rendered against the Guarantor, the Company and the
Subsidiaries and the same shall remain undischarged for a period of sixty (60)
days during which execution shall not be effectively stayed, or any judgment,
writ, assessment, warrant of attachment, or execution or similar process shall
be issued or levied against a substantial part of the property of the Guarantor,
the Company or any Subsidiary and such judgment, writ, or similar process shall
not be released, stayed, vacated or otherwise dismissed within sixty (60) days
after issue or levy; or
 
(h)           Any Note or the Guarantee and Security Agreement shall be asserted
in writing by the Guarantor, the Company or any Subsidiary not to be in full
force and effect, or the Guarantor, the Company or any Subsidiary shall disavow
any of its obligations thereunder; or
 
(i)           Any Lien purported to be created under the Guarantee and Security
Agreement shall be asserted by the Company or any Subsidiary not to be, a valid
and perfected Lien on any Collateral, with the priority required by the
Guarantee and Security Agreement; or
 
(j)           The Company shall have failed to make filings within sixty (60)
days of the date hereof with the United States Patent and Trademark Office in
respect of the security interests granted in the Company’s Trademarks (as
defined in the Guarantee and Security Agreement) to the Investor under the
Guarantee and Security Agreement; or
 
(k)          Any Event of Default under and as defined in the Guarantee and
Security Agreement shall have occurred.
 
(l)           Guarantor is in default under the VAC Note (as defined below).
 
Section 4. 
Rights Of Investor Upon Default.

 
Upon the occurrence or existence of any Event of Default (other than an Event of
Default referred to in Sections 3(e) or 3(f) hereof) and at any time thereafter
during the continuance of such Event of Default, the Investor may, upon the
approval of Investor holding more than 25% of the aggregate principal balance of
the Notes then outstanding, by written notice to the Company, declare all
outstanding amounts payable by the Company hereunder to be immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 3(e) or 3(f) hereof, immediately and without
notice, all outstanding amounts payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding.  In addition
to the foregoing remedies, upon the occurrence or existence of any Event of
Default, the Investor may exercise, upon the approval of Investor holding more
than a majority of the aggregate principal balance of the Notes, any other
right, power or remedy permitted to it by law, either by suit in equity or by
action at law, or both.

 
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Section 5.             Conversion Rights.  This Note is convertible into capital
stock of the Company (the “Conversion Shares”) in accordance with the conversion
rights specified in Schedule 1 attached hereto and incorporated herein by this
reference.
 
Section 6.             [Reserved].
 
Section 7.             Negative Covenants.    Until all principal and interest
and any other amounts due and payable under this Note have been paid in full in
cash, the Company shall not, and shall not permit any Subsidiary to, without the
prior written approval of the Investor holding a majority in principal amount of
the Notes:

 
(a)          Indebtedness.  Incur, create, assume or permit to exist any
Indebtedness, except
 
(i)           Indebtedness under that certain Amended and Restated Senior
Subordinated Secured Note, dated of even date herewith (the “VAC Note”), made by
Guarantor in favor of ValueAct SmallCap Master Fund, L.P. (“VAC”);

(ii)          guarantees of the VAC Note under (x) that certain Amended and
Restated Guaranty Agreement, dated of even date herewith, made by the Company in
favor of VAC, (y) that certain Amended and Restated Guarantee and Security
Agreement, among the Company, Guarantor, the Subsidiaries party thereto, the
investors party thereto and VAC, and (z) the guarantee given by AMV Holding
Limited and the debenture securing such guarantee dated August 23, 2008;

(iii)          Indebtedness under this Note and the Guarantee and Security
Agreement; and

(iv)          unsecured Indebtedness, provided the Indebtedness is expressly
subordinate in right of payment to this Note on terms acceptable to Investor.

“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.
 
(b)         Affiliate Transaction.  Excluding (x) the transactions with
Affiliates as of the date hereof and as set forth on Exhibit A 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
 
(i)          the Affiliate Transaction is in the ordinary course of and pursuant
to the reasonable requirements of the Company’s or such Subsidiary’s business
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate; and
 
(A)           if the Affiliate Transaction or series of related Affiliate
Transactions involves aggregate consideration less than or equal to $2,000,000,
the Company shall deliver to the Investor a resolution of the Board of Directors
of the Company 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 Company; and

 
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(B)           if the Affiliate Transaction or series of related Affiliate
Transactions involves aggregate consideration greater than $2,000,000, the
Company shall either deliver to the Investor an opinion as to the fairness to
the Company 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, this covenant shall not prohibit or restrict any
distribution of any cash among or between the Company, the Guarantor or any
direct or indirect wholly-owned Subsidiaries of the Company or the Guarantor.

(c)         Dividends. Declare or make, or agree to declare or make, directly or
indirectly, any dividends on any Equity Interests (as defined in the Guarantee
and Security Agreement) 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 Company and its Subsidiaries in
the ordinary course of business, provided that such repurchases shall not exceed
$150,000 in any twelve (12) month period.

(d)         Subsidiaries. Create, own or acquire any Subsidiary (other than any
Subsidiary owned as of the date hereof), except that the Company and its
wholly-owned subsidiaries may create or own wholly-owned Subsidiaries, provided
that any such Subsidiary created or owned in reliance of this Section7(d) shall
execute a joinder to the Guarantee and Security Agreement in form and substance
satisfactory to the Investor in its sole discretion.

(e)         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 Company 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 VAC Note is paid in full; provided further that all or part
of the deferred portion may be paid in kind by issuance of Company common stock
on such terms as may be approved by the disinterested directors of the Company’s
Board of Directors (which shall, for such purposes, not include Rob Ellin, Peter
Guber and Paul Schaeffer).

Section 8.             Defenses.
 
The obligations of the Company under this Note shall not be subject to
reduction, limitation, impairment, termination, defense, set-off, counterclaim
or recoupment for any reason.
 
This Note is a senior secured obligation of the Company.  The Company’s
obligations under this Note are (i) guaranteed by the Guarantor and by the
subsidiaries of the Guarantor and (ii) secured by a security interest in
substantially all of the assets of the Company, the Guarantor and such
Subsidiaries, in each case pursuant to the terms and provisions of the Guarantee
and Security Agreement.  This Note is subject to the terms and provisions of the
Guarantee and Security Agreement and the Investor, by its acceptance of this
Note, hereby acknowledges and agrees to such terms and provisions.

 
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Section 9.             Transfer of Note; Lost or Stolen Note.
 
(a)           The Investor may sell, transfer or otherwise dispose of all or any
part of this Note (including without limitation pursuant to a pledge) to any
Person or entity.  From and after the date of any such sale, transfer or
disposition, the transferee hereof shall be deemed to be the holder of a Note in
the principal amount acquired by such transferee, and the Company shall, as
promptly as practicable, issue and deliver to such transferee a new Note
identical in all respects to this Note, in the name of such transferee and, if
such transferee acquires less than the entire principal amount of this Note, the
Company shall contemporaneously issue to the Investor a new Note identical in
all respects to this Note, representing the outstanding balance of this Note.
The Company shall be entitled to treat the original Investor as the holder of
this entire Note unless and until it receives written notice of the sale,
transfer or disposition hereof.
 
(b)           Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Note, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Note, if mutilated, the Company
shall execute and deliver to the Investor a new Note identical in all respects
to this Note.
 
Section 10.           Attorneys’ and Collection Fees.
 
Should the indebtedness evidenced by this Note or any part hereof be collected
at law or in equity or in bankruptcy, receivership or other court proceedings,
the Company agrees to pay, in addition to the principal and interest due and
payable hereon, all costs of collection, including reasonable attorneys’ fees
and expenses, incurred by the Investor or its agent in collecting or enforcing
this Note.
 
Section 11.           Indemnification.
 
(a)         The Company shall indemnify the Investor, and any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Investor (each an “Affiliate” of the Investor) (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges, disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee by a third party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Note, the Guarantee and Security Agreement or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or the consummation of or the use of
the proceeds therefrom, (ii) the breach by the Company or any Subsidiary of any
representation, warranty, covenant or agreement contained herein or in the
Guarantee and Security Agreement, or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by judgment of a court of
competent jurisdiction to have primarily resulted from the gross negligence or
willful misconduct of such Indemnitee.
 
(b)        To the extent permitted by applicable law, the Company shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of, in connection with, or as a result of, this Note, the Guarantee and Security
Agreement or any agreement or instrument contemplated hereby or thereby, or the
use of the proceeds thereof, other than claims predicated upon the gross
negligence or willful misconduct of such Indemnitee.
 
Section 12.           Waivers.
 
(a)         The Company hereby waives presentment, demand for payment, notice of
dishonor, notice of protest and all other notices or demands in connection with
the delivery, acceptance, performance or default of this Note.  No delay by the
Investor in exercising any power or right hereunder shall operate as a waiver of
any power or right, nor shall any single or partial exercise of any power or
right preclude other or further exercise thereof, or the exercise thereof, or
the exercise of any other power or right hereunder or otherwise; and no waiver
whatsoever or modification of the terms hereof shall be valid unless set forth
in writing by the Investor and then only to the extent set forth therein.

 
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(b)         The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Note; and the Company (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Investor, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
 
Section 13.           Amendments.
 
No amendment, modification or other change to, or waiver of any provision of,
this Note may be made unless such amendment, modification or change is set forth
in writing and is signed by the Company and Investor holding more than 75% of
the aggregate principal balance of the Notes.
 
Section 14.           Governing Law; Jurisdiction; Consent to Service of
Process; Waiver of Jury Trial.
 
(a)         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
 
(b)         THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT
OF THE STATE OF CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED
STATES’ DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN CONNECTION WITH THIS
NOTE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT IN
THE STATE OF CALIFORNIA OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT INVESTOR MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AGAINST THE COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
 
(c)         THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR THE GUARANTEE AND SECURITY AGREEMENT
IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

 
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(d)         EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 16.  NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
 
(e)         EACH PARTY HERETO 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 NOTE, THE GUARANTEE
AND SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
 
Section 15.           Successors and Assigns.
 
The terms and conditions of this Note shall inure to the benefit of and be
binding upon the respective successors (whether by merger or otherwise) and
permitted assigns of the Company and the Investor.  The Company may not assign
its rights or obligations under this Note.
 
Section 16.           Notices.
 
Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be delivered in accordance with the Guarantee
and Security Agreement.
 
Section 17.           Entire Agreement.
 
The Notes, the Guarantee and Security Agreement and the other Secured
Transaction Documents (as defined in the Guarantee and Security Agreement)
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereto and thereof.
 
Section 18.           Headings.
 
The headings used in this Note are used for convenience only and are not to be
considered in construing or interpreting this Note.
 
Section 19.           Severability.
 
In case any one or more of the provisions of this Note shall be held invalid,
illegal or unenforceable, in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
fullest extent permitted by law.
 
[Signature Page Follows]
 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its
duly authorized officer as of the date indicated below.
 
Date:  ________, 2010
 

 
NeuMedia, Inc.
     
By:
     
Name:
   
Title:

 
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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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SCHEDULE 1

CONVERSION RIGHTS

1.           Conversion.

1.1           Common Stock.  In lieu of repayment of this Note, Investor shall
have the right, at the option of Investor at any time, on one or more occasion,
exercisable by written notice (“Investor’s Section 1.1 Exercise Notice”) from
Investor to the Company, to convert all or any part of the accrued and unpaid
principal and interest due Investor under this Note (the “Outstanding Note
Amount”), as of the date of Investor’s Section 1.1 Exercise Notice, into shares
of the Company’s Common Stock (the “Common Stock”) at a conversion price in an
amount equal to $0.15 per share of Common Stock.

1.2           No Other Conversion.  Except as set forth in Sections 1.1 above,
this Note shall not otherwise be convertible into the Common Stock or any other
capital stock of the Company.

1.3           No Fractional Shares.  The Company shall not be required to issue
fractional shares of the Common Stock upon the conversion of this Note.  If any
fraction of a share of the Common Stock would, except for the provisions of this
paragraph, be issuable on the conversion of this Note (or specified portion
thereof), the Company shall pay an amount in cash calculated by it to be equal
to the then fair market value per share of the Common Stock as reasonably
determined by the Board of Directors of the Company, multiplied by such fraction
computed to the nearest whole cent.

2.           Adjustments Upon Capitalization and Corporate Changes.  If at any
time prior to the Maturity Date, any of the outstanding shares of the capital
stock of the Company are changed into, or exchanged for, a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization or reclassification, or if the number of such outstanding
shares is changed through a stock split, stock dividend, stock consolidation or
similar capital adjustment, or if the Company makes a distribution in partial
liquidation or any other comparable extraordinary distribution with respect to
any of its shares of capital stock, an appropriate adjustment shall be made by
the Board (and approved by a majority of the disinterested members of the
Board), if necessary, in the number, kind or conversion price of shares into
which this Note is convertible.

 
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