Document:

ValueAct
SmallCap Master Fund, L.P.

    435
Pacific Avenue, Fourth Floor

    San
Francisco, CA 94133

    

    June 21,
2010

    

    The Board
of Directors

    NeuMedia,
Inc.

    2000
Avenue of the Stars

    Suite
410

    Los
Angeles, CA  90067

     

    
      	
               
      

            	
              Re:

            	
              AMV
      Restructuring

            

    

     

    Gentlemen:

     

    This
agreement (“Agreement”)
sets forth the terms of the agreements between ValueAct SmallCap Master Fund,
L.P. (including any affiliate thereof, “VAC”), NeuMedia, Inc.,
formerly known as Mandalay Media, Inc. (“NeuMedia”), Jonathan Cresswell
(“Cresswell”), Nathaniel
MacLeitch (including in his capacity as Trustee for the AMV Founders under the
AMV Note (each as defined below) “MacLeitch”), Robert Ellin
(“Ellin”), Trinad
Management, LLC (“Trinad
Management”) and Trinad Capital Master Fund, Ltd.(“Trinad Fund” and together with
Ellin and Trinad Management, the “Trinad Affiliates”) and the
Guber Family Trust (“Guber” and, together with the
Trinad Affiliates, the “Lead
Participating Investors” and, together with any other purchasers of New
Senior Notes (as defined below) the “Participating Investors”) with
regard to the (i) partial satisfaction of that certain Senior Secured Note
issued by Twistbox Entertainment, Inc. (“Twistbox”), guaranteed by AMV
Holding Limited (“AMV”)
and held by VAC, as amended (the “VAC Note”), and (ii)
satisfaction of that certain Secured Promissory Note issued by NeuMedia and held
by Cresswell, MacLeitch and certain other former shareholders of AMV (the “AMV Founders”), as amended
(the “AMV Note”). The
aggregate outstanding principal amount plus accrued and unpaid interest on the
AMV Note and the VAC Note as of any date of determination is referred to herein
as the “Outstanding
Balance.”

     

    In
consideration of the significant costs to be borne by the parties hereto in
pursuing the transactions contemplated herein and further in consideration of
their mutual undertakings as to the matters described herein, upon execution by
the parties hereto of this Agreement, this Agreement shall constitute the
legally binding and enforceable agreement of the parties hereto.

     

    1.           Administration.

     

    (a)           The
joint administrators of AMV (the “Administrators”) are
conducting a process in the course of the administration of AMV pursuant to the
provisions of the U.K. Insolvency Act of 1986 (the “Administration”) for the sale
of the shares in the operating subsidiaries of AMV (collectively, the “Assets”).  NeuMedia
will retain all assets and liabilities of Twistbox and NeuMedia.  The
consummation of the acquisition of the Assets by Newco concurrently upon the
receipt of the funds from the Client Account (as defined below) by NeuMedia
pursuant to Section 1(e) is referred to herein as the “Closing.”

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (b)         VAC,
the AMV Founders and/or their respective affiliates (whether or not acting in
conjunction with unaffiliated third parties), acting through Antiphony
(Management Holdings) Limited (“Newco”), will acquire at the
Closing the Assets on the standard terms of an English law insolvency
acquisition consistent with the offer to the Administrators in the form attached
hereto as Annex A, resulting in  the release of US$23 million of
secured indebtedness, comprising of a release of all amounts due and payable
under the AMV Note and a portion of the amounts due and payable under the VAC
Note.  Immediately following the Closing, the AMV Note will be
cancelled in its entirety and the VAC Note will be amended and restated in the
form attached hereto as Annex B following such release or payment in cash (the
“Amended VAC
Note”).  The principal amount of the Amended VAC Note will be
an amount equal to US$3.5 million.

     

    (c)         [Reserved.]

     

    (d)         [Reserved.]

     

    (e)          On
Friday, June 18, 2010, the Lead Participating Investors deposited the aggregate
amount of US$2,500,000 in a client account (the “Client Account”) with Manatt,
Phelps & Phillips LLP, which will release US$2,500,000 to NeuMedia at the
Closing for the purpose of consummating the purchase by the Lead Participating
Investors of the New Senior Debt (as defined below).  NeuMedia will
provide evidence of the receipt of the US$2,500,000 to VAC at the
Closing.  The Lead Participating Investors hereby irrevocably commit
to invest an aggregate of US$2,500,000, in NeuMedia at the Closing in exchange
for Notes issued by NeuMedia in the form of Annex D (the “New Senior Notes” and the
indebtedness evidenced thereby, the “New Senior Debt”) allocated as
follows: (a) $1,500,000 by the Trinad Fund and (b) $1,000,000 by the Guber
Family Trust.  No later than five business days following the date
hereof, the Lead Participating Investors shall provide notice (substantially in
the form attached hereto as Annex E) to each stockholder of NeuMedia who,
together with its affiliates, held, as of June 13, 2010, at least 5% of the
outstanding common stock of NeuMedia, is an accredited investor within the
meaning of federal securities laws and is not an officer or director of NeuMedia
or an affiliate of an officer or director of NeuMedia (the “Eligible Rights Offering
Participants”), which notice shall set forth the terms pursuant to which
such Eligible Rights Offering Participants may elect to participate in the
funding of the New Senior Debt by acquiring a portion of such indebtedness from
the Lead Participating Investors(the “Rights
Offering”).  At the Closing, NeuMedia will issue the New Senior
Notes in the aggregate principal amount of US$2,500,000 to the Lead
Participating Investors, which indebtedness will be senior to the Amended VAC
Note on the terms and to the extent set forth in the Subordination Agreement in
the form of Annex F (the “Subordination
Agreement”).  For the avoidance of doubt, except as
contemplated by the immediately preceding sentence, NeuMedia and its
subsidiaries will be prohibited from issuing any debt (including a receivables
line) senior to or pari passu with the Amended VAC Note.

     

    (f)          [Reserved.]

     

    2.           Transaction
Documents.

     

    (g)          Prior
to or concurrently with the execution hereof, certain parties hereto have duly
executed the following documents (collectively with this Agreement, the
Intercompany Balance Documentation and the ancillary documents to be executed in
connection herewith and therewith (including, without limitation, any documents
necessary to effect the acquisition of the Assets), the “Transaction
Documents”):

     

    (i)           the
Mutual Release Agreement in the form attached as Annex G
hereto;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (ii)          the
AMV/Administrators Release Agreement in the form attached as Annex H
hereto;

     

    (iii)         [Reserved]

     

    (iv)        the
Amended VAC Note;

     

    (v)         the
Amended and Restated Guarantee and Security Agreement among Twistbox, NeuMedia,
each of the subsidiaries party thereto, the investor party thereto and VAC, as
collateral agent in the form attached as Annex I hereto;

     

    (vi)        the
Amended and Restated Guaranty by NeuMedia to VAC in the form attached as Annex J
hereto;

     

    (vii)       the
Letter Agreement between VAC, Rob Ellin, Trinad Management and NeuMedia in the
form of Annex K hereto;

     

    (viii)      the
Subordination Agreement;

     

    (ix)         the
New Senior Notes;

     

    (x)          the
Guarantee and Security Agreement among Twistbox, NeuMedia, each of the
subsidiaries thereof party thereto, the Participating Investors and the
collateral agent described therein in the form attached as Annex L hereto (the
“New Senior Note Security
Agreement”);

     

    (xi)         the
Warrant Agreements between NeuMedia and each of the Participating Investors in
the form of Annex M hereto (the “Warrant
Agreement”);

     

    (xii)        the
Resignation Letters in the form of Annex N hereto;

     

    (xiii)       the
Earn-Out Transfer Letter Agreement in the form attached as Annex R hereto;
and

     

    (xiv)       the
Non-Competition Agreement between Newco and NeuMedia in the form of Annex O
hereto (the “Non-Competition
Agreement”);

     

    (h)         Immediately
following the Closing, each of the Transaction Documents set forth in Section
2(a)(i)-(xiv) shall be automatically released and effective without further
action by any party thereto.

     

    (i)           At
the Closing, the US$2,500,000 held in the Client Account pursuant to Section
1(e) shall be distributed to NeuMedia.

     

    3.           Intercompany
Balances.   The
parties acknowledge that NeuMedia, Twistbox and AMV have agreed,
effective as of May 10, 2010, that costs and expenses
from NeuMedia and/or Twistbox to AMV and its subsidiaries are
transferred so as to effect a net-off of intercompany balances between
NeuMedia and/or Twistbox, on the one hand, and AMV and its subsidiaries, on
the other hand so as to achieve a zero balance on that date
for all intercompany balances.  The  parties agree
to work together in good faith to take whatever actions are reasonably
necessary to get the most favorable tax treatment for the Assets
post-Closing.  The documentation effecting a net-off of
such intercompany balances is referred to as the “Intercompany
Balance Documentation.”  Any liability incurred by any
party and agreed in advance by both parties after 10 May
2010 will be payable in the ordinary course.   

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    4.           The
parties acknowledge that NeuMedia, Twistbox and AMV have implemented, effective
as of March 31, 2010, an allocation of costs and expenses from NeuMedia and/or
Twistbox to AMV in the amount of US$1,234,206, thus effecting a net-off of
intercompany balances between NeuMedia and/or Twistbox, on the one hand, and
AMV, on the other hand.  Any remaining amounts due between and among
AMV and its subsidiaries, on the one hand, and NeuMedia and its subsidiaries
(other than AMV and its subsidiaries), on the other hand,  will be
written off and the parties agree to work together in good faith to take
whatever actions are reasonably necessary to get the most favorable tax
treatment for the Assets post-Closing.  The documentation effecting a
net-off and write off of such intercompany balances is referred to as the “Intercompany Balance
Documentation.”

     

    5.           Cancellation of NeuMedia
Common Stock and Warrants.  Upon the Closing, all warrants and
Common Stock of NeuMedia held by VAC will be cancelled and all warrants and
Common Stock of NeuMedia held by MacLeitch and Cresswell will be repurchased by
NeuMedia or its assigns for a price of US$0.02 per share.

     

    6.           Earn-Out
Transfer.  Upon the Closing, Newco shall assume all of
NeuMedia’s obligations to pay Earn-Out Payments (the “Earn-Out Payments”) to the AMV
Founders under and as defined in Section 2.4 of the Stock Purchase Agreement,
dated as of October 8, 2008, between NeuMedia and the AMV Founders and NeuMedia
shall not have any further obligations in respect of such Earn-Out
Payments.  Notwithstanding the foregoing, the AMV Founders are
entitled to keep and have no obligation to reimburse any Earn-Out Payments paid
on or prior to the date hereof.

     

    7.           Indemnification.

     

    (a)           Effective
immediately upon the execution of this Agreement, NeuMedia hereby agrees to
indemnify and hold harmless VAC, the AMV Founders, their respective affiliates
and each of their respective directors, officers, employees, partners,
equityholders, representatives and agents, and each of their respective
successors and assigns (collectively, the “VAC/AMV Founders Indemnified
Parties”) from any and all losses, liabilities, damages, or expenses,
including reasonable fees and expenses of experts and counsel and cost of
litigation, and whether involving a third party or among the parties to this
Agreement (the “Damages”) that any VAC/AMV
Founders Indemnified Party may suffer or become subject to as a result of or
arising out of or in connection with claims by shareholders or other
stakeholders of NeuMedia or any other third party seeking to enjoin performance
of or invalidate this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby, or seeking damages with respect to
this Agreement, any other Transaction Document or the transactions contemplated
hereby or thereby,.

     

    (b)           Effective
immediately upon the Closing, NeuMedia hereby agrees to indemnify and hold
harmless the VAC/AMV Founders Indemnified Parties from any and Damages that any
VAC/AMV Founders Indemnified Party may suffer or become subject to as a result
of or arising out of or in connection with claims by shareholders of NeuMedia or
creditors of NeuMedia, its affiliates and subsidiaries (other than AMV and its
subsidiaries), based in whole or in part on any act, omission, transaction or
occurrence from the beginning of time arising from any aspect of the dealings or
relationships between NeuMedia, its affiliates and subsidiaries (other than AMV
and its subsidiaries) and its and their respective Representatives, on the one
hand, and VAC, AMV and its subsidiaries, the AMV Founders and their respective
Representatives, on the other hand, relating solely to this Agreement and the
other Transaction Documents and any transactions contemplated hereby or
thereby.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (c)           Effective
immediately upon the Closing, NeuMedia hereby agrees to indemnify and hold
harmless the VAC/AMV Founders Indemnified Parties from any and all Damages that
any VAC/AMV Founders Indemnified Party may suffer or become subject to as a
result of or arising out of or in connection with any third party claim relating
to the operation of the business of NeuMedia or its affiliates or subsidiaries
(other than AMV and its subsidiaries) prior to the Closing (other than any third
party claim relating to the operation of the Twistbox business prior to February
12, 2008 and unrelated to the acquisition of Twistbox by NeuMedia).

     

    (d)           Effective
immediately upon the Closing, Cresswell and MacLeitch, jointly and severally,
hereby agree to indemnify and hold harmless NeuMedia, Twistbox, their affiliates
and each of their respective directors, officers, employees, partners,
equityholders, representatives and agents, and each of their respective
successors and assigns (collectively, the “NeuMedia Indemnified Parties”)
from any and all Damages that any NeuMedia Indemnified Party may suffer or
become subject to as a result of or arising out of or in connection with any
third party claim relating to the operation of the AMV business prior to the
Closing; provided, however,
that this Section 6(d) shall not apply to any third party claim relating to or
arising out of (i) the Content License and Output Agreement, effective as of
July 1, 2009 (the “Vivid
Agreement”), between Waat Media Corp., Twistbox, AMV and Vivid
Entertainment, LLC; (ii) any tax claims; or (iii) claims by shareholders of
NeuMedia or creditors of NeuMedia, its affiliates and subsidiaries (other than
AMV and its subsidiaries), based in whole or in part on any act, omission,
transaction or occurrence from the beginning of time arising from any aspect of
the dealings or relationships between NeuMedia, its affiliates and subsidiaries
(other than AMV and its subsidiaries) and its and their respective
Representatives, on the one hand, and VAC, AMV and its subsidiaries, the AMV
Founders and their respective Representatives, on the other hand, relating to
this Agreement and the other Transaction Documents and any transactions
contemplated hereby or thereby;
provided,
further, however,
that Cresswell  and MacLeitch shall not be required to indemnify any
NeuMedia Indemnified
Party  under this Section 6(c) unless and only to the extent that the
amount of  Damages for which the NeuMedia Indemnified
Party seeks indemnification hereunder exceeds US$50,000; provided,
further, however
that the aggregate amount of Damages for which the NeuMedia Indemnified Parties
may seek indemnification under this Section 6(c) shall not exceed US$1,500,000
in the aggregate.

     

    8.           [Reserved.]

     

    9.           Representations and
Warranties.

     

    (e)           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 Agreement and the other Transaction Documents and to
perform its obligations hereunder and thereunder and (ii) when this Agreement
and the other Transaction Documents are executed and delivered by such party,
this Agreement and the other Transaction Documents shall constitute the legal,
valid and binding obligations of such party enforceable in accordance with their
terms (except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors’ rights generally or by general principles of equity and public
policy).

     

    (f)           Solely
with respect to VAC, VAC is the sole beneficiary of and holds, free and clear of
any lien and has full power and authority to modify the VAC Note.

     

    (g)           Solely
with respect to the Cresswell and MacLeitch (including in his capacity as
representative for the AMV Founders under the AMV Note), (i) MacLeitch is the
sole beneficiary (as the representative of the AMV Founders) of the AMV Note,
free and clear of any lien and have full power and authority to cancel the AMV
Note and (ii) MacLeitch (in his capacity as security agent for the AMV Founders)
has full power and authority on behalf of the AMV Founders to release the
debenture provided by AMV dated October 23, 2008, which secures amounts owing in
respect of the AMV Note and to take all action necessary in connection
therewith.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (h)           Cresswell,
MacLeitch and VAC each owns beneficially and of record, free and clear of any
lien and has full power and authority to transfer free and clear of any lien,
the number and class of shares of NeuMedia Common Stock and the number of
NeuMedia warrants set forth opposite such person’s name on Annex P to be
cancelled or purchased by NeuMedia pursuant to Section 4 and the NeuMedia Common
Stock and NeuMedia Warrants set forth on Annex P represent all of the issued and
outstanding shares of capital stock of NeuMedia and warrants to acquire shares
of capital stock of NeuMedia held by such person as of the date
hereof.

     

    10.         [Reserved.]

     

    11.         [Reserved.]

     

    12.         Expenses.  Each
party hereto will bear its own costs and expenses (including, without
limitation, any brokers’ or finders’ fees and any attorneys’ and accountants’
fees) in connection with the transactions proposed by this Agreement; provided, however,
that VAC will advance and recover the costs of the Administration on the terms
agreed to by VAC and the Administrators.

     

    13.         Non-Disclosure.  Attached
hereto as Annex Q is a form of Press Release to be filed by NeuMedia following
the Closing.  Except as provided in the immediately preceding sentence
or as required by law, the rules and regulations of the Securities Exchange
Commission  or the requirements of any stock market on which such
party’s common stock is listed or quoted (in which case the disclosing party
shall advise the other party of such disclosure and provide them with a copy of
such disclosure), in the event of any litigation between or involving the
parties hereto and/or, in the case of VAC and the AMV Founders, in connection
with the Administration, the parties hereto will not disclose, directly or
indirectly, the terms of or reveal the existence of this Agreement to any
person, firm or entity, other than their respective Representatives who are
required to be informed thereof in connection with their approval of the
transactions contemplated herein or their representation of the parties in
connection with the transactions contemplated herein.  Notwithstanding
the foregoing, it is acknowledged and agreed that each of VAC, MacLeitch and
Cresswell may in the future determine that he/it is required to file an
amendment to their report on Schedule 13D reporting, among other things, his/its
ownership interest in NeuMedia and the existence and terms of this Agreement and
the other Transaction Documents and may update such filing as he/it deems
appropriate in his/its sole discretion.

     

    14.         Entire Agreement;
Counterparts.  This Agreement and the other Transaction
Documents contain the entire understandings of the parties with respect to the
subject matter of each such provision and supersedes any prior agreement between
the parties, including but not limited to that certain Letter of Intent dated
April 16, 2010.  This 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.

     

    15.         Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal, substantive laws of the State of Delaware, except
any provision of this Agreement insofar as it relates to AMV or the
Administrators and their respective Representatives where this Agreement and any
non-contractual obligations arising out of or in connection with it shall be
governed by and construed in accordance with the laws of England and as to which
the parties intend that such persons shall be entitled to rely upon and enforce
such provisions by virtue of the Contracts (Rights of Third Parties) Act 1999 as
thought they were a party to this Agreement.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    16.         Consent to Jurisdiction;
Service of Process

     

    (i)      
     In relation to any legal action or proceedings
arising out of or in connection with any provision of this Agreement insofar as
it relates to AMV or the Administrators or their respective Representatives,
each party hereby irrevocably submits to the jurisdiction of the courts of
England and waives any objection to the courts of England on the grounds that
they are inappropriate or inconvenient forum.  Each such submission is
made for the benefit of the other parties to this Agreement (and AMV and the
Administrators and their respective Representatives) and shall not affect the
right of each other party to take proceedings in any other court of competent
jurisdiction nor shall the taking of proceeding in any court of competent
jurisdiction preclude each other party from taking proceedings in any court of
competent jurisdiction (whether concurrently or not) unless precluded by
law.

     

    (j)      
     Save as set out in Section 15(a) above, 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 Agreement or the transactions contemplated hereby or thereby 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
Agreement or the transactions contemplated hereby or thereby brought against
such party in any such court as set forth in this Section 15.

     

    17.         No Third Party
Beneficiary.  Save as expressly provided in this Agreement,
nothing in this Agreement shall confer any rights, remedies or claims upon any
person not a party or a permitted assignee of a party to this Agreement;
provided, however, that (i) the VAC/AMV Founders Indemnified Parties are
intended third party beneficiaries of Section 6(a) and Section 6(b) and (ii) the
NeuMedia Indemnified Parties are intended third party beneficiaries of Section
6(c).

     

    18.         Specific
Performance.

     

    (k)           The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this 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 an injunction or injunctions to prevent
breaches of this 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.  The parties hereto waive any requirement for
security or the posting of any bond or other surety in connection with any
temporary or permanent award or injunctive, mandatory or other equitable
relief.

     

    (l)       
    Each party hereto agrees not to question or otherwise
challenge the assertion or enforceability of this remedy, in and of itself, as
described in Section 17(a) by any other party hereto.

     

    [Remainder
of page intentionally left blank.]

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    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.  We look forward to closing the transaction as soon as
possible.

    

    
      
        	
                Very
      truly yours,

              
	 
      
	
                VALUEACT
      SMALLCAP MASTER FUND, L.P.

              
	
                By
      its General Partner, VA SmallCap Partners, LLC

              
	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              
	
                Address:

              	
                435
      Pacific Avenue, Fourth Floor

              
	 
      	
                San
      Francisco, CA 94133

              

      

    

     

    This
Agreement sets forth our understanding of the transactions contemplated herein
and related matters.

    

    
      
        
          	
                  NEUMEDIA,
      INC.

                
	 
      
	
                  By:   

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

    
      
        
          
            
              
                	
                        Address: 
       2000 Avenue of the Stars

                      
	
                        Suite
      410

                      
	
                        Los
      Angeles, CA  90067

                      
	 
	 
      
	
                        Jonathan
      Cresswell

                      
	
                        Address: 

                      	
                        ___________

                      
	 
      	
                        ___________

                      
	 
      	 
      
	
                          

                      
	
                        Nathaniel
      MacLeitch

                      
	
                        Address:  

                      	
                        ___________

                      
	 
      	
                        __________]

                      

              

            

          

        

      

    

    

    Signature
Page to Letter Agreement

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    Lead Participating
Investors:

    

    
      
        	
                Trinad
      Affiliates:

              
	 
      
	
                Trinad
      Capital Master Fund, Ltd.

              
	 
      
	
                By: 

              	
                  

              
	 
      	
                Title:

              

      

    

    
      
        
          
            
              	 
      	 
      
	
                      Address: 

                    	
                      2000
      Avenue of the Stars

                    
	 
      	
                      Suite
      410

                    
	 
      	
                      Los
      Angeles,
CA  90067

                    

            

          

        

      

    

    
      
        	 
      
	
                Trinad
      Management, LLC

              
	 
      
	
                By: 

              	
                   

              
	 
      	
                Title:

              

      

    

    
      
        
          
            	 
      	 
      
	
                    Address:

                  	
                    2000
      Avenue of the Stars

                  
	 
      	
                    Suite
      410

                  
	 
      	
                    Los
      Angeles, CA  90067

                  
	 
      	 
      
	
                      

                  
	
                    Robert
      Ellin

                  
	 
      
	
                    Address:

                  	
                    2000
      Avenue of the Stars

                  
	 
      	
                    Suite
      410

                  
	 
      	
                    Los
      Angeles, CA  90067

                  
	 
      	 
      
	
                    Guber:

                  	 
      
	 
      	 
      

          

        

      

    

    
      
        	
                Guber
      FamilyTrust

              
	 
      
	
                By:

              	 
      
	 
      	 
      
	
                Address:   

              	
                   

              
	 
      	
                   

              

      

    

    

    Signature
Page to Letter Agreement

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    ANNEX A

     

    Form of
AMV Offer

    
      
         

      

      
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    ANNEX B

     

    Amended
VAC Note

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX C

     

    Intentionally
Omitted

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX D

     

    New
Senior Notes

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX E

     

    Notice of
Rights Offering

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX F

     

    Subordination
Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX G

     

    Mutual
Release

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX H

     

    AMV
Administrators Release Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX I

     

    Amended
and Restated Guaranty and Security Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX J

     

    Amended
and Restated Guaranty

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX K

     

    Ellin
Letter Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX L

     

    New
Senior Note Security Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX M

     

    Warrant
Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX N

     

    Resignation
Letters

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX O

     

    Non-Competition
Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX P

     

    Certain
Outstanding Shares and Warrants

    

    
      
        	
                Beneficial Owner

              	 
      	
                Shares

              	 
      	
                Warrants

              
	 
      	 
      	 
      	 
      	 
      
	
                VAC

              	 
      	
                561,798
      shares of Common Stock

              	 
      	
                Warrant
      to purchase 1,092,622 shares of Common Stock

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                Warrant
      to purchase 1,092,621 shares of Common Stock

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                Warrant
      to purchase 280,899 shares of Common Stock

              
	 
      	 
      	 
      	 
      	 
      
	
                Cresswell

              	 
      	
                1,770,287
      shares of Common Stock

              	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                MacLeitch

              	
                  

              	
                1,770,287
      shares of Common Stock

              	
                  

              	 
      

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX Q

     

    Form of
Press Release

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX R

     

    Form of
Earn-Out Transfer AgreementAMENDED
AND RESTATED GUARANTEE AND SECURITY AGREEMENT

    

    among

    

    TWISTBOX
ENTERTAINMENT, INC.,

    

    NEUMEDIA,
INC.

    (FORMERLY
KNOWN AS MANDALAY MEDIA INC.)

    

    EACH OF
THE SUBSIDIARIES PARTY HERETO,

    

    THE
INVESTORS PARTY HERETO,

    

    and

    

    VALUEACT
SMALLCAP MASTER FUND, L.P., as Collateral Agent

    

    Dated as
of June 21, 2010

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    TABLE OF
CONTENTS

    

    
      
        
          
            
              
                
                  
                    
                      	 
      	 	
                              Page

                            
	 
      	 	 
      
	
                              ARTICLE 1.
      DEFINITIONS; GUARANTEE; GRANT OF SECURITY; CONTINUING PERFECTION AND
      PRIORITY

                            	 	
                              2

                            
	 
      	 
      	 	 
      
	
                              Section
      1.1

                            	
                              General
      Definitions

                            	 	
                              2

                            
	
                              Section
      1.2

                            	
                              Other
      Definitions; Interpretation

                            	 	
                              10

                            
	
                              Section
      1.3

                            	
                              Guarantee

                            	 	
                              11

                            
	
                              Section
      1.4

                            	
                              Grant
      of Security

                            	 	
                              18

                            
	 
      	 	 
      
	
                              ARTICLE 2.
      SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF
LIABILITY

                            	 	
                              20

                            
	 
      	 
      	 	 
      
	
                              Section
      2.1

                            	
                              Security
      for Obligations

                            	 	
                              20

                            
	
                              Section
      2.2

                            	
                              No
      Assumption of Liability

                            	 	
                              20

                            
	 
      	 	 
      
	
                              ARTICLE 3.
      REPRESENTATIONS AND WARRANTIES AND COVENANTS

                            	 	
                              20

                            
	 
      	 
      	 	 
      
	
                              Section
      3.1

                            	
                              Generally

                            	 	
                              20

                            
	
                              Section
      3.2

                            	
                              Equipment
      and Inventory

                            	 	
                              24

                            
	
                              Section
      3.3

                            	
                              Receivables

                            	 	
                              24

                            
	
                              Section
      3.4

                            	
                              Investment
      Property

                            	 	
                              26

                            
	
                              Section
      3.5

                            	
                              Letter
      of Credit Rights

                            	 	
                              28

                            
	
                              Section
      3.6

                            	
                              Intellectual
      Property Collateral

                            	 	
                              29

                            
	
                              Section
      3.7

                            	
                              Commercial
      Tort Claims

                            	 	
                              31

                            
	
                              Section
      3.8

                            	
                              Deposit
      Accounts.

                            	 	
                              31

                            
	 
      	 	 
      
	
                              ARTICLE 4.
      FURTHER ASSURANCES

                            	 	
                              31

                            
	 
      	 	 
      
	
                              ARTICLE 5.
      COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

                            	 	
                              32

                            
	 
      	 	 
      
	
                              ARTICLE 6.
      REMEDIES UPON DEFAULT

                            	 	
                              33

                            
	 
      	 
      	 	 
      
	
                              Section
      6.1

                            	
                              Remedies
      Generally

                            	 	
                              33

                            
	
                              Section
      6.2

                            	
                              Application
      of Proceeds of Sale

                            	 	
                              35

                            
	
                              Section
      6.3

                            	
                              Investment
      Property

                            	 	
                              36

                            
	
                              Section
      6.4

                            	
                              Grant
      of License to Use Intellectual Property

                            	 	
                              36

                            
	 
      	 	 
      
	
                              ARTICLE 7.
      REIMBURSEMENT OF COLLATERAL AGENT

                            	 	
                              37

                            
	 
      	 	 
      
	
                              ARTICLE 8.
      WAIVERS; AMENDMENTS

                            	 	
                              38

                            
	 
      	 	 
      
	
                              ARTICLE 9.
      SECURITY INTEREST ABSOLUTE

                            	 	
                              38

                            

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	
                        ARTICLE 10.
      TERMINATION; RELEASE

                      	 	
                        39

                      
	 
      	 	 
      
	
                        ARTICLE 11.
      ADDITIONAL SUBSIDIARY GUARANTORS AND GRANTORS

                      	 	
                        39

                      
	 
      	 	 
      
	
                        ARTICLE 12.
      COLLATERAL AGENT

                      	 	
                        40

                      
	 
      	 	 
      
	
                        ARTICLE 13.
      NOTICES

                      	 	
                        42

                      
	 
      	 	 
      
	
                        ARTICLE 14.
      BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS

                      	 	
                        43

                      
	 
      	 	 
      
	
                        ARTICLE 15.
      SURVIVAL OF AGREEMENT; SEVERABILITY

                      	 	
                        43

                      
	 
      	 	 
      
	
                        ARTICLE 16.
      GOVERNING LAW

                      	 	
                        44

                      
	 
      	 	 
      
	
                        ARTICLE 17.
      COUNTERPARTS

                      	 	
                        44

                      
	 
      	 	 
      
	
                        ARTICLE 18.
      HEADINGS

                      	 	
                        44

                      
	 
      	 	 
      
	
                        ARTICLE 19.
      JURISDICTION; VENUE; CONSENT TO SERVICE OF PROCESS

                      	 	
                        45

                      
	 
      	 	 
      
	
                        ARTICLE 20.
      WAIVER OF JURY TRIAL

                      	 	
                        45

                      

              

            

          

        

      

    

    

    SCHEDULES:

     

    Schedule I       List
of Subsidiary Guarantors and Addresses for Notices List of Foreign Subsidiaries
which are not Subsidiary Guarantors as of June 21, 2010, and
Addresses

     

    Schedule
II     Existing Liens

     

    Schedule 1.4(a)       Twistbox
Games Ltd. & Co. KG Collateral

     

    Schedule 3.1(a)(i)    List
of Chief Executive Offices, Jurisdictions of Organization, Federal Employer
Identification Numbers and Company Organizational Numbers

     

    Schedule 3.1(a)(ii)   List
of Legal and Other Names

     

    Schedule 3.1(a)(v)(A) List
of Filing Offices

     

    Schedule 3.1(a)(v)(B) Excluded
Trademarks

     

    Schedule 3.2     List
of Locations of Equipment and Inventory

     

    Schedule 3.4     List
of Pledged Collateral, Investment Property and Securities
Accounts

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    Schedule 3.5     List
of Letters of Credit

     

    Schedule 3.6     List
of Intellectual Property

     

    Schedule 3.7     List
of Commercial Tort Claims

     

    Schedule 3.8     List
of Deposit Accounts

     

    EXHIBITS:

    

    Exhibit
A           Form of
Copyright Security Agreement

    

    Exhibit
B           Form of
Patent Security Agreement

    

    Exhibit
C           Form of
Trademark Security Agreement

    

      
        
           

        

        
          iv

          
            

          

        

        
           

        

      

    

    
       

      ALL
INDEBTEDNESS EVIDENCED BY THIS GUARANTEE AND SECURITY AGREEMENT 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 THE
COLLATERAL AGENT, THE COMPANY, TRINAD CAPITAL MASTER FUND, LTD. AND NEUMEDIA,
INC.

       

      AMENDED
AND RESTATED GUARANTEE AND SECURITY AGREEMENT, dated as of June 21, 2010 (this
“Guarantee and
Security Agreement”), among Twistbox Entertainment, Inc., a Delaware
corporation (the “Company”), NeuMedia,
Inc. formerly known as Mandalay Media Inc., a Delaware corporation (the “Parent”) each of the
subsidiaries of the Parent identified on Schedule I as being a subsidiary
guarantor (each such subsidiary, individually a “Subsidiary Guarantor”
and, collectively, the “Subsidiary
Guarantors”; the Subsidiary Guarantors, the Parent and the Company are
referred to collectively herein as the “Grantors”), the
investors from time to time party hereto (including their successors and
permitted assigns, each an “Investor” and
collectively, the “Investors”) and
ValueAct SmallCap Master Fund, L.P., as collateral agent for the benefit of the
Secured Parties (including its successors and permitted assigns and in such
capacity, the “Collateral
Agent”).

       

      Reference
is made to the Securities Purchase Agreement, dated as of July 30, 2007,
among the Company and the Investors from time to time party thereto (as amended,
supplemented or otherwise modified from time to time, the “Securities Purchase
Agreement”).

       

      The
Company is indebted to the Investors 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,
the “Senior Secured
Note”) upon the terms and subject to the conditions specified in, the
Securities Purchase Agreement.

       

      This
Guarantee and Security Agreement amends and restates that certain Guaranty and
Security Agreement, dated as of June 30, 2007, by and among the Company, the
subsidiary guarantors party thereto, the investors party thereto and the
Collateral Agent, as the same may have been amended, supplemented or otherwise
modified from time to time prior to the date hereof (the “Original Guarantee and
Security Agreement”).

       

      The
Parent directly owns all of the Equity Interests of the Company and will derive
substantial benefit from the amendment and restatement of the Original Guarantee
and Security Agreement.

       

      The
Parent has entered into a letter agreement dated as of June 21, 2010, by and
among the Collateral Agent, the Parent, the Lead Participating Investors party
thereto, Jonathan Cresswell and Nathaniel MacLeitch, with regard to (i) the
partial satisfaction of the Senior Secured Note, and (ii) the satisfaction of
that certain Secured Promissory Note issued by the Parent and held by Jonathan
Cresswell, Nathaniel MacLeitch and certain other former shareholders of AMV
Holding Limited.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      The
Grantors and the Collateral Agent, on behalf of itself and each other Secured
Party (and each of their respective successors or permitted assigns), hereby
agree as follows:

       

      ARTICLE
1.

       

      DEFINITIONS;
GUARANTEE; GRANT OF SECURITY;

      CONTINUING
PERFECTION AND PRIORITY

       

      Section
1.1         General
Definitions

       

      As used
in this Guarantee and Security Agreement, the following terms shall have the
meanings specified below:

       

      “Account Debtor” means
each Person who is obligated in respect of any Receivable or any Supporting
Obligation or Collateral Support related thereto.

       

      “Accounts” means all
“accounts” as defined in Article 9 of the UCC.

       

      “Additional Subsidiary
Guarantor and Grantor” has the meaning assigned to such term in
Article 11.

       

      “Applicable Date”
means (i) in the case of any Grantor (other than an Additional Subsidiary
Guarantor and Grantor), the date hereof, and (ii) in the case of any
Additional Subsidiary Guarantor and Grantor, the date of the Supplement executed
and delivered by such Additional Subsidiary Guarantor and Grantor.

       

      “Authorization” means,
collectively, any license, approval, permit or other authorization issued by
Governmental Authority.

       

      “Bankruptcy Law” means
Title 11, U.S. Code, or any similar foreign, federal or state law for the relief
of debtors.

       

      “Business Day” means
any day other than Saturday, Sunday or other day on which commercial banks in
The City of New York are authorized or required by law to remain
closed.

       

      “Cash Collateral
Account” means any Deposit Account or Securities Account established by
the Collateral Agent in which cash may from time to time be on deposit or held
therein pursuant to the Secured Transaction Documents.

       

      “Chattel Paper” means
all “chattel paper” as defined in Article 9 of the UCC.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Claim Proceeds”
means, with respect to any Commercial Tort Claim or any Collateral Support or
Supporting Obligation relating thereto, all Proceeds thereof, including all
insurance proceeds and other amounts and recoveries resulting or arising from
the settlement or other resolution thereof, in each case regardless of whether
characterized as a “commercial tort
claim” under Article 9 of the UCC or “proceeds” under the
UCC.

       

      “Collateral” has the
meaning assigned to such term in Section 1.4(a).

       

      “Collateral Records”
means all books, instruments, certificates, Records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals
and other documents, and all computer software, computer printouts, tapes, disks
and related data processing software and similar items, in each case that at any
time represent, cover or otherwise evidence any of the Collateral.

       

      “Collateral Support”
means all property (real or personal) assigned, hypothecated or otherwise
securing any of the Collateral, and shall include any security agreement or
other agreement granting a lien or security interest in such real or personal
property.

       

      “Commercial Tort
Claims” means (i) all “commercial tort claims” as defined in
Article 9 of the UCC and (ii) all Claim Proceeds with respect to any
of the foregoing; including all claims described on Schedule 3.7.

       

      “Company” has the
meaning assigned to such term in the preliminary statement of this Guarantee and
Security Agreement.

       

      “Copyright License”
means any written agreement, now or hereafter in effect, granting any right to
any third party under any Copyright now or hereafter owned or held by any
Grantor or which any Grantor otherwise has the right to license, or granting any
right to any Grantor under any Copyright now or hereafter owned by any third
party, and all rights of any Grantor under any such agreement, including each
agreement described on Schedule 3.6.

       

      “Copyright Security
Agreement” means a Copyright Security Agreement substantially in the form
of Exhibit A hereto.

       

      “Copyrights” means all
of the following: (i) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (ii) all registrations and
applications for registration of any such copyright in the United States or any
other country, including registrations, recordings, supplemental registrations
and pending applications for registration in the United States Copyright Office
or any similar offices in the United States or any other country, including
those described on Schedule 3.6.

       

      “Deposit Accounts”
means all “deposit accounts” as defined in Article 9 of the UCC, including
all such accounts described on Schedule 3.8.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “Documents” means all
“documents” as defined in Article 9 of the UCC.

       

      “Equipment” means
(i) all “equipment” as defined in Article 9 of the UCC, (ii) all
machinery, manufacturing equipment, data processing equipment, computers, office
equipment, furnishings, furniture, appliances, fixtures and tools, in each case,
regardless of whether characterized as “equipment” under the UCC, and
(iii) all accessions or additions to any of the foregoing, all parts
thereof, whether or not at any time of determination incorporated or installed
therein or attached thereto, and all replacements therefor, wherever located,
now or hereafter existing.

       

      “Equity Interest”
means (i) shares of corporate stock, partnership interests, membership
interests, and any other interest that confers on a Person the right to receive
a share of the profits and losses of, or distribution of assets of, the issuing
Person, and (ii) all warrants, options or other rights to acquire any
Equity Interest set forth in clause (i) of this defined term.

       

      “Event of Default” has
the meaning assigned to such term in the Senior Secured Notes.

       

      “Foreign Subsidiary”
means any direct subsidiary of any Grantor organized under the laws of any
jurisdiction outside the United States of America other than any Subsidiary
Guarantor and as designated as such on Schedule I
hereto.

       

      “Foreign Subsidiary Voting
Stock” means the voting capital stock of any Foreign
Subsidiary.

       

      “Financial Assets”
means all “financial assets” as defined in Article 8 of the
UCC.

       

      “General Intangibles”
means (i) all “general intangibles” as defined in Article 9 of the UCC
and (ii) all chooses in action and causes of action, all indemnification
claims, all goodwill, all tax refunds, all licenses, permits, concessions,
franchises and authorizations, all Intellectual Property, all Payment
Intangibles and all Software, in each case, regardless of whether characterized
as a “general intangible” under the UCC.

       

      “Goods” means
(i) all “goods” as defined in Article 9 of the UCC and (ii) all
Equipment and Inventory and any computer program embedded in goods and any
supporting information provided in connection with such program, to the extent
(a) such program is associated with such goods in such a manner that it is
customarily considered part of such goods or (b) by becoming the owner of
such goods, a Person acquires a right to use the program in connection with such
goods, in each case, regardless of whether characterized as a “good” under the
UCC.

       

      “Governmental
Authority” means any nation or government, any state, province, city,
municipal entity or other political subdivision thereof, and any governmental,
executive, legislative, judicial, administrative or regulatory agency,
department, authority, instrumentality, commission, board, bureau or similar
body, whether federal, state, provincial, territorial, local or
foreign.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      “Grantor” and “Grantors” have the
meanings assigned to such terms in the preliminary statement of this Guarantee
and Security Agreement; provided, that AMV Holding Limited shall not be Grantor
for purposes of this Guarantee and Security Agreement.

       

      “Guaranteed
Obligations” has the meaning assigned to such term in
Section 1.3(a)(i).

       

      “Guaranty” means the
Amended and Restated Guaranty, given as of June 21, 2010, by the Parent to the
Investor, as amended, supplemented or otherwise modified from time to
time.

       

      “Instruments” means
all “instruments” as defined in Article 9 of the UCC.

       

      “Insurance” means all
insurance policies covering any or all of the Collateral (regardless of whether
the Collateral Agent or any other Secured Party is an additional named insured
or the loss payee thereof) and all business interruption insurance
policies.

       

      “Intellectual
Property” means all intellectual and similar property owned by any
Grantor of every kind and nature, including inventions, designs, Patents,
Copyrights, Trademarks, Licenses, domain names, Trade Secrets, confidential or
proprietary technical and business information, know how, show how or other data
or information, software and databases and all embodiments or fixations thereof
and related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.

       

      “Inventory” means
(i) all “inventory” as defined in Article 9 of the UCC and
(ii) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in any Grantor’s business, all goods which are
returned to or repossessed by or on behalf of any Grantor, and all computer
programs embedded in any goods, and all accessions thereto and products thereof,
in each case, regardless of whether characterized as “inventory” under the
UCC.

       

      “Investor” and “Investors” have the
meaning assigned to such term in the preliminary statements of this Guarantee
and Security Agreement.

       

      “Investment Property”
means, collectively, all “investment property”
as defined in Article 9 of the UCC including all Pledged
Collateral.

       

      “Letter of Credit
Rights” means all “letter-of-credit rights” as defined in Article 9
of the UCC and all rights, title and interests of each Grantor to any letter of
credit, in each case regardless of whether characterized as a “letter-of-credit
right” under the UCC.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      “License” means any
Copyright License, Patent License, Trademark License, Trade Secret License or
other license or sublicense to which any Grantor is a party.

       

      “Lien” means any lien,
mortgage, charge, claim, security interest, encumbrance, or right of first
refusal.

       

      “Net Receivables
Balance” means all amounts recorded on the Company’s balance sheet as
Receivables or accrued Receivables net of allowance for doubtful accounts
consistent with past practice.

       

      “Obligations” means
(i) the due and punctual payment of (a) principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Senior Secured Notes,
when and as due, whether at maturity or by acceleration or otherwise, and
(b) all other monetary obligations, including fees, commissions, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Grantors to the Secured
Parties when and as due, or that are otherwise payable to any Investors, in each
case under the Secured Transaction Documents when and as due, (ii) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Grantors or any other party (other than an Investor) under or
pursuant to the Secured Transaction Documents, and (iii) with respect to
the Subsidiary Guarantor, the Guaranteed Obligations.

       

      “Original Guarantee and
Security Agreement” the meaning assigned to such term in the preliminary
statements of this Guarantee and Security Agreement.

       

      “Parent” has the
meaning assigned to such term in the preliminary statement of this Guarantee and
Security Agreement.

       

      “Patent License” means
any written agreement, now or hereafter in effect, granting to any third party
any right to make, use or sell any invention on which a Patent, now or hereafter
owned or held by or on behalf of any Grantor or which any Grantor otherwise has
the right to license, is in existence, or granting to any Grantor any right to
make, use or sell any invention on which a Patent, now or hereafter owned by any
third party, is in existence, and all rights of any Grantor under any such
agreement, including each agreement described on Schedule 3.6.

       

      “Patent Security
Agreement” means a Patent Security Agreement substantially in the form of
Exhibit B hereto.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      “Patents” means all of
the following: (i) all letters patent of the United States or any other
country, all registrations and recordings thereof and all applications for
letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in the United States or any other
country, including those described on Schedule 3.6, and
(ii) all reissues, continuations, divisions, continuations in part,
renewals or extensions thereof, and the inventions disclosed or claimed therein,
including the right to make, use and/or sell the inventions disclosed or claimed
therein.

       

      “Payment Intangibles”
means all “payment intangibles” as defined in Article 9 of the
UCC.

       

      “Permitted Liens”
means all of the following: (i) Liens existing as of the date hereof and set
forth in Schedule
II (ii) Liens of materialmen, mechanics, warehousemen, or carriers, or
other like liens arising in the ordinary course of business and securing
obligations which are not yet delinquent, (iii) Liens for taxes, assessments or
similar charges incurred in the ordinary course of business that are not yet due
and payable, (iv) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business, (v) Liens in favor of the Investors
and (vi) Liens by Grantors in favor of the holders of the two Senior Notes
issued by the Parent, dated June 21, 2010, in the principal amount of $1,500,000
and $1,000,000, respectively; provided that the aggregate outstanding principal
amount of such senior Notes does not exceed $ 2,500,000.

       

      “Person” means any
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, or joint stock
company.

       

      “Pledged Collateral”
means, collectively, Pledged Debt and Pledged Equity Interests.

       

      “Pledged Debt” means
all indebtedness for borrowed money owed or owing to any Grantor, including all
indebtedness described on Schedule 3.4, all Instruments
other than checks received in the ordinary course of business, Chattel Paper or
other documents, if any, representing or evidencing such debt, and all interest,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such debt.

       

      “Pledged Equity
Interests” means all Equity Interests owned or held by or on behalf of
any Grantor, including all such Equity Interests described on Schedule 3.4, and all
certificates, instruments and other documents, if any, representing or
evidencing such Equity Interests and all interests of such Grantor on the books
and records of the issuers of such Equity Interests, all of such Grantor’s
right, title and interest in, to and under any partnership, limited liability
company, shareholder or similar agreements to which it is a party, and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
Equity Interests; provided, however, that in no
event shall more than 65% of the total outstanding Foreign Subsidiary Voting
Stock of any Foreign Subsidiary be pledged (or deemed to be pledged)
hereunder.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      “Proceeds” means
(i) all “proceeds” as defined in Article 9 of the UCC,
(ii) payments or distributions made with respect to any Investment
Property, (iii) any payment received from any insurer or other Person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that constitutes the
Collateral, and (iv) whatever is receivable or received when any of the
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary, including any claim of any
Grantor against any third party for (and the right to sue and recover for and
the rights to damages or profits due or accrued arising out of or in connection
with) (a) past, present or future infringement of any Patent now or
hereafter owned or held by or on behalf of any Grantor, or licensed under a
Patent License, (b) past, present or future infringement or dilution of any
Trademark now or hereafter owned or held by or on behalf of any Grantor, or
licensed under a Trademark License, or injury to the goodwill associated with or
symbolized by any Trademark now or hereafter owned or held by or on behalf of
any Grantor, (c) past, present or future infringement of any Copyright now
or hereafter owned or held by or on behalf of any Grantor, or licensed under a
Copyright License, (d) past, present or future infringement of any Trade
Secret now or hereafter owned or held by or on behalf of any Grantor, or
licensed under a Trade Secret License, and (e) past, present or future breach of
any License, in each case, regardless of whether characterized as “proceeds”
under the UCC.

       

      “Receivables” means
all rights to payment, whether or not earned by performance, for goods or other
property sold, leased, licensed, assigned or otherwise disposed of, or services
rendered or to be rendered, including all such rights constituting or evidenced
by any Account, Chattel Paper, Instrument or other document, General Intangible
or Investment Property, together with all of the applicable Grantor’s rights, if
any, in any goods or other property giving rise to such right to payment, and
all Collateral Support and Supporting Obligations related thereto and all
Receivables Records.

       

      “Receivables Records”
means (i) all originals of all documents, instruments or other writings or
electronic records or other Records evidencing any Receivable, (ii) all
books, correspondence, credit or other files, Records, ledger sheets or cards,
invoices, and other papers relating to such Receivable, including all tapes,
cards, computer tapes, computer discs, computer runs and record keeping systems,
whether in the possession or under the control of the applicable Grantor or any
computer bureau or agent from time to time acting for such Grantor or otherwise,
(iii) all evidences of the filing of financing statements relating to such
Receivable and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including lien search reports, from filing or other registration
officers and (iv) all credit information, reports and memoranda relating to
such Receivable.

       

      “Record” means a
“record” as defined in Article 9 of the UCC.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      “Related Party” means,
with respect to any specified Person, such Person’s affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s affiliates.

       

      “Secured Parties”
means (i) the Collateral Agent, (ii) the Investors under the Senior
Secured Notes, (iii) the beneficiaries of each indemnification obligation
undertaken by or on behalf of any Grantor under any Secured Transaction
Document, and (iv) the successors and permitted assigns of each of the
foregoing.

       

      “Secured Transaction
Documents” means the Senior Secured Notes, this Guarantee and Security
Agreement, the Guaranty, and all other instruments, documents, certificates and
agreements related thereto.

       

      “Securities Accounts”
means all “securities accounts” as defined in Article 8 of the UCC,
including all such accounts described on Schedule 3.4.

       

      “Securities
Intermediary” has the meaning specified in Article 8 of the
UCC.

       

      “Securities Purchase
Agreement” has the meaning assigned to such term in the preliminary
statement of this Guarantee and Security Agreement.

       

      “Security Interest”
has the meaning assigned to such term in Section 1.4(a).

       

      “Senior Secured Note”
has the meaning assigned to such term in the preliminary statement of this
Guarantee and Security Agreement.

       

      “Software” means all
“software” as defined in Article 9 of the UCC.

       

      “Subordinated
Obligations” has the meaning assigned to such term in
Section 1.3(e).

       

      “Subsidiary” means any
Person in which the Parent, directly or indirectly, owns capital stock or holds
an equity or similar interest.

       

      “Subsidiary Guarantee”
has the meaning assigned to such term in Section 1.3(a)(i).

       

      “Subsidiary Guarantor”
has the meaning assigned to such term in the preliminary statement of this
Guarantee and Security Agreement.

       

      “Supplement” means a
supplement hereto, in a form reasonably satisfactory to the Collateral
Agent.

       

      “Supporting
Obligation” means (i) all “supporting obligations” as defined in
Article 9 of the UCC and (ii) all Guaranties and other secondary
obligations supporting any of the Collateral, in each case regardless of whether
characterized as a “supporting obligation” under the UCC.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      “Trade Secret
Licenses” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trade Secrets now or hereafter
owned or held by or on behalf of any Grantor or which such Grantor otherwise has
the right to license, or granting to any Grantor any right to use any Trade
Secrets now or hereafter owned by any third party, and all rights of any Grantor
under any such agreement, including each agreement described on Schedule 3.6.

       

      “Trade Secrets” means
all trade secrets and all other confidential or proprietary information and
know-how now or hereafter owned or used in, or contemplated at any time for use
in, the business of any Grantor (all of the foregoing being collectively called
a “Trade Secret”), whether or not such Trade Secret has been reduced to a
writing or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, the right to sue for
any past, present and future infringement of any Trade Secret, and all proceeds
of the foregoing, including licenses, royalties, income, payments, claims,
damages and proceeds of suit.

       

      “Trademark License”
means any written agreement, now or hereafter in effect, granting to any third
party any right to use any Trademark now or hereafter owned or held by any
Grantor or which such Grantor otherwise has the right to license, or granting to
any Grantor any right to use any Trademark now or hereafter owned by any third
party, and all rights of any Grantor under any such agreement, including each
agreement described on Schedule 3.6.

       

      “Trademark Security
Agreement” means a Trademark Security Agreement substantially in the form
of Exhibit C hereto.

       

      “Trademarks” means all
of the following: (i) all trademarks, service marks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
trade dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office or
any similar offices in the United States or any other country, and all
extensions or renewals thereof, including those described on Schedule 3.6, (ii) all
goodwill associated therewith or symbolized by any of the foregoing and
(iii) all other assets, rights and interests that uniquely reflect or
embody such goodwill.

       

      “UCC” means the
Uniform Commercial Code as in effect from time to time in the State of
New York or, when the context implies, the Uniform Commercial Code as in
effect from time to time in any other applicable jurisdiction.

       

      Section
1.2         Other Definitions;
Interpretation

       

      (a)         Other Definitions.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Securities
Purchase Agreement.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      (b)         Rules of
Interpretation.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms.  The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”.  The word “will” shall be construed to
have the same meaning and effect as the word “shall”.  Unless the
context requires otherwise, (i) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified, (ii) any definition of or reference to
any law shall be construed as referring to such law as from time to time amended
and any successor thereto and the rules and regulations promulgated from time to
time thereunder, (iii) any reference herein to any Person shall be
construed to include such Person’s successors and permitted assigns,
(iv) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Guarantee and Security Agreement in
its entirety and not to any particular provision hereof, (v) all references
herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and
Schedules to and any Supplement thereto, this Guarantee and Security
Agreement, and (vi) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.  All references herein to provisions of the UCC shall
include all successor provisions under any subsequent version or amendment to
any Article of the UCC.

       

      Section
1.3         Guarantee

       

      (a)         Subsidiary Guarantee;
Limitation of Liability.

       

      (i)         Each
Subsidiary Guarantor jointly and severally, hereby absolutely, unconditionally
and irrevocably guarantees, as a primary obligor and not merely as surety, to
the Collateral Agent for the ratable benefit of the Secured Parties the punctual
payment when due (but subject to the expiration of any grace period granted by
the Secured Parties in their sole discretion or the giving of any required
notice provided for in any secured Transaction Document), whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or
otherwise, of the Obligations of the Company and each other Grantor now or
hereafter existing under or in respect of the Secured Transaction Documents
(including, without limitation, any extensions, modifications, substitutions,
amendments or renewals of any or all of the foregoing Obligations), whether
direct or indirect, absolute or contingent, and whether for principal, interest,
premiums, fees, indemnities, contract causes of action, costs, expenses or
otherwise (such Obligations being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, reasonable fees and out-of-pocket expenses of counsel) incurred by
the Collateral Agent or any other Investors in enforcing any rights under this
Subsidiary Guarantee (the “Subsidiary
Guarantee”) or any other Secured Transaction Document.  Without
limiting the generality of the foregoing, each Subsidiary Guarantor’s liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by any other Grantor to the Collateral Agent or any Investors
under or in respect of the Secured Transaction Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other
Grantor.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      (ii)        Each
Subsidiary Guarantor, and by its acceptance of this Subsidiary Guarantee, the
Collateral Agent and each other Investors, hereby confirms that it is the
intention of all such Persons that this Subsidiary Guarantee and the Obligations
of each Subsidiary Guarantor hereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Subsidiary Guarantee and the
Obligations of each Subsidiary Guarantor hereunder.  To effectuate the
foregoing intention, the Collateral Agent, each Investor and the Subsidiary
Guarantors hereby irrevocably agree that the Guaranteed Obligations of each
Subsidiary Guarantor under this Subsidiary Guarantee at any time shall be
limited to the maximum amount as will result in the Guaranteed Obligations of
such Subsidiary Guarantor under this Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.

       

      (iii)       Each
Subsidiary Guarantor hereby unconditionally and irrevocably agrees that in the
event any payment shall be required to be made to the Collateral Agent or any
Investors under this Subsidiary Guarantee, such Subsidiary Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Subsidiary Guarantor so as to maximize the aggregate amount then required to be
paid to the Collateral Agent and Investors under or in respect of the Secured
Transaction Documents.

       

      (b)         Subsidiary Guarantee
Absolute.  Each Subsidiary Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Secured Transaction Documents, 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 each Subsidiary Guarantor under or in
respect of this Subsidiary Guarantee are independent of the Guaranteed
Obligations or any other Obligations of any other Grantor under or in respect of
the Secured Transaction Documents, and a separate action or actions may be
brought and prosecuted against each Subsidiary Guarantor to enforce this
Subsidiary 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 each
Subsidiary Guarantor under this Subsidiary Guarantee shall be irrevocable,
absolute and unconditional irrespective of, and each Subsidiary Guarantor hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to, any or all of the following:

       

      (i)         any
lack of validity or enforceability of any Secured Transaction Document or any
agreement or instrument relating thereto;

       

      (ii)        any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations or any other Obligations of any other
Grantor under or in respect of the Secured Transaction Documents, or any other
amendment or waiver of or any consent to departure from any Secured Transaction
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any Grantor or
any of its Subsidiaries or otherwise;

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      (iii)       any
taking, release or amendment or waiver of, or consent to departure from, any
other guarantee, for all or any of the Guaranteed Obligations it being
understood that any such amendment, waiver or consent shall be applicable to the
Guaranteed Obligations of the Subsidiary Guarantors;

       

      (iv)      any
change, restructuring or termination of the corporate structure or existence of
any Grantor or any of its Subsidiaries;

       

      (v)      
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);

       

      (vi)      the
failure of any other Person to execute or deliver this Agreement, any Supplement
or any other guarantee or agreement or the release or reduction of liability of
any Subsidiary Guarantor or other guarantor or surety with respect to the
Guaranteed Obligations; or

       

      (vii)     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 Guaranteed Obligations (other than contingent indemnification
obligations).

       

      This
Subsidiary Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Investors or any other Person
upon the insolvency, bankruptcy or reorganization of the Company or any other
Grantor or otherwise, all as though such payment had not been made.

       

      (c)         Waivers and
Acknowledgments.  Each Subsidiary Guarantor hereby
unconditionally and irrevocably waives:

       

      (i)         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 Guaranteed Obligations and this Subsidiary Guarantee
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;

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      (ii)        any
right to revoke this Subsidiary Guarantee and acknowledges that this Subsidiary
Guarantee is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future;

       

      (iii)       (A)  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 such Subsidiary Guarantor or other
rights of such Subsidiary Guarantor to proceed against any of the other
Grantors, any other guarantor or any other Person, and (B) any defense
based on any right of set-off or counterclaim against or in respect of the
Obligations of such Subsidiary Guarantor hereunder;

       

      (iv)      any
duty on the part of any Investors to disclose to such Subsidiary 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

       

      (v)       each
Subsidiary Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Secured
Transaction Documents and that the waivers set forth in Section 1.3(b) and
this Section 1.3(c) are knowingly made in contemplation of such
benefits.

       

      (d)         Subrogation.  Each
Subsidiary Guarantor hereby unconditionally and irrevocably agrees not to
exercise any rights that it may now have or hereafter acquire against the
Company or any other Grantor that arise from the existence, payment, performance
or enforcement of such Subsidiary Guarantor’s obligations under or in respect of
this Subsidiary Guarantee or any other Secured Transaction Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of any Investor against the Company or any other Grantor, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Company or any other Grantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations
(other than contingent indemnification rights) shall have been paid in full in
cash.  If any amount shall be paid to any Subsidiary Guarantor in
violation of the immediately preceding sentence at any time prior to the latest
of the payment in full in cash of the Guaranteed Obligations (other than
contingent indemnification rights), such amount shall be received and held in
trust for the benefit of the Investors, shall be segregated from other property
and funds of such Subsidiary Guarantor and shall forthwith be paid or delivered
to the Collateral Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms of the
Secured Transaction Documents, or to be held as collateral for any Guaranteed
Obligations.  If (i) any Subsidiary Guarantor shall make payment
to any Investor of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations (other than contingent
indemnification rights) shall have been paid in full in cash, the Investors
will, at such Subsidiary Guarantor’s request and expense, execute and deliver to
such Subsidiary Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Subsidiary Guarantor of an interest in the Guaranteed Obligations resulting
from such payment made by such Subsidiary Guarantor pursuant to this Subsidiary
Guarantee.

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      (e)         Subordination.  Each
Subsidiary Guarantor hereby subordinates any and all debts, liabilities and
other obligations owed to such Subsidiary Guarantor by each other Grantor (the
“Subordinated
Obligations”) to the Guaranteed Obligations to the extent and in the
manner hereinafter set forth in this Section 1.3:

       

      (i)         Prohibited Payments,
Etc.  Except during the continuance of an Event of Default,
each Subsidiary Guarantor may receive payments from any other Grantor on account
of the Subordinated Obligations.  Upon the occurrence and during the
continuance of any Event of Default, however, no Subsidiary Guarantor may
demand, accept or take any action to collect any payment on account of the
Subordinated Obligations.

       

      (ii)        Prior Payment of Guaranteed
Obligations.  In any proceeding under any Bankruptcy Law
relating to any other Grantor, each Subsidiary Guarantor agrees that the
Investors shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (including all interest and expenses accruing after the commencement
of a proceeding under any Bankruptcy Law, whether or not constituting an allowed
claim in such proceeding (“Post-Petition
Interest”)) (other than contingent indemnification obligations) before
such Subsidiary Guarantor receives payment of any Subordinated
Obligations.

       

      (iii)       Turn-Over.  Upon
the occurrence and during the continuance of any Event of Default, each
Subsidiary Guarantor shall upon written request by the Collateral Agent,
collect, enforce and receive payments on account of the Subordinated Obligations
as trustee for the Investors and deliver such payments to the Collateral Agent
on account of the Guaranteed Obligations (including all Post-Petition Interest),
together with any necessary endorsements or other instruments of transfer, but
without reducing or affecting in any manner the liability of such Subsidiary
Guarantor under the other provisions of this Subsidiary Guarantee.

       

      (iv)       Collateral Agent
Authorization.  Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent is authorized and empowered (but
without any obligation to so do), in its reasonable discretion, (A) in the
name of each Subsidiary Guarantor, to collect and enforce, and to submit claims
in respect of, the Subordinated Obligations and to apply any amounts received
thereon to the Guaranteed Obligations (including any and all Post-Petition
Interest), and (B) to require each Subsidiary Guarantor (1) to collect
and enforce, and to submit claims in respect of, the Subordinated Obligations
and (2) to pay any amounts received on such obligations to the Collateral
Agent for application to the Guaranteed Obligations (including any and all
Post-Petition Interest).

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      (f)         Continuing Subsidiary
Guarantee; Assignments.  This Subsidiary Guarantee is a
continuing guarantee and shall (i) remain in full force and effect until
the payment in full in cash of the Guaranteed Obligations, (ii) be binding
upon each Subsidiary Guarantor, its successors and assigns, and (iii) inure
to the benefit of and be enforceable by the Investors and their successors and
permitted transferees and assigns.

       

      (g)         Mandatory Provisions of
Bankruptcy Law.  Nothing in this Section 1.3 shall limit
any rights a receiver, liquidator, insolvency administrator may have under the
German Insolvency Act (Insolvenzordnung).

       

      (h)         Subsidiary Guarantors’
Obligations Unconditional. The covenants and agreements of each
Subsidiary Guarantor set forth in this Guarantee shall be primary obligations of
each Subsidiary Guarantor, and such obligations shall be continuing, absolute
and unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Subsidiary Guarantor with its
obligations hereunder), whether based upon any claim that Parent, or any other
Person may have against Investor or any other Person or otherwise, and shall
remain in full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition whatsoever
(whether or not each Subsidiary Guarantor or Parent shall have any knowledge or
notice thereof) including, without limitation:

       

      
        	
                 
      

              	
                A.

              	
                any
      amendment, modification, addition, deletion, supplement or renewal to or
      of or other change in the Obligations or the Secured Transaction Documents
      or any related instrument or agreement, or any other instrument or
      agreement applicable thereto or any of the parties to such agreements, or
      to any collateral, or any furnishing or acceptance of additional security
      for, guarantee of or right of offset with respect to, any of the
      Obligations; or the failure of any security or the failure of Investor to
      perfect or insure any interest in any
  collateral;

              

      

       

      
        	
                 
      

              	
                B.

              	
                any
      failure, omission or delay on the part of Parent or Investor to conform or
      comply with any term of any instrument or agreement referred to in clause (A)
      above;

              

      

       

      
        	
                 
      

              	
                C.

              	
                any
      waiver, consent, extension, indulgence, compromise, release or other
      action or inaction under or in respect of any instrument, agreement,
      guarantee, right of offset or security referred to in clause (A)
      above or any obligation or liability of Parent or Investor, or any
      exercise or non-exercise by Investor of any right, remedy, power or
      privilege under or in respect of any such instrument, agreement,
      guarantee, right of offset or security or any such obligation or
      liability;

              

      

       

      
        	
                 
      

              	
                D.

              	
                any
      bankruptcy, insolvency, reorganization, arrangement, readjustment,
      composition, liquidation or similar proceeding with respect to Parent,
      Investor or any other Person or any of their respective properties or
      creditors, or any action taken by any trustee or receiver or by any court
      in any such proceeding;

              

      

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                E.

              	
                any
      limitation on the liability or obligations of any Person under the Secured
      Transaction Documents or any other related instrument or agreement, the
      Obligations, any collateral security for the Obligations or any other
      guarantee of the Obligations or any discharge, termination, cancellation,
      frustration, irregularity, invalidity or unenforceability, in whole or in
      part, of any of the foregoing, or any other agreement, instrument,
      guarantee or security referred to in clause (A) above or
      any term of any thereof;

              

      

       

      
        	
                 
      

              	
                F.

              	
                any
      merger or consolidation of Parent into or with any other Person or any
      sale, lease or transfer of any of the assets of Parent to any other
      Person;

              

      

       

      
        	
                 
      

              	
                G.

              	
                any
      change in the ownership of any shares of capital stock of Parent or any
      corporate change in Parent; or

              

      

       

      
        	
                 
      

              	
                H.

              	
                any
      other occurrence or circumstance whatsoever, whether similar or dissimilar
      to the foregoing and any other circumstance that might otherwise
      constitute a legal or equitable defense or discharge of the liabilities of
      a guarantor or surety or that might otherwise limit recourse against each
      Subsidiary Guarantor.

              

      

       

      The
obligations of each Subsidiary Guarantor set forth herein constitute the full
recourse obligations of each Subsidiary Guarantor, enforceable against it to the
full extent of all its assets and properties.

       

      Each
Subsidiary Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by Investor upon this Guarantee or acceptance of this Guarantee, and
the Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this Guarantee.  Each
Subsidiary Guarantor unconditionally waives, to the extent permitted by
law:  (a) acceptance of this Guarantee and proof of reliance by
Investor hereon; (b) notice of any of the matters referred to in the foregoing
clauses A
through H
hereof, or any right to consent or assent to any thereof; (c) all notices that
may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve intact any rights against each Subsidiary Guarantor,
including without limitation, any demand, presentment, protest, proof or notice
of nonpayment under the Secured Transaction Documents or any related instrument
or agreement, and notice of default or any failure on the part of Parent to
perform and comply with any covenant, agreement, term or condition of the
Secured Transaction Documents or any related instrument or agreement; (d) any
right to the enforcement, assertion or exercise against Parent of any right,
power, privilege or remedy conferred in the Loan Document or any related
instrument or agreement or otherwise; (e) any requirement of diligence on the
part of any Person; (f) any requirement of Investor to take any action
whatsoever, to exhaust any remedies or to mitigate the damages resulting from a
default under the Secured Transaction Documents or any related instrument or
agreement; (g) any notice of any sale, transfer or other disposition by any
Person of any right under, title to or interest in the Secured Transaction
Documents or any related instrument or agreement relating thereto or any
collateral for the Obligations; and (h) any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge, release or defense of
a guarantor or surety, or that might otherwise limit recourse against any
Subsidiary Guarantor (including, without limitation, any and all benefits
under California Civil Code Sections 2809, 2810, 2819, 2822, 2825, 2845, 2846,
2847, 2848, 2849, 2850, 2899 and 3433).

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      Without
limiting the foregoing, each Subsidiary Guarantor hereby absolutely,
unconditionally and irrevocably waives and agrees not to assert or take
advantage of any defense based upon an election of remedies by Investor,
including an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or impairs any right of subrogation of each
Subsidiary Guarantor or the right of each Subsidiary Guarantor to proceed
against any Person for reimbursement or both.

       

      Each
Subsidiary Guarantor agrees that this Guarantee shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of Parent is rescinded or must be otherwise restored by Investor, whether as a
result of any proceedings in bankruptcy or reorganization or
otherwise.

       

      Each
Subsidiary Guarantor further agrees that, without limiting the generality of
this Guarantee, if an Event of Default shall have occurred and be continuing and
Investor is prevented by applicable law from exercising its remedies under the
Secured Transaction Documents, Investor shall be entitled to receive hereunder
from each Subsidiary Guarantor, upon demand therefor, the sums which would have
otherwise been due from Parent had such remedies been exercised.

       

      Section
1.4         Grant of
Security

       

      (a)         Grant by
Grantors.  As security for the payment or performance, as
applicable, in full of the Obligations, each Grantor hereby pledges and grants
to the Collateral Agent, for the ratable benefit of the Secured Parties, a lien
on and security interest (the “Security Interest”)
in and to all of the right, title and interest of such Grantor in, to and under
the following property, wherever located, whether now existing or hereafter
arising or acquired from time to time (all of which being hereinafter
collectively referred to as the “Collateral”):

       

      (i)         all
Accounts,

       

      (ii)        all
Deposit Accounts and Securities Accounts, including all Cash Collateral
Accounts,

       

      (iii)       all
Chattel Paper, Documents and Instruments,

       

      (iv) 
     all Commercial Tort Claims,

       

      (v)        all
Equipment,

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      (vi)      all
General Intangibles,

       

      (vii)     all
Goods,

       

      (viii)    all
Insurance,

       

      (ix)       all
Instruments,

       

      (x)        all
Intellectual Property, but excluding in all cases all intent-to-use United
States trademark applications for which an amendment to allege use or statement
of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d),
respectively, or if filed, has not been deemed in conformance with 15 U.S.C. §
1051(a) or examined and accepted, respectively, by the United States Patent and
Trademark Office provided that upon such filing and acceptance, such
intent-to-use applications shall be included in the definition of
Collateral,

       

      (xi)       all
Inventory,

       

      (xii)      all
Investment Property, including all Pledged Collateral,

       

      (xiii)     all
Proceeds of Authorizations,

       

      (xiv)     all
Receivables and Receivables Records,

       

      (xv)      all
other goods and personal property of such Grantor, whether tangible or
intangible, wherever located, including letters of credit,

       

      (xvi)     to
the extent not otherwise included in clauses (i) through (xv) of this
Section, all Collateral Records, Collateral Support and Supporting Obligations
in respect of any of the foregoing,

       

      (xvii)    to
the extent not otherwise included in clauses (i) through (xvi) of this
Section, all other property in which a security interest may be granted under
the UCC or which may be delivered to and held by the Collateral Agent pursuant
to the terms hereof (including the account referred to in
Section 3.4(c)(ii) and all funds and other property from time to time
therein or credited thereto),

       

      (xviii)   all
Collateral of Twistbox Games Ltd. & Co. KG as further defined in Schedule 1.4(a) in compliance
with mandatory German law, and

       

      (xix)     to
the extent not otherwise included in clauses (i) through (xvii) of
this Section, all Proceeds, products, substitutions, accessions, rents and
profits of or in respect of any of the foregoing.

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      (b)         Revisions to
UCC.  For the avoidance of doubt, it is expressly understood
and agreed that, to the extent the UCC is revised after the date hereof such
that the definition of any of the foregoing terms included in the description or
definition of the Collateral is changed, the parties hereto desire that any
property which is included in such changed definitions, but which would not
otherwise be included in the Security Interest on the date hereof, nevertheless
be included in the Security Interest upon the effective date of such
revision.  Notwithstanding the immediately preceding sentence, the
Security Interest is intended to apply immediately on the date hereof to all of
the Collateral to the fullest extent permitted by applicable law, regardless of
whether any particular item of the Collateral was then subject to the
UCC.

       

      ARTICLE
2.

       

      SECURITY FOR OBLIGATIONS; NO
ASSUMPTION OF LIABILITY

       

      Section
2.1         Security for
Obligations

       

      This
Guarantee and Security Agreement secures, and the Collateral is collateral
security for, the prompt and complete payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of Title 11 of
the United States Code, or any similar provision of any other bankruptcy,
insolvency, receivership or other similar law), of all Obligations with respect
to each Grantor.

       

      Section
2.2         No Assumption of
Liability

       

      Notwithstanding
anything to the contrary herein, the Security Interest is granted as security
only and shall not subject the Collateral Agent or any other Secured Party to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.

       

      ARTICLE
3.

       

      REPRESENTATIONS AND
WARRANTIES AND COVENANTS

       

      Section
3.1         Generally

       

      (a)         Representations and
Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that:

       

      (i)         As
of the Applicable Date, (A) such Grantor’s chief executive office or its
principal place of business is, and for the preceding four months has been,
located at the office indicated on Schedule 3.1(a)(i),
(B) such Grantor’s jurisdiction of organization is the jurisdiction
indicated on Schedule 3.1(a)(i), and
(C) such Grantor’s Federal Employer Identification Number and/or company
organizational number is as set forth on Schedule 3.1(a)(i).

       

      (ii)        As
of the Applicable Date, (A) such Grantor’s full legal name is as set forth
on Schedule 3.1(a)(ii) and
(B) such Grantor has not changed its legal name in the preceding five
years, except as set forth on Schedule 3.1(a)(ii).

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      (iii)       Such
Grantor has not within the five years preceding the Applicable Date become bound
(whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not theretofore been
terminated.

       

      (iv)  
    Such Grantor has good and valid rights in, and title to,
the Collateral with respect to which it has purported to grant the Security
Interest, except for minor defects in title that do not materially interfere
with its ability to conduct its business as currently conducted or to utilize
such Collateral for its intended purposes, and except for Permitted
Liens.

       

      (v)        To
the best of such Grantor’s knowledge, all actions and consents, including all
filings, notices, registrations and recordings, necessary or desirable to
create, perfect or ensure the first priority (subject only to Liens expressly
permitted by the Secured Transaction Documents) of the Security Interest in the
Collateral owned or held by it or on its behalf or for the exercise by the
Collateral Agent or any other Secured Party of any voting or other rights
provided for in this Guarantee and Security Agreement or the exercise of any
remedies in respect of any such Collateral have been made or obtained,
(A) except for (1) the filing of UCC financing statements naming such
Grantor as “debtor” and the Collateral Agent as “secured party”, or the making
of other appropriate filings, registrations or recordings, containing a
description of such Collateral in each applicable governmental, municipal or
other office specified on Schedule 3.1(a)(v)(A),
(2) the filing, registration or recordation of fully executed security
agreements in the form hereof (or in such other form as shall be in all respects
satisfactory to the Collateral Agent) and containing a description of all such
Collateral consisting of Patents, Trademarks and Copyrights, together with all
other necessary documents, in each applicable governmental registry or office,
(3) Deposit Accounts, (4) Collateral in which the Security Interest may be
perfected only by possession, the delivery of which to the Collateral Agent is
not required hereunder; (B) except for any such Collateral as to which the
representations and warranties in this Section 3.1(a)(v) would not be
true solely by virtue of such Collateral having been used or disposed of in a
manner expressly permitted hereunder or under any other Secured Transaction
Document; and (C) except to the extent that such Security Interest may not
be perfected by filing, registering, recording or taking any other action in the
United States.  The filing, in a timely manner, of the Securities
Purchase Agreement and/or the Guarantee and Security Agreement and/or the Pledge
Agreements with the following governmental bodies is required in order to
perfect the security interests granted thereunder:

       

      (A)        The
United States Patent and Trademark Office and the United States Copyright
Office

       

      (B)         The
Patents, Trademarks and Designs Office of any other jurisdiction.

       

      The
Collateral Agent agrees that it shall not seek (nor require any Grantor to take
any action in order) to perfect its Security Interest in the trademarks set
forth on Schedule 3.1(a)(v)(B).

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      Subsequent
recording and filing with the United States Patent and Trademark Office and the
United States Copyright Office may be necessary to perfect a Lien on registered
patents, trademarks, trademark applications and copyrights acquired by the
Company or any of its Subsidiaries after the date hereof.

       

      (vi)      It
has not filed or authorized the filing of (A) any financing statement or
analogous document under the UCC or any other applicable laws covering any such
Collateral, (B) any assignment in which it assigns any such Collateral or
any security agreement or similar instrument covering any such Collateral with
the United States Patent and Trademark Office or the United States Copyright
Office, or (C) any assignment in which it assigns any such Collateral or
any security agreement or similar instrument covering any such Collateral with
any foreign governmental, municipal or other office, in each case, which
financing statement, analogous document, assignment or other instrument, as
applicable, is still in effect, except for Liens expressly permitted by the
Secured Transaction Documents.

       

      (vii)      The
Security Interest in the Collateral owned or held by it or on its behalf
(A) is effective to vest in the Collateral Agent, on behalf of the Secured
Parties, the rights of the Collateral Agent in such Collateral as set forth
herein and (B) does not violate Regulation T, U or X as of the Applicable
Date.

       

      (viii)    Immediately
after the Applicable Date, (i) the fair value of the assets of the
Grantors, taken as a whole, at a fair valuation, will exceed their debts and
liabilities, subordinated, contingent or otherwise, (ii) the present fair
saleable value of the property of the Grantors, taken as a whole, will be
greater than the amount that will be required to pay the probable liability of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured, (iii) each
Grantor will be able to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured, and
(iv) each of the Grantors will not have unreasonably small capital with
which to conduct the business following such date.

       

      (b)         Covenants and
Agreements.  Each Grantor hereby covenants and agrees as
follows:

       

      (i)         It
will promptly notify the Collateral Agent in writing of any change (A) in
its legal name, (B) in the location of its chief executive office,
principal place of business, any office in which it maintains books or records
relating to any of the Collateral owned or held by it or on its behalf or,
except to the extent permitted by Section 3.1(b)(vii) or
Section 3.2, any office or facility at which any such Collateral is located
(including the establishment of any such new office or facility), (C) in
its identity or legal or organizational structure or its jurisdiction of
formation, or (D) in its Federal Taxpayer Identification
Number.  It agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral with the priority required
hereby.

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      (ii)        It
shall maintain, at its own cost and expense, such complete and accurate Records
with respect to the Collateral owned or held by it or on its behalf as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which it is engaged, but in any event to include complete accounting Records
indicating all payments and proceeds received with respect to any part of such
Collateral.

       

      (iii)       It
shall, at its own cost and expense, take any and all actions reasonably
necessary to defend title to the Collateral owned or held by it or on its behalf
against all Persons and to defend the Security Interest in such Collateral and
the priority thereof against any Lien or other interest not expressly permitted
by the Secured Transaction Documents, and in furtherance thereof, it shall not
take, or permit to be taken, any action not otherwise expressly permitted by the
Secured Transaction Documents that is reasonably likely to impair the Security
Interest or the priority thereof or any Secured Party’s rights in or to such
Collateral in violation hereof.

       

      (iv)      The
Collateral Agent and such Persons as the Collateral Agent may designate shall
have the right at reasonable times and on reasonable notice, at the cost and
expense of such Grantor, to inspect all of its Records (and to make extracts and
copies from such Records), to discuss its affairs with its officers and (to the
extent consented to by such independent accountants) independent accountants and
to verify under reasonable procedures the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Collateral
owned or held by or on behalf of such Grantor, including, upon the occurrence
and during the continuance of any Event of Default, in the case of Receivables,
Pledged Debt, General Intangibles, Commercial Tort Claims or Collateral in the
possession of any third person, by contacting Account Debtors, contract parties
or other obligors thereon or any third person possessing such Collateral for the
purpose of making such a verification.  The Collateral Agent shall
maintain the confidentiality of all such information and shall have the absolute
right to share on a confidential basis any information it gains from such
inspection or verification with any Secured Party.

       

      (v)        At
its option, the Collateral Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral owned or held by or on behalf of such
Grantor, and not permitted by the Secured Transaction Documents, and may pay for
the maintenance and preservation of such Collateral to the extent such Grantor
fails to do so as required by the Secured Transaction Documents, and such
Grantor agrees, jointly with the other Grantors and severally, to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing
in this paragraph shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent or any other
Secured Party to cure or perform, any covenants or other promises of any Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Secured
Transaction Documents.

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      (vi)       It
shall not be excused from liability as a result of granting of the Security
Interest pursuant to this Guarantee and Security Agreement to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement or instrument relating to the Collateral owned or
held by it or on its behalf, all in accordance with the terms and conditions
thereof and it agrees, jointly with the other Grantors and severally, to
indemnify and hold harmless the Collateral Agent and the other Secured Parties
from and against any and all liability for such performance.

       

      (vii)      It
shall not make, or permit to be made, an assignment, pledge or hypothecation of
the Collateral owned or held by it or on its behalf, or grant any other Lien in
respect of such Collateral, except Permitted Liens.  Except as
expressly permitted by the Secured Transaction Documents, it shall not make or
permit to be made any transfer of such Collateral, and it shall remain at all
times in possession of such Collateral and the direct owner, beneficially and of
record, of the Pledged Equity Interests included in such Collateral, except that
(A) Inventory may be sold in the ordinary course of business and
(B) unless and until the Collateral Agent shall notify it that an Event of
Default shall have occurred and be continuing and that, during the continuance
thereof, it shall not sell, convey, lease, assign, transfer or otherwise dispose
of any such Collateral (which notice may be given by telephone if promptly
confirmed in writing), it may use and dispose of such Collateral in any lawful
manner not inconsistent with the provisions of this Guarantee and Security
Agreement or any other Secured Transaction Document.

       

      Section
3.2         Equipment and
Inventory

       

      Each of
the Grantors, jointly with the other Grantors and severally, represents and
warrants to the Collateral Agent and the other Secured Parties that, except for
such Equipment and Inventory that does not exceed a book value of $100,000 in
the aggregate for all Grantors, as of the Applicable Date, all of the Equipment
and Inventory included in the Collateral owned or held by it or on its behalf
(other than mobile goods and Inventory and Equipment in transit) is kept only at
the locations specified on Schedule 3.2.  In
addition, each Grantor covenants and agrees that it shall not permit any
Equipment or Inventory owned or held by it or on its behalf to be in the
possession or control of any warehouseman, bailee, agent or processor for a
period of greater than ninety (90) consecutive days, unless such warehouseman,
bailee, agent or processor shall have been notified of the Security Interest and
shall have agreed in writing to hold such Equipment or Inventory subject to the
Security Interest and the instructions of the Collateral Agent and to waive and
release any Lien held by it with respect to such Equipment or Inventory, whether
arising by operation of law or otherwise.

       

      Section
3.3         Receivables

       

      (a)         Representations and
Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that, except for Receivables valued at less than $25,000
individually and $100,000 in the aggregate for all Grantors, no Receivable is
evidenced by an Instrument (other than checks received in the ordinary course of
business) or Chattel Paper that has not been delivered to the Collateral
Agent.

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      (b)         Covenants and
Agreements.  Each Grantor hereby covenants and agrees
that:

       

      (i)         At
the reasonable request of the Collateral Agent, it shall mark conspicuously, in
form and manner reasonably satisfactory to the Collateral Agent, all Chattel
Paper, Instruments (other than checks received in the ordinary course of
business) and other evidence of any Receivables owned or held by it or on its
behalf (other than any delivered to the Collateral Agent as provided herein and
other than purchase orders sent to customers), as well as the related
Receivables Records with an appropriate reference to the fact that the
Collateral Agent has a security interest therein.

       

      (ii)        It
will not, without the Collateral Agent’s prior written consent (which consent
shall not be unreasonably withheld), grant any extension of the time of payment
of any such Receivable, compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partly, any Supporting Obligation or
Collateral Support relating thereto, or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, releases, compromises or
settlements granted or made in the ordinary course of business and consistent
with its then current practices and in accordance with such practices reasonably
believed by such Grantor to be prudent.

       

      (iii)       Except
as otherwise provided in this Section and unless otherwise determined by
such Grantor in accordance with its good faith business judgment, it shall
continue to use its best efforts to collect all amounts due or to become due to
it under all such Receivables and any Supporting Obligations or Collateral
Support relating thereto, and diligently exercise each material right it may
have thereunder, in each case at its own cost and expense, and in connection
with such collections and exercise, it shall, upon the occurrence and during the
continuance of an Event of Default, take such action as it or the Collateral
Agent may reasonably deem necessary.  Notwithstanding the foregoing,
the Collateral Agent shall have the right at any time upon the occurrence and
during the continuance of an Event of Default to notify, or require such Grantor
to notify, any Account Debtor with respect to any such Receivable, Supporting
Obligation or Collateral Support of the Collateral Agent’s security interest
therein, and in addition, at any time during the continuation of an Event of
Default, the Collateral Agent may: (A) direct such Account Debtor to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and (B) enforce, at the cost and expense of such
Grantor, collection thereof and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor would
be able to have done.  If the Collateral Agent notifies such Grantor
that it has elected to collect any such Receivable, Supporting Obligation or
Collateral Support in accordance with the preceding sentence, any payments
thereof received by such Grantor shall not be commingled with any of its other
funds or property but shall be held separate and apart therefrom, shall be held
in trust for the benefit of the Collateral Agent hereunder and shall be
forthwith delivered to the Collateral Agent in the same form as so received
(with any necessary endorsement), and such Grantor shall not grant any extension
of the time of payment thereof, compromise, compound or settle the same for less
than the full amount thereof, release the same, wholly or partly, or allow any
credit or discount whatsoever thereon.

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      (iv)      It
shall use its reasonable best efforts to keep in full force and effect any
Supporting Obligation or Collateral Support relating to any
Receivable.

       

      Section
3.4         Investment
Property

       

      (a)         Representations and
Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that:

       

      (i)         Schedule 3.4 sets forth, as of
the Applicable Date, (i) all of the Investment Property (other than
(A) Receivables not evidenced by an Instrument or Chattel Paper and
(B) Equity Interests with an immaterial value) owned or held by or on
behalf of such Grantor to the extent not held in a Securities Account and
(ii) each Securities Account or commodities account maintained by or on
behalf of such Grantor.

       

      (ii)        All
Pledged Equity Interests have been duly authorized and validly issued and are
fully paid and nonassessable, and such Grantor is the direct owner, beneficially
and of record, thereof, free and clear of all Liens (other than Liens expressly
permitted by the Secured Transaction Documents).

       

      (iii)       All
Pledged Debt other than Pledged Debt described on Schedule 3.4 hereto has been
duly authorized, issued and delivered and, where necessary, authenticated, and
constitutes the legal, valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, and
general equitable principles (whether considered in a proceeding in equity or at
law).

       

      (iv)      All
Investment Property, other than Investment Property held in a Securities Account
identified on Schedule 3.4, consisting of
certificated securities, Chattel Paper or Instruments other than checks received
in the ordinary course of business has been delivered to the Collateral
Agent.

       

      (v)       Other
than the Pledged Equity Interests that constitute General Intangibles, there is
no Investment Property other than that (x) represented by certificated
securities or Instruments in the possession of the Collateral Agent or
(y) held in a Securities Account identified on Schedule 3.4.

       

      (b)        Registration in Nominee
Name; Denominations.  Each Grantor hereby agrees that
(i) without limiting Article 5, the Collateral Agent, on behalf of the
Secured Parties, shall have the right (in its sole and absolute discretion) to
hold any Investment Property in its own name as pledgee, the name of its nominee
(as pledgee or as sub agent) or the name of the applicable Grantor, endorsed or
assigned, where applicable, in blank or in favor of the Collateral Agent,
(ii) at the Collateral Agent’s request, such Grantor will promptly give to
the Collateral Agent copies of any material notices or other communications
received by it with respect to any Investment Property registered in its name,
and (iii) the Collateral Agent shall at all times have the right to
exchange any certificates, instruments or other documents representing or
evidencing any Investment Property owned or held by or on behalf of such Grantor
for certificates, instruments or other documents of smaller or larger
denominations for any purpose consistent with this Guarantee and Security
Agreement.

      
        
           

        

        
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      (c)         Voting and
Distributions.

       

      (i)         Unless
and until an Event of Default shall have occurred and be
continuing:

       

      (A)           Each
Grantor shall be entitled to exercise any and all voting and/or other consensual
rights and powers inuring to an owner of the Investment Property, or any part
thereof, for any purpose not inconsistent with the terms of this Guarantee and
Security Agreement and the other Secured Transaction Documents; provided, however, that such
Grantor will not be entitled to exercise any such right if the result thereof
could materially and adversely affect the rights inuring to a holder of the
Investment Property or the rights and remedies of the Collateral Agent under
this Guarantee and Security Agreement or any other Secured Transaction Document
or the ability of the Collateral Agent to exercise the same.

       

      (B)           The
Collateral Agent shall execute and deliver to each Grantor, or cause to be
executed and delivered to each Grantor, all such proxies, powers of attorney and
other instruments as such Grantor may reasonably request for the purpose of
enabling it to exercise the voting and/or consensual rights and powers it is
entitled to exercise pursuant to subsection (c)(i)(A) and to receive the cash
payments it is entitled to receive pursuant to subsection
(c)(i)(C).

       

      (C)           Each
Grantor shall be entitled to receive, retain and use any and all cash dividends,
interest and principal paid on the Investment Property owned or held by it or on
its behalf to the extent and only to the extent that such cash dividends,
interest and principal are not prohibited by, and otherwise paid in accordance
with, the terms and conditions of the Securities Purchase Agreement, the other
Secured Transaction Documents and applicable laws.  All non cash
dividends, interest and principal, and all dividends, interest and principal
paid or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or paid in
surplus, and all other distributions (other than distributions referred to in
the preceding sentence) made on or in respect of the Investment Property,
whether paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding Pledged Equity
Interests in any issuer of any Investment Property or received in exchange for
any Investment Property, or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by such Grantor, shall not be commingled with any
of its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Collateral Agent hereunder and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement).

      
        
           

        

        
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      (ii)        Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default:

       

      (A)           Upon
the direction of the Collateral Agent, all rights of each Grantor to dividends,
interest or principal that it is authorized to receive pursuant to subsection
(c)(i)(C) shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
receive and retain such dividends, interest or principal, as
applicable.  All dividends, interest and principal received by or on
behalf of any Grantor contrary to the provisions of this Section shall be
held in trust for the benefit of the Collateral Agent, shall be segregated from
other property or funds of such Grantor and shall be forthwith delivered to the
Collateral Agent upon demand in the same form as so received (with any necessary
endorsement).  Any and all money and other property paid over to or
received by the Collateral Agent pursuant to the provisions of this subsection
(c)(ii)(A) shall be retained by the Collateral Agent in an account to be
established in the name of the Collateral Agent, for the ratable benefit of the
Secured Parties, upon receipt of such money or other property and shall be
applied in accordance with the provisions of
Section 6.2.  Subject to the provisions of this subsection
(c)(ii)(A), such account shall at all times be under the sole dominion and
control of the Collateral Agent, and the Collateral Agent shall at all times
have the sole right to make withdrawals therefrom and to exercise all rights
with respect to the funds and other property from time to time deposited therein
or credited thereto as set forth in the Secured Transaction
Documents.  After all Events of Default have been cured or waived, the
Collateral Agent shall, within five Business Days after all such Events of
Default have been cured or waived, repay to the applicable Grantor all cash
dividends, interest and principal (without interest) that such Grantor would
otherwise be permitted to retain pursuant to the terms of subsection (c)(i)(C)
and which remain in such account.

       

      (B)           Upon
the direction of the Collateral Agent, all rights of each Grantor to exercise
the voting and consensual rights and powers it is entitled to exercise pursuant
to subsection (c)(i)(A), and the obligations of the Collateral Agent under
subsection (c)(i)(B), shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers, provided
that, unless otherwise directed by the Investors, the Collateral Agent shall
have the right from time to time upon the occurrence of and during the
continuance of an Event of Default to permit such Grantor to exercise such
rights.  After all Events of Default have been cured or waived, the
applicable Grantor will have the right to exercise the voting and consensual
rights and powers that it would otherwise be entitled to exercise pursuant to
the terms of subsection (c)(i)(A).

       

      (d)        Covenants and
Agreements.  [Intentionally Omitted]

       

      Section
3.5         Letter of Credit
Rights

       

      Each of
the Grantors, jointly with the other Grantors and severally, represents and
warrants to the Collateral Agent and the other Secured Parties that Schedule 3.5 sets forth, as of
the Applicable Date, each letter of credit giving rise to a Letter of Credit
Right included in the Collateral owned or held by or on behalf of such
Grantor.

      
        
           

        

        
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    Section
3.6     Intellectual Property
Collateral

     

    (a)         Representations and
Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that Schedule 3.6
sets forth, as of the Applicable Date, all of the Patents, material Patent
Licenses, Trademarks, Trademark Licenses, material Copyrights, material
Copyright Licenses, Trade Secret Licenses and Domain Names included in the
Collateral owned or held by such Grantor.

     

    (b)         Covenants and
Agreements.  Each Grantor hereby covenants and agrees as
follows:

     

    (i)         It
will not, knowingly or intentionally, nor will it permit any of its licensees
(or sublicensees) to, do any act, or omit to do any act, whereby any Patent that
is related to the conduct of its business may become invalidated or dedicated to
the public, and it shall use its reasonable best efforts to continue to mark any
products covered by a Patent with the relevant patent number as necessary and
sufficient to establish and preserve its maximum rights under applicable patent
laws.

     

    (ii)       It
will (either directly or through its licensees or its sublicensees), for each
Trademark that is necessary for the conduct of its business, (A) maintain
such Trademark in full force free from any claim of abandonment or invalidity
for non use, (B) display such Trademark with notice of Federal or other
analogous registration to the extent necessary and sufficient to establish and
preserve its rights under applicable law, and (C) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party’s
valid and legal rights.

     

    (iii)     It
will promptly notify the Collateral Agent in writing if it knows or has reason
to know that any Intellectual Property material to the conduct of its business
may become abandoned, lost or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or the United States Copyright Office, or any similar offices
or tribunals in the United States or any other country) regarding such Grantor’s
ownership of any such Intellectual Property, its right to register the same, or
to keep and maintain the same.

     

    (iv)       Within
thirty (30) days following the last day of each fiscal quarter (and at such
other times as the Collateral Agent shall reasonably request) each Grantor shall
execute and deliver to the Collateral Agent a Copyright Security Agreement,
Trademark Security Agreement and/or Patent Security Agreement, as applicable,
containing a description of all Intellectual Property in which such Grantor has
obtained an ownership interest during such fiscal quarter or which is not
otherwise covered by any previously filed Copyright Security Agreement,
Trademark Security Agreement or Patent Security Agreement, as applicable, and
each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to
execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.

     

    
      
        
        

      

      
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    (v)         It
will take all necessary steps that are consistent with the practice in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar offices or tribunals in the United States
and the European Union, and except as otherwise determined in its good faith
business judgment, any other country, to maintain and pursue each material
application relating to the Intellectual Property owned or held by it (and to
obtain the relevant grant or registration) and to maintain each issued Patent
and each registered Trademark and Copyright that is material to the conduct of
its business, including timely filings of applications for renewal, affidavits
of use, affidavits of incontestability and payment of maintenance fees, and, if
consistent, in good faith, with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.  In
the event that it has reason to believe that any Intellectual Property material
to the conduct of its business has been or is about to be infringed,
misappropriated or diluted by a third party, it promptly shall notify the
Collateral Agent in writing and shall, if consistent with good business
judgment, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to
protect such Intellectual Property.

     

    (vi)       During
the continuance of an Event of Default, it shall use its reasonable best efforts
to obtain all requisite consents or approvals by the licenser of each License to
effect the assignment (as collateral security) of all of its right, title and
interest thereunder to the Collateral Agent or its designee.

     

    (vii)     It
shall take all steps reasonably necessary to protect the secrecy of all Trade
Secrets relating to the products and services sold or delivered under or in
connection with the Intellectual Property owned or held by, including entering
into confidentiality agreements with employees and labeling and restricting
access to secret information and documents.

     

    (viii)   It
shall in accordance with its past practices continue to collect all amounts due
or to become due to such Grantor under all Intellectual Property, and diligently
exercise each material right it may have thereunder, in each case at its own
cost and expense, and in connection with such collections and exercise, it
shall, upon the occurrence and during the continuance of an Event of Default,
take such action as it or the Collateral Agent may reasonably deem
necessary.  Notwithstanding the foregoing, the Collateral Agent shall
have the right at any time after the occurrence and during the continuance of an
Event of Default to notify, or require such Grantor to notify, any relevant
obligors with respect to such amounts of the Collateral Agent’s security
interest therein.

     

    
      
        
        

      

      
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    Section
3.7     Commercial Tort
Claims

     

    (a)         Representations and
Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that Schedule 3.7
sets forth, as of the Applicable Date, all Commercial Tort Claims made by it or
on its behalf or to which it otherwise has any right, title or
interest.

     

    (b)         Covenants and
Agreements.  Each Grantor hereby covenants and agrees that
promptly after the same shall have been commenced, it shall provide to the
Collateral Agent written notice of any Commercial Tort Claim and any judgment,
settlement or other disposition thereof.

     

    Section
3.8     Deposit
Accounts.

     

    (a)         Representations and
Warranties.  The only Deposit Accounts maintained by any
Grantor on the Applicable Date are those listed on Schedule 3.8
which sets forth such information separately for each Grantor.

     

    (b)         Covenants and
Agreements.  Each Grantor hereby covenants and agrees as
follows:

     

    Following
the Applicable Date, each Grantor shall provide the Investors and Collateral
Agent fifteen (15) days written notice prior to the formation of a Deposit
Account.

     

    ARTICLE
4.

     

    FURTHER
ASSURANCES

     

    Each
Grantor hereby covenants and agrees, at its own cost and expense, to execute,
acknowledge, deliver and/or cause to be duly filed all such further agreements,
instruments and other documents (including favorable legal opinions in
connection with any Transaction) that may be reasonably requested by the
Collateral Agent, and take all such further actions, that the Collateral Agent
may from time to time reasonably request to preserve, protect and perfect the
Security Interest granted by it and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with its
execution and delivery of this Guarantee and Security Agreement, the granting by
it of the Security Interest and the filing of any financing statements or other
documents in connection herewith or therewith.  In addition, to the
extent permitted by applicable law, each Grantor hereby irrevocably authorizes
the Collateral Agent to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral owned or
held by it or on its behalf without the signature of such Grantor and
additionally agrees that a photographic or other reproduction of this Guarantee
and Security Agreement may be filed with the United States Patent and Trademark
Office and/or the United States Copyright Office, as applicable.  Each
Grantor hereby further irrevocably authorizes the Collateral Agent to file a
Record or Records, including financing statements, in all jurisdictions and with
all filing offices that the Collateral Agent may determine, in its sole and
absolute discretion, are necessary, advisable or prudent to perfect the Security
Interest granted by it and agrees that such financing statements may describe
the Collateral owned or held by it or on its behalf in the same manner as
described herein or may contain an indication or description of collateral that
describes such property in any other manner that the Collateral Agent may
determine, in its sole and absolute discretion, is necessary, advisable or
prudent to perfect the Security Interest granted by such Grantor, including
describing such property as “all assets” or “all personal
property.”

     

    
      
        
        

      

      
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    ARTICLE
5.

     

    COLLATERAL AGENT APPOINTED
ATTORNEY-IN-FACT

     

    Each
Grantor hereby appoints the Collateral Agent and any officer or agent thereof,
as its true and lawful agent and attorney in fact for the purpose of carrying
out the provisions of this Guarantee and Security Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest, and without limiting the generality of the
foregoing, the Collateral Agent shall have the right, with power of substitution
for such Grantor and in such Grantor’s name or otherwise, for the use and
benefit of the Collateral Agent and the other Secured Parties, upon the
occurrence and during the continuance of an Event of Default, (i) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral
owned or held by it or on its behalf or any part thereof; (ii) to demand,
collect, receive payment of, give receipt for, and give discharges and releases
of, any of such Collateral; (iii) to sign the name of such Grantor on any
invoice or bill of lading relating to any of such Collateral; (iv) to send
verifications of Receivables owned or held by it or on its behalf to any Account
Debtor; (v) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on any of the Collateral owned or held by it or on
its behalf or to enforce any rights in respect of any of such Collateral;
(vi) to settle, compromise, compound, adjust or defend any actions, suits
or proceedings relating to any of such Collateral; (vii) to notify, or to
require such Grantor to notify, Account Debtors and other obligors to make
payment directly to the Collateral Agent, and (viii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of such Collateral, and to do all other acts and things necessary to carry out
the purposes of this Guarantee and Security Agreement, as fully and completely
as though the Collateral Agent were the absolute owner of such Collateral for
all purposes; provided, however, that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent or any other Secured Party to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent
or any other Secured Party, or to present or file any claim or notice, or to
take any action with respect to any of the Collateral or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken or omitted to be taken by the Collateral Agent or any other Secured Party
with respect to any of the Collateral shall give rise to any defense,
counterclaim or offset in favor of such Grantor or to any claim or action
against the Collateral Agent or any other Secured Party in the absence of the
Collateral Agent’s or such Secured Party’s gross negligence or willful
misconduct.  The provisions of this Article shall in no event
relieve any Grantor of any of its obligations hereunder or under the other
Secured Transaction Documents with respect to any of the Collateral or impose
any obligation on the Collateral Agent or any other Secured Party to proceed in
any particular manner with respect to any of the Collateral, or in any way limit
the exercise by the Collateral Agent or any other Secured Party of any other or
further right that it may have on the date of this Guarantee and Security
Agreement or hereafter, whether hereunder, under any other Secured Transaction
Document, by law or otherwise.  Any sale pursuant to the provisions of
this paragraph shall conform to the commercially reasonable standards as
provided in Part 6 of Article 9 of the UCC.

     

    
      
        
        

      

      
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    ARTICLE
6.

     

    REMEDIES UPON
DEFAULT

     

    Section
6.1     Remedies
Generally

     

    (a)         General
Rights.  Upon the occurrence and during the continuance of an
Event of Default, each Grantor agrees to deliver each item of Collateral owned
or held by it or on its behalf to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right to take any of or all the
following actions at the same or different times to the extent permitted by law:
(i) with respect to any Collateral consisting of Intellectual Property or
Commercial Tort Claims, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any such Collateral by the applicable
Grantors to the Collateral Agent, or, in the case of Intellectual Property, to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any such Collateral throughout the world on
such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers cannot be obtained), and (ii) with or without
legal process and with or without prior notice or demand for performance, to
take possession of the Collateral owned or held by it or on its behalf and
without liability for trespass to enter any premises where such Collateral may
be located for the purpose of taking possession of or removing such Collateral
and, generally, to exercise any and all rights afforded to a secured party under
the UCC or other applicable law.  Without limiting the generality of
the foregoing, each Grantor agrees that, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the right,
subject to the mandatory requirements of applicable law, to sell or otherwise
dispose of any of the Collateral owned or held by or on behalf of such Grantor,
at public or private sale or at any broker’s board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate.  The Collateral Agent shall be irrevocably
authorized at any such sale of such Collateral constituting securities (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to Persons who will represent and agree that they are purchasing such Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale, the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely, free from any claim or right on the part of the
applicable Grantor, and such Grantor hereby waives (to the extent permitted by
law) all rights of redemption, stay, valuation and appraisal which such Grantor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.

     

    
      
        
        

      

      
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    (b)         Sale of Collateral.
The Collateral Agent shall give each Grantor ten days’ written notice (which
such Grantor agrees is reasonable notice within the meaning of Part 6 of
Article 9 of the UCC) of the Collateral Agent’s intention to make any sale
of any of the Collateral owned or held by or on behalf of such Grantor. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker’s board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which such Collateral will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. At any such sale, the
Collateral to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of any of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section, any Secured Party
may bid for or purchase, free (to the extent permitted by applicable law) from
any right of redemption, stay, valuation or appraisal on the part of such
Grantor (all said rights being also hereby waived and released to the extent
permitted by law), any of the Collateral offered for sale and may make payment
on account thereof by using any claim then due and payable to such Secured Party
from such Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to such Grantor therefor. For purposes
hereof, (i) a written agreement to purchase any of the Collateral shall be
treated as a sale thereof, (ii) the Collateral Agent shall be free to carry
out such sale pursuant to such agreement, and (iii) no Grantor shall be
entitled to the return of any of the Collateral subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose upon any of the Collateral and to sell any of the Collateral
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Without
limiting the generality of the foregoing, each Grantor agrees as follows:
(A) if the proceeds of any sale of the Collateral owned or held by it or on
its behalf pursuant to this Article are insufficient to pay all the
Obligations, it shall be liable for the resulting deficiency and the fees,
charges and disbursements of any counsel employed by the Collateral Agent or any
other Secured Party to collect such deficiency, (B) it hereby waives any
claims against the Collateral Agent arising by reason of the fact that the price
at which any such Collateral may have been sold at any private sale pursuant to
this Article was less than the price that might have been obtained at a
public sale, even if the Collateral Agent accepts the first offer received and
does not offer such Collateral to more than one offeree, (C) there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements in this Section may be
specifically enforced, (D) the Collateral Agent may sell any such
Collateral without giving any warranties as to such Collateral, and the
Collateral Agent may specifically disclaim any warranties of title or the like,
and (E) the Collateral Agent shall have no obligation to marshal any such
Collateral.

     

    
      
        
        

      

      
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    Section
6.2     Application of Proceeds of
Sale

     

    The
Collateral Agent shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as
follows:

     

    FIRST, to the payment
of all reasonable costs and expenses incurred by the Collateral Agent in
connection with such collection or sale or otherwise in connection with this
Guarantee and Security Agreement, any other Secured Transaction Document or any
of the Obligations, including all out of pocket court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Secured Transaction
Document on behalf of any Grantor and any other reasonable out-of-pocket costs
or expenses incurred in connection with the exercise of any right or remedy
hereunder or under any other Secured Transaction Document;

     

    SECOND, to the
payment in full of the Obligations (the amounts so applied to be distributed
among the Secured Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such distribution); and

     

    THIRD, to the
applicable Grantor, its successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

     

    The
Collateral Agent shall have sole and absolute discretion as to the order of
application of any such proceeds, moneys or balances in accordance with this
Guarantee and Security Agreement. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.

     

    
      
        
        

      

      
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    Section
6.3     Investment
Property

     

    In view
of the position of each Grantor in relation to the Investment Property, or
because of other current or future circumstances, a question may arise under the
Securities Act of 1933, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar
statute as from time to time in effect being called the “Federal securities
laws”) with respect to any disposition of the Investment Property
permitted hereunder. Each Grantor understands that compliance with the Federal
securities laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Investment Property, and might also limit the extent to which or
the manner in which any subsequent transferee of any Investment Property could
dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Investment Property under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. Each Grantor
recognizes that in light of such restrictions and limitations the Collateral
Agent may, with respect to any sale of the Investment Property, limit the
purchasers to those who will agree, among other things, to acquire such
Investment Property for their own account, for investment, and not with a view
to the distribution or resale thereof. Each Grantor acknowledges and agrees that
in light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, (i) may proceed to make such a sale whether or not
a registration statement for the purpose of registering such Investment
Property, or any part thereof, shall have been filed under the Federal
securities laws and (ii) may approach and negotiate with a single potential
purchaser to effect such sale. Each Grantor acknowledges and agrees that any
such sale might result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions. In the event of
any such sale, the Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Investment Property at a price that the
Collateral Agent, in its discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section will apply notwithstanding the existence of a public or
private market upon which the quotations or sales prices may exceed
substantially the price at which the Collateral Agent sells any such Investment
Property.

     

    Section
6.4     Grant of License to Use
Intellectual Property

     

    For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article, at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non exclusive license (exercisable without payment of
royalty or other compensation to such Grantor) to use, license or sub license
any of the Collateral consisting of Intellectual Property now owned or held or
hereafter acquired or held by or on behalf of such Grantor, and wherever the
same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof. The
use of such license by the Collateral Agent shall be exercised, at the option of
the Collateral Agent, upon the occurrence and during the continuation of an
Event of Default; provided that any license, sub license or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon such Grantor notwithstanding any subsequent cure of an Event of Default.
Any royalties and other payments received by the Collateral Agent shall be
applied in accordance with Section 6.2.

     

    
      
        
        

      

      
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    ARTICLE
7.

     

    REIMBURSEMENT OF COLLATERAL
AGENT

     

    Each
Grantor agrees, jointly with the other Grantors and severally, to pay to the
Collateral Agent the amount of any and all reasonable out-of-pocket expenses,
including the fees, other charges and disbursements of counsel and of any
experts or agents, that the Collateral Agent may incur in connection with
(i) the administration of this Guarantee and Security Agreement relating to
such Grantor or any of its property, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral owned or held by or on behalf of such Grantor, (iii) the
exercise, enforcement or protection of any of the rights of the Collateral Agent
hereunder relating to such Grantor or any of its property, or (iv) the
failure by such Grantor to perform or observe any of the provisions hereof.
Without limitation of its indemnification obligations under the other Secured
Transaction Documents, each of the Grantors agrees, jointly with the other
Grantors and severally, to indemnify the Collateral Agent and each Related Party
thereof (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related out-of-pocket expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of
(a) the execution or delivery by such Grantor of this Guarantee and
Security Agreement or any other Secured Transaction Document or any agreement or
instrument contemplated hereby or thereby, or the performance by such Grantor of
its obligations under the Secured Transaction Documents and the other
transactions contemplated thereby or (b) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not 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. Any amounts payable as provided hereunder
shall be additional Obligations secured hereby and by the other Secured
Transaction Documents. The provisions of this Section shall remain
operative and in full force and effect regardless of the termination of this
Guarantee and Security Agreement or any other Secured Transaction Document, the
consummation of the transactions contemplated hereby or thereby, the repayment
of any of the Obligations, the invalidity or unenforceability of any term or
provision of this Guarantee and Security Agreement or any other Secured
Transaction Document or any investigation made by or on behalf of the Collateral
Agent or any other Secured Party. All amounts due under this Section shall
be payable within ten days of written demand therefor and shall bear interest at
the then prevailing rate under the Secured Notes.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    ARTICLE
8.

     

    WAIVERS;
AMENDMENTS

     

    No
failure or delay of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent and the other Secured Parties hereunder and under the other
Secured Transaction Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Guarantee and Security Agreement or any other Secured Transaction Document or
consent to any departure by any Grantor therefrom shall in any event be
effective unless the same shall be permitted by this Section, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice or demand on any Grantor in any case shall
entitle such Grantor to any other or further notice or demand in similar or
other circumstances. Neither this Guarantee and Security Agreement nor any
provision hereof may be waived, amended, supplemented or otherwise modified, or
any departure therefrom consented to, except pursuant to an agreement or
agreements in writing entered into by the Grantors and Investors holding more
than a majority of the aggregate principal amount of the Senior Secured Notes
then outstanding, provided that no such agreement shall waive, amend, supplement
or otherwise modify, or consent to a departure to, the rights or duties of the
Collateral Agent hereunder without the prior written consent of the Collateral
Agent.

     

    ARTICLE
9.

     

    SECURITY INTEREST
ABSOLUTE

     

    All
rights of the Collateral Agent hereunder, the Security Interest and all
obligations of each Grantor hereunder shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the
Securities Purchase Agreement, any other Secured Transaction Document, any
agreement with respect to any of the Obligations, or any other agreement or
instrument relating to any of the foregoing, (ii) 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 waiver, amendment, supplement or other modification
of, or any consent to any departure from, the Securities Purchase Agreement, any
other Secured Transaction Document or any other agreement or instrument relating
to any of the foregoing, (iii) any exchange, release or non-perfection of
any Lien on any other collateral, or any release or waiver, amendment,
supplement or other modification of, or consent under, or departure from, any
guarantee, securing or guaranteeing all or any of the Obligations, or
(iv) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor in respect of the Obligations or in
respect of this Guarantee and Security Agreement or any other Secured
Transaction Document.

     

    
      
        
        

      

      
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    ARTICLE
10.

     

    TERMINATION;
RELEASE

     

    This
Guarantee and Security Agreement and the Security Interest shall terminate and
be of no further force and effect when the Obligations shall have been finally
and indefeasibly paid in full. Upon (i) any sale, transfer or other
disposition permitted by the Secured Transaction Documents (other than any sale,
transfer or other disposition of any Collateral that would, immediately after
giving effect thereto, continue to be Collateral but for the release of the
Security Interest therein pursuant to this clause) or (ii) the
effectiveness of any written consent to the release of the Security Interest in
any Collateral, the Security Interest in such Collateral shall be automatically
released. In addition, if any of the Pledged Equity Interests in any Subsidiary
are sold, transferred or otherwise disposed of pursuant to a transaction
permitted by the Secured Transaction Documents and, immediately after giving
effect thereto, such Subsidiary or subsidiary, as applicable, would no longer be
a Subsidiary or a subsidiary, as applicable, then the obligations of such
Subsidiary or subsidiary, as applicable, under this Guarantee and Security
Agreement and the Security Interest in the Collateral owned or held by or on
behalf of such Subsidiary or such subsidiary, as applicable, shall be
automatically released. In connection with any termination or release pursuant
to this Section, the Collateral Agent shall execute and deliver to the
applicable Grantor, and hereby authorizes the filing of, at such Grantor’s cost
and expense, all Uniform Commercial Code termination statements and similar
documents that such Grantor may reasonably request to evidence such termination
or release. Any execution and delivery of documents pursuant to this
Article shall be without recourse to or warranty by the Collateral Agent or
any other Secured Party.

     

    ARTICLE
11.

     

    ADDITIONAL SUBSIDIARY
GUARANTORS AND GRANTORS

     

    Each
Grantor hereby covenants and agrees to cause each of its Subsidiaries to execute
a Supplement within three (3) calendar days of such Subsidiary becoming a
Subsidiary of such Grantor. Upon execution and delivery after the date hereof by
the Collateral Agent and a Subsidiary of a Supplement, such Subsidiary shall
become a Subsidiary Guarantor and Grantor, as applicable, hereunder with the
same force and effect as of the date of such execution as if originally named as
a Subsidiary Guarantor and a Grantor, as applicable, herein (each an “Additional Subsidiary
Guarantor and Grantor”). The execution and delivery of any Supplement
shall not require the consent of any other Grantor hereunder. The rights and
obligations of each Grantor hereunder and each Grantor and other party (other
than an Investor) under the Secured Transaction Documents shall remain in full
force and effect notwithstanding the addition of any Additional Subsidiary
Guarantor and Grantor as a party to this Guarantee and Security
Agreement.

     

    
      
        
        

      

      
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    ARTICLE
12.

     

    COLLATERAL
AGENT

     

    Each
Investor hereby irrevocably appoints the Collateral Agent as its agent and
authorizes the Collateral Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Collateral Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.

     

    The
Person serving as the Collateral Agent hereunder shall have the same rights and
powers in its capacity as an Investor as any other investor and may exercise the
same as though it were not the Collateral Agent, and such Person and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Company or any Subsidiary or other Affiliate thereof
as if it were not the Collateral Agent hereunder.

     

    The
Collateral Agent shall not have any duties or obligations except those expressly
set forth herein. Without limiting the generality of the foregoing, (i) the
Collateral Agent shall not be subject to any fiduciary or other implied duties,
regardless of whether an Event of Default has occurred and is continuing,
(ii) the Collateral Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated by this Agreement, and (iii) except as
expressly set forth herein, the Collateral Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Company or any of the Subsidiaries that is communicated to or
obtained by the Person serving as Collateral Agent or any of its Affiliates in
any capacity. The Collateral Agent shall not be liable for any action taken or
not taken by it in the absence of its own gross negligence or willful
misconduct. The Collateral Agent shall be deemed not to have knowledge of any
Event of Default unless and until written notice thereof is given to the
Collateral Agent by the Company or an Investor (and, promptly after its receipt
of any such notice, it shall give each Investor and the Company notice thereof),
and the Collateral Agent shall not be responsible for or have any duty to
ascertain or inquire into (a) any statement, warranty or representation
made in or in connection with any Secured Transaction Document, (b) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (c) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth therein,
(d) the validity, enforceability, effectiveness or genuineness thereof or
any other agreement, instrument or other document or (e) the satisfaction of any
condition set forth in herein, other than to confirm receipt of items expressly
required to be delivered to the Collateral Agent.

     

    The
Collateral Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing reasonably believed by it to be
genuine and to have been signed or sent by the proper Person. The Collateral
Agent also may rely upon any statement made to it orally or by telephone and
reasonably believed by it to be made by the proper Person, and shall not incur
any liability for relying thereon. The Collateral Agent may consult with legal
counsel (who may be counsel for the Grantors), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      The
Collateral Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub agents appointed by the Collateral
Agent, provided that no such delegation shall serve as a release of the
Collateral Agent or waiver by the Company of any rights hereunder. The
Collateral Agent and any such sub agent may perform any and all its duties and
exercise its rights and powers through their respective affiliates. The
exculpatory provisions of the preceding paragraphs shall apply to any such sub
agent and to the affiliates of the Collateral Agent and any such sub agent, and
shall apply to their respective activities acting for the Collateral
Agent.

    

     

    Subject
to the appointment and acceptance of a successor Collateral Agent as provided in
this paragraph, the Collateral Agent may resign at any time by notifying the
Investors and the Company. Upon any such resignation, the Investor holding a
majority of the principal amount of the Senior Secured Notes shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Investor and shall have accepted such appointment within 30 days after the
retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Investor holding a majority of the
principal amount of the Senior Secured Notes, appoint a successor Collateral
Agent which shall be a bank with an office in New York, New York, or
an affiliate of any such bank. Upon the acceptance of its appointment as
Collateral Agent hereunder by a successor, such successor shall succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations hereunder. After the Collateral Agent’s resignation
hereunder, the provisions of this Article shall continue in effect for the
benefit of such retiring Collateral Agent, its sub agents and their respective
affiliates in respect of any actions taken or omitted to be taken by any of them
while it was acting as Collateral Agent.

     

    Each
Investor acknowledges that it has, independently and without reliance upon the
Collateral Agent or any other Investors and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Secured Transaction Documents. Each Investor also
acknowledges that it will, independently and without reliance upon the
Collateral Agent or any other Investors and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon any Secured
Transaction Document, any related agreement or any document furnished
thereunder.

     

    
      
        
        

      

      
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    ARTICLE
13.

     

    NOTICES

     

    All
notices, requests, demands and other communications to any party hereunder shall
be in writing (including facsimile or similar writing) and shall be given to
such party at its address or facsimile number set forth below or such other
address or facsimile number as such party may hereafter specify by notice to the
other parties listed below:

     

    (a)         If
to the Company:

     

    Twistbox
Entertainment, Inc.

    14242
Ventura Blvd., Third Floor

    Sherman
Oaks, CA 91423

    Telephone:
(818) 301-6200

    Facsimile:
(818) 708-0598

    Attention:
Chief Executive Officer

    Attention:
General Counsel

     

    with a
copy to:

     

    Manatt,
Phelps & Phillips, LLP

    11355
West Olympic Boulevard

    Los
Angeles, CA  90064

    Telephone:
(310) 312-4168

    Facsimile:
(310) 914-5789

    Attention:
Richard J. Maire, Jr., Esq.

     

    (b)         If
to Parent or a Subsidiary Guarantor: At its address for notices set forth on
Schedule I.

     

    (c)         If
to the Collateral Agent:

     

    ValueAct
SmallCap Master Fund, L.P.

    435
Pacific Avenue, 4th Floor

    San
Francisco, CA 94133

    Telephone:
(415) 249-1237

    Facsimile:
(415) 249-1242

    Attention:
Jimmy Price

     

    with a
copy to:

     

    Paul,
Weiss, Rifkind, Wharton & Garrison LLP

    1285
Avenue of the Americas

    New York,
New York 10019-6064

    Telephone:
(212) 373-3425

    Facsimile:
(212) 492-0425

    Attention:
Valerie Radwaner, Esq.

     

    
      
        
        

      

      
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    Each such
notice, request or other communication shall be effective (i) upon receipt
(provided,
however, that
notices received on a Saturday, Sunday or legal holiday or after 6:30 p.m.
(New York City time) on any other day will be deemed to have been received
on the next Business Day), if given by facsimile transmission, (ii) the
Business Day following the date of delivery with a nationally recognized
overnight courier service or (iii) if given by any other means, when
delivered at the address specified in this Article 13.

     

    ARTICLE
14.

     

    BINDING EFFECT; SEVERAL
AGREEMENT; ASSIGNMENTS

     

    Whenever
in this Guarantee and Security Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and permitted
assigns of such party, and all covenants, promises and agreements by or on
behalf of any Grantor that are contained in this Guarantee and Security
Agreement shall bind and inure to the benefit of each party hereto and its
successors and permitted assigns. This Guarantee and Security Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and permitted assigns, and shall inure to the
benefit of such Grantor, the Collateral Agent and the other Secured Parties, and
their respective successors and permitted assigns, except that no Grantor shall
have the right to assign its rights or obligations hereunder or any interest
herein or in any of the Collateral (and any such attempted assignment shall be
void), except as expressly contemplated by this Guarantee and Security Agreement
or the other Secured Transaction Documents. This Guarantee and Security
Agreement shall be construed as a separate agreement with respect to each of the
Grantors and may be amended, supplemented, waived or otherwise modified or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor
hereunder.

     

    ARTICLE
15.

     

    SURVIVAL OF AGREEMENT;
SEVERABILITY

     

    All
covenants, agreements, representations and warranties made by the Grantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Guarantee and Security Agreement or any
other Secured Transaction Document shall be considered to have been relied upon
by the Collateral Agent and the other Secured Parties and shall survive the
execution and delivery of any Secured Transaction Document and the making of any
Loan, regardless of any investigation made by the Secured Parties or on their
behalf, and shall continue in full force and effect until this Guarantee and
Security Agreement shall terminate. In the event any one or more of the
provisions contained in this Guarantee and Security Agreement or in any other
Secured Transaction Document should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    ARTICLE
16.

     

    GOVERNING
LAW

     

    THIS
GUARANTEE AND SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE LAWS OF THE FEDERAL
REPUBLIC OF GERMANY SHALL APPLY ONLY TO THE EXTENT SUCH APPLICATION IS MANDATORY
PURSUANT TO THE PRINCIPLES OF INTERNATIONAL PRIVATE LAW (CONFLICT OF
LAWS).

     

    ARTICLE
17.

     

    COUNTERPARTS

     

    This
Guarantee and Security Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one contract (subject to Article 14), and shall become effective as
provided in Article 14. Delivery of an executed counterpart of this
Guarantee and Security Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Guarantee and Security
Agreement.

     

    ARTICLE
18.

     

    HEADINGS

     

    Article and
Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Guarantee and Security Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Guarantee and Security Agreement.

     

    
      
        
        

      

      
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    ARTICLE
19.

     

    JURISDICTION; VENUE; CONSENT
TO SERVICE OF PROCESS

     

    EACH OF
THE GRANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES’ DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER COLLATERAL DOCUMENT, 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 NEW YORK STATE 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 THE SECURED PARTIES 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.

     

    EACH OF
THE GRANTORS 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 GUARANTEE AND SECURITY AGREEMENT OR ANY OTHER SECURED
TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN THE PRECEDING 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.

     

    EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN ARTICLE 13. NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

     

    ARTICLE
20.

      

    WAIVER OF JURY
TRIAL

     

    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 GUARANTEE AND SECURITY AGREEMENT
OR ANY OTHER SECURED TRANSACTION DOCUMENTS 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 GUARANTEE AND SECURITY AGREEMENT AND THE OTHER SECURED
TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

     

    [Signature
Pages Follow]

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the parties hereto have duly executed this Guarantee and
Security Agreement as of the day and year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    
                                                                                                                                      
                                                                                                                                        
                                                                                                                                          
                                                                                                                                            
                                                                                                                                              	
                                                                                                                                                      TWISTBOX
      ENTERTAINMENT, INC.

                                                                                                                                                    
	 
      	 
      
	
                                                                                                                                                      By:

                                                                                                                                                    	 
      
	 
      	
                                                                                                                                                      Name:

                                                                                                                                                    
	 
      	
                                                                                                                                                      Title:

                                                                                                                                                    
	 
      
	
                                                                                                                                                      NEUMEDIA,
      INC. formerly known as

                                                                                                                                                      Mandalay
      Media, Inc.

                                                                                                                                                    
	 
      	 
      
	
                                                                                                                                                      By:

                                                                                                                                                    	 
      
	 
      	
                                                                                                                                                      Name:

                                                                                                                                                    
	 
      	
                                                                                                                                                      Title:

                                                                                                                                                    
	 
      
	
                                                                                                                                                      FOREIGN
      SUBSIDIARIES

                                                                                                                                                    
	 
	
                                                                                                                                                      TWISTBOX
      ENTERTAINMENT LTD.

                                                                                                                                                      (RUSSIA)

                                                                                                                                                    
	 
      	 
      
	
                                                                                                                                                      By:

                                                                                                                                                    	 
      
	 
      	
                                                                                                                                                      Name:

                                                                                                                                                    
	 
      	
                                                                                                                                                      Title:

                                                                                                                                                    
	 
      
	
                                                                                                                                                      TWISTBOX
      ENTERTAINMENT LIMITED

                                                                                                                                                      (UK)

                                                                                                                                                    
	 
      	 
      
	
                                                                                                                                                      By:

                                                                                                                                                    	 
      
	 
      	
                                                                                                                                                      Name:

                                                                                                                                                    
	 
      	
                                                                                                                                                      Title:

                                                                                                                                                    

                                                                                                                                            

                                                                                                                                          

                                                                                                                                        

                                                                                                                                      

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    	
                                                            TWISTBOX
      ENTERTAINMENT LTDA

                                                            (BRAZIL)

                                                          
	 
      	 
      
	
                                                            By:

                                                          	 
      
	 
      	
                                                            Name:

                                                          
	 
      	
                                                            Title:

                                                          
	 
      
	
                                                            WAAT
      MEDIA CHILE SA

                                                          
	 
      	 
      
	
                                                            By:

                                                          	 
      
	 
      	
                                                            Name:

                                                          
	 
      	
                                                            Title:

                                                          
	 
      
	
                                                            TWISTBOX
      ENTERTAINMENT OF

                                                            ARGENTINA

                                                          
	 
      	 
      
	
                                                            By:

                                                          	 
      
	 
      	
                                                            Name:

                                                          
	 
      	
                                                            Title:

                                                          
	 
      
	
                                                            WAAT
      MEDIA COLUMBIA

                                                          
	 
      	 
      
	
                                                            By:

                                                          	 
      
	 
      	
                                                            Name:

                                                          
	 
      	
                                                            Title:

                                                          
	 
      
	
                                                            DOMESTIC
      SUBSIDIARIES

                                                          
	 
	
                                                            WAAT
      MEDIA CORP.

                                                          
	 
      	 
      
	
                                                            By:

                                                          	 
      
	 
      	
                                                            Name:

                                                          
	 
      	
                                                            Title:

                                                          

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          	
                  VALUEACT
      SMALLCAP MASTER

                
	
                  FUND,
      L.P., as Collateral Agent

                
	 
      
	
                  By
      Its General Partner, VA SmallCap

                  Partners,

                
	 
      	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                
	 
      
	
                  VALUEACT
      SMALLCAP MASTER

                
	
                  FUND,
      L.P., as Investor

                
	 
      
	
                  By
      Its General Partner, VA SmallCap

                  Partners,

                
	 
      	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

       

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

    

    EXHIBIT
A

     

    FORM OF COPYRIGHT SECURITY
AGREEMENT

     

    This
Copyright Security Agreement (this “Copyright Security
Agreement”), dated as of ___________, is made by ________________, a
____________, located at __________________ (the “Grantor”), in favor
of ValueAct SmallCap Master Fund, L.P., a British Virgin Islands limited
partnership, located at 435 Pacific Avenue, San Francisco, CA 94133, in its
capacity as collateral agent for the benefit of the Secured Parties pursuant to
the Guarantee and Security Agreement (defined below) (in such capacity, the
“Collateral
Agent”).

     

    WITNESSETH
:

     

    WHEREAS,
reference is made to the Securities Purchase Agreement, dated as of
July 30, 2007, among the Grantor, the Subsidiary Guarantors, and the
Investor (as amended, supplemented or otherwise modified from time to time, the
“Securities Purchase
Agreement”);

     

    WHEREAS,
the Investor has agreed to purchase the Senior Secured Notes from the Grantor
pursuant to, and upon the terms and subject to the conditions specified in, the
Securities Purchase Agreement;

     

    WHEREAS,
as a condition to the obligation of the Investor to purchase the Senior Secured
Notes under the Security Purchase Agreement, Grantor, the Subsidiary Guarantors,
Investor and the Collateral Agent have entered into a Guarantee and Security
Agreement dated July 30, 2007 (as amended and restated on ____________,
2010 pursuant to that certain Amended and Restated Security Agreement among the
Grantor, the Subsidiary Guarantors, Investor and the Collateral Agent, the
“Security
Agreement”) pursuant to which the Grantor is required to execute and
deliver this Copyright Security Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and as a condition to the obligation
of the Investor to purchase the Senior Secured Notes, the Grantor and the
Collateral Agent hereby agree as follows:

     

    SECTION
1.  Defined
Terms.  Unless otherwise defined herein, capitalized terms used
herein have the meaning given to them in the Security Agreement.

     

    SECTION
2.  Grant of
Security Interest in Copyright Collateral.  Subject to the
terms and conditions of the Security Agreement, as security for the payment or
performance, as applicable, in full of the Obligations, the Grantor hereby
pledges and grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a lien on and security interest in and to all of its right,
title and interest in, to and under all the following property of the Grantor,
wherever located, whether now existing or hereafter arising or acquired from
time to time (all of which being hereinafter collectively referred to as, the
“Copyright
Collateral”):

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (a) 
      

            	
              (i) all
      copyright rights in any work subject to the copyright laws of the United
      States or any other country, whether as author, assignee, transferee or
      otherwise, and (ii) all registrations and applications for
      registration of any such copyright in the United States or any other
      country, including registrations, recordings, supplemental registrations
      and pending applications for registration in the United States Copyright
      Office or any similar offices in the United States or any other country,
      including those copyright rights described on Schedule 1 attached
      hereto; and

            

    

     

    
      	
            	
              (b)  
      

            	
              all
      Proceeds, products, substitutions, accessions, rents and profits of or in
      respect of any of the foregoing.

            

    

     

    SECTION
3.  Security
Agreement.  The security interest granted pursuant to this
Copyright Security Agreement is granted in conjunction with the security
interest granted to the Collateral Agent pursuant to the Security Agreement, and
the Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Copyright
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.  In the event that any provision
of this Copyright Security Agreement is deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall control.

     

    SECTION
4.  Termination.  Upon
the full payment and performance of the Obligations and termination of the
Security Agreement, upon written request of the Grantor, the Collateral Agent
shall execute, acknowledge, and deliver to the Grantor an instrument in writing
in recordable form releasing the collateral pledge, grant, assignment, lien on
and security interest in the Copyright Collateral under this Copyright Security
Agreement.

     

    SECTION
5.  Governing
Law.  THIS COPYRIGHT SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

     

    SECTION
6.  Counterparts.  This
Copyright Security Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
contract.  Delivery of an executed counterpart of this Copyright
Security Agreement by facsimile transmission shall be as effective as delivery
of a manually executed counterpart of this Copyright Security
Agreement.

     

    [Signature
Page Follows]

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    
                                                                                                                                      IN
WITNESS WHEREOF, the Grantor has caused this Copyright Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth
above.

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    	
                            [_____________________]

                          
	
                            as
      Grantor

                          
	 
      	 
      
	
                            By:

                          	 
      
	 
      	
                            Name:

                          
	 
      	
                            Title

                          

                  

                

              

            

          

        

      

    

     

    
      [Signature
Page to Copyright Security Agreement]

    

    
      
        
          
             

             

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
1

     

    to

     

    COPYRIGHT
SECURITY AGREEMENT

     

    COPYRIGHT
REGISTRATIONS AND APPLICATIONS

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Jurisdiction

                              	 	
                                Title

                              	 	
                                Registration

                                No.

                              	 	
                                Registration

                                Date

                              	 	
                                Status

                              
	 
      	 	 
      	 	 
      	 	 
      	 	 
      

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

     

    FORM OF PATENT SECURITY
AGREEMENT

     

    This
Patent Security Agreement (this “Patent Security
Agreement”), dated as of ___________, is made by ________________, a
____________, located at __________________ (the “Grantor”), in favor
of ValueAct SmallCap Master Fund, L.P., a British Virgin Islands limited
partnership, located at 435 Pacific Avenue, San Francisco, CA 94133, in its
capacity as collateral agent for the benefit of the Secured Parties pursuant to
the Guarantee and Security Agreement (defined below) (in such capacity, the
“Collateral
Agent”).

     

    WITNESSETH
:

     

    WHEREAS,
reference is made to the Securities Purchase Agreement, dated as of
July 30, 2007, among the Grantor, the Subsidiary Guarantors, and the
Investor (as amended, supplemented or otherwise modified from time to time, the
“Securities Purchase
Agreement”);

     

    WHEREAS,
the Investor has agreed to purchase the Senior Secured Notes from the Grantor
pursuant to, and upon the terms and subject to the conditions specified in, the
Securities Purchase Agreement;

     

    WHEREAS,
as a condition to the obligation of the Investor to purchase the Senior Secured
Notes under the Security Purchase Agreement, Grantor, the Subsidiary Guarantors,
Investor and the Collateral Agent have entered into a Guarantee and Security
Agreement dated July 30, 2007 (as amended and restated on ____________,
2010 pursuant to that certain Amended and Restated Security Agreement among the
Grantor, the Subsidiary Guarantors, Investor and the Collateral Agent, the
“Security
Agreement”) pursuant to which the Grantor is required to execute and
deliver this Patent Security Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and as a condition to the obligation
of the Investor to purchase the Senior Secured Notes, the Grantor and the
Collateral Agent hereby agree as follows:

     

    SECTION
1.  Defined
Terms.  Unless otherwise defined herein, capitalized terms used
herein have the meaning given to them in the Security Agreement.

     

    SECTION
2.  Grant of
Security Interest in Patent Collateral.  Subject to the terms
and conditions of the Security Agreement, as security for the payment or
performance, as applicable, in full of the Obligations, the Grantor hereby
pledges and grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a lien on and security interest in and to all of its right,
title and interest in, to and under all the following property of the Grantor,
wherever located, whether now existing or hereafter arising or acquired from
time to time (all of which being hereinafter collectively referred to as, the
“Patent
Collateral”):

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (a) 
      

            	
              (i)
      all letters patent of the United States or any other country, all
      registrations and recordings thereof and all applications for letters
      patent of the United States or any other country, including registrations,
      recordings and pending applications in the United States Patent and
      Trademark Office or any similar offices in the United States or any other
      country, including those described on Schedule 1 attached hereto, and
      (ii) all reissues, continuations, divisions, continuations in part,
      renewals or extensions thereof, and the inventions disclosed or claimed
      therein, including the right to make, use and/or sell the inventions
      disclosed or claimed therein; and

            

    

     

    
      	
            	
              (b) 
      

            	
              all
      Proceeds, products, substitutions, accessions, rents and profits of or in
      respect of any of the foregoing.

            

    

     

    SECTION
3.  Security
Agreement.  The security interest granted pursuant to this
Patent Security Agreement is granted in conjunction with the security interest
granted to the Collateral Agent pursuant to the Security Agreement, and the
Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Patent Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.  In the event that any provision of this Patent
Security Agreement is deemed to conflict with the Security Agreement, the
provisions of the Security Agreement shall control.

     

    SECTION
4.  Termination.  Upon
the full payment and performance of the Obligations and termination of the
Security Agreement, upon written request of the Grantor, the Collateral Agent
shall execute, acknowledge, and deliver to the Grantor an instrument in writing
in recordable form releasing the collateral pledge, grant, assignment, lien on
and security interest in the Patent Collateral under this Patent Security
Agreement.

     

    SECTION
5.  Governing
Law.  THIS PATENT SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     

    SECTION
6.  Counterparts.  This
Patent Security Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
contract.  Delivery of an executed counterpart of this Patent Security
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Patent Security Agreement.

     

    [Signature
Page Follows]

     

     

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      
        
          	
                  [_____________________]

                
	
                  as
      Grantor

                
	 
      	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title

                

        

      

    

     

    
      [Signature
Page to Patent Security Agreement]

    

    
      
        
          
             

             

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
1

     

    to

     

    PATENT
SECURITY AGREEMENT

     

    ISSUED
PATENT AND PATENT APPLICATIONS

     

    
      
        
          
            
              
                
                  	
                          Jurisdiction

                        	 
      	
                          Title

                        	 
      	
                          (Application) / Registration

                          No.

                        	 
      	
                          (Filing) / Registration

                          Date

                        	 
      	
                          Status

                        
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

                

              

            

          

        

      

    

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
C

     

    FORM OF TRADEMARK SECURITY
AGREEMENT

     

    This
Trademark Security Agreement (this “Trademark Security
Agreement”), dated as of ___________, is made by ________________, a
____________, located at __________________ (the “Grantor”), in favor
of ValueAct SmallCap Master Fund, L.P., a British Virgin Islands limited
partnership, located at 435 Pacific Avenue, San Francisco, CA 94133, in its
capacity as collateral agent for the benefit of the Secured Parties pursuant to
the Guarantee and Security Agreement (defined below) (in such capacity, the
“Collateral
Agent”).

     

    WITNESSETH
:

     

    WHEREAS,
reference is made to the Securities Purchase Agreement, dated as of
July 30, 2007, among the Grantor, the Subsidiary Guarantors, and the
Investor (as amended, supplemented or otherwise modified from time to time, the
“Securities Purchase
Agreement”);

     

    WHEREAS,
the Investor has agreed to purchase the Senior Secured Notes from the Grantor
pursuant to, and upon the terms and subject to the conditions specified in, the
Securities Purchase Agreement;

     

    WHEREAS,
as a condition to the obligation of the Investor to purchase the Senior Secured
Notes under the Security Purchase Agreement, Grantor, the Subsidiary Guarantors,
Investor and the Collateral Agent have entered into a Guarantee and Security
Agreement dated July 30, 2007 (as amended and restated on ____________,
2010 pursuant to that certain Amended and Restated Security Agreement among the
Grantor, the Subsidiary Guarantors, Investor and the Collateral Agent, the
“Security
Agreement”) pursuant to which the Grantor is required to execute and
deliver this Trademark Security Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and as a condition to the obligation
of the Investor to purchase the Senior Secured Notes, the Grantor and the
Collateral Agent hereby agree as follows:

     

    SECTION
1.  Defined
Terms.  Unless otherwise defined herein, capitalized terms used
herein have the meaning given to them in the Security Agreement.

     

    SECTION
2.  Grant of
Security Interest in Trademark Collateral.  Subject to the
terms and conditions of the Security Agreement, as security for the payment or
performance, as applicable, in full of the Obligations, the Grantor hereby
pledges and grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a lien on and security interest in and to all of its right,
title and interest in, to and under all the following property of the Grantor,
wherever located, whether now existing or hereafter arising or acquired from
time to time (all of which being hereinafter collectively referred to as, the
“Trademark
Collateral”):

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (a) 
      

            	
              all
      trademarks, service marks, trade names, corporate names, company names,
      business names, fictitious business names, trade styles, trade dress,
      logos, other source or business identifiers, designs and general
      intangibles of like nature, now existing or hereafter adopted or acquired,
      all registrations and recordings thereof, and all registration and
      recording applications filed in connection therewith, including
      registrations and registration applications in the United States Patent
      and Trademark Office or any similar offices in the United States or any
      other country, and all extensions or renewals thereof, including those
      trademark registrations and applications described on Schedule 1
      attached hereto, (ii) all goodwill associated therewith or symbolized
      by any of the foregoing and (iii) all other assets, rights and
      interests that uniquely reflect or embody such goodwill;
    and

            

    

     

    
      	
            	
              (b) 
      

            	
              all
      Proceeds, products, substitutions, accessions, rents and profits of or in
      respect of any of the foregoing;

            

    

     

    provided,
however, that the grant of security interest hereunder shall not include any
intent-to-use United States trademark applications for which an amendment to
allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or
15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in
conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by
the United States Patent and Trademark Office provided that upon such filing and
acceptance, such intent-to-use applications shall be included in the definition
of Trademark Collateral.

     

    SECTION
3.  Security
Agreement.  The security interest granted pursuant to this
Trademark Security Agreement is granted in conjunction with the security
interest granted to the Collateral Agent pursuant to the Security Agreement, and
the Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Trademark
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.  In the event that any provision
of this Trademark Security Agreement is deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall control.

     

    SECTION
4.  Termination.  Upon
the full payment and performance of the Obligations and termination of the
Security Agreement, upon written request of the Grantor, the Collateral Agent
shall execute, acknowledge, and deliver to the Grantor an instrument in writing
in recordable form releasing the collateral pledge, grant, assignment, lien on
and security interest in the Trademark Collateral under this Trademark Security
Agreement.

     

    SECTION
5.  Governing
Law.  THIS TRADEMARK SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    SECTION
6.  Counterparts.  This
Trademark Security Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
contract.  Delivery of an executed counterpart of this Trademark
Security Agreement by facsimile transmission shall be as effective as delivery
of a manually executed counterpart of this Trademark Security
Agreement.

     

    [Signature
Page Follows]

    

    
      
        
          
                 

                 

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the Grantor has caused this Trademark Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      	
              [_____________________]

            
	
              as
      Grantor

            
	 
      	 
      
	
              By:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title

            

    

     

    [Signature Page to Trademark Security
Agreement]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
1

     

    to

     

    TRADEMARK
SECURITY AGREEMENT

     

    TRADEMARK
REGISTRATIONS AND APPLICATIONS

     

    
      
        
          
            	
                    Jurisdiction

                  	 
      	
                    Trademark

                  	
                    Registration

                    No.

                    (App. No.)

                  	 
      	
                    Registration

                    Date

                    (App. Date)

                  	 
      	
                    Record Owner

                  	 
      	
                    Status

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]