Document:

MSTI
      Holdings, Inc.

    259-263
      Goffle Road

    Hawthorne,
      New Jersey 07506

    

    January
      31, 2008

    

    

    To
      the
      MSTI Holdings, Inc. Debenture Holders:

     

    1.    Liquidated
      Damages; Repricing Warrants.
      Reference is hereby made to that certain Registration Rights Agreement, dated
      as
      of May 25, 2007 (the “Registration
      Rights Agreement”),
      by
      and among MSTI Holdings, Inc., a Delaware corporation (the “Company”),
      and
      each entity identified on the signature pages thereto (each, including its
      successors and assigns, a “Purchaser”
and,
      collectively, the “Purchasers”).
      Capitalized terms used in this Section 1 of this letter agreement and not
      otherwise defined shall have the meanings ascribed to them in the Registration
      Rights Agreement. 

     

    Pursuant
      to Section 1 of the Registration Rights Agreement, the Company was required
      to
      cause the Initial Registration Statement to be declared effective by the
      Securities and Exchange Commission (the “Commission”)
      on or
      prior to the Effectiveness Date, as such date has been extended to November
      21,
      2007 by letter agreement between the Purchasers and the Company. Pursuant to
      Section 2(b) of the Registration Rights Agreement, if the Initial Registration
      Statement is not declared effective by the Commission by November 21, 2007,
      the
      Company is required to pay to each Purchaser, for each month in which the
      Registration Statement has not been declared effective, an amount in cash equal
      to 1% of the aggregate purchase price paid by such Purchaser for any
      unregistered Registrable Securities then held by such Purchaser (“Liquidated
      Damages”).
      

     

    The
      undersigned Purchasers hereby waive any non-compliance with the aforementioned
      Section 2(b) of the Registration Rights Agreement, and waive any default or
      Event of Default (as such term is defined in the Debentures), and any breach
      or
      threatened breach, arising under the Registration Rights Agreement or any other
      Transaction Document, including without limitation the Debentures and the
      Warrants, and waive any Liquidated Damages, in each case resulting or that
      could
      result from the Company’s failure to have the Initial Registration Statement
      declared effective by the Commission by November 21, 2007. 

     

    In
      exchange for such waiver by the Purchasers of their rights to Liquidated
      Damages, the parties hereto agree that Section 2(b) of the Warrants be hereby
      amended to reduce the exercise price from $1.00 to $0.65 per share.

     

    2.    Subsequent
      Equity Sales.
      Reference is hereby made to that certain Securities Purchase Agreement, dated
      as
      of May 24, 2007 (the “Purchase
      Agreement”),
      by
      and among the Company and the Purchasers. Capitalized terms used in this Section
      2 of this letter agreement and not otherwise defined shall have the meanings
      ascribed to them in the Purchase Agreement. 

     

    Pursuant
      to Section 4.13(a) of the Purchase Agreement, as amended, the Company is
      prohibited from issuing shares of Common Stock or Common Stock Equivalents
      until
      90 days after the Registration Statement is declared effective, except for
      Exempt Issuances. The Purchasers hereby waive any non-compliance with the
      aforementioned Section 4.13(a), and waive any default or Event of Default (as
      such term is defined in the Debentures), and any breach or threatened breach,
      arising under the Purchase Agreement or any other Transaction Document,
      including without limitation the Debentures and the Warrants, and waive any
      and
      all penalties, damages, and claims resulting or that could result from the
      issuance of (i) shares of Common Stock to Telkonet, Inc. for a purchase price
      of
      up to $3,000,000, of which $275,000 of such proceeds will be used by the Company
      for European investor relations purposes, (ii) shares of Common Stock issued
      in
      connection with acquisitions or strategic transactions approved by the directors
      of the Company, but not including a transaction where the shares are being
      issued primarily for the purpose of raising capital or to an entity whose
      primary business is investing in securities, and (iii) an additional 2,000,000
      shares of Common Stock to employees and consultants under the Company’s 2007
      Stock Incentive Plan at an exercise price of no less than $0.65 per
      share.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.    Amendment
      to Debenture.
      The
      text of Section 8(a)(ix) of the Debenture is hereby deleted and replaced with
      the following:

     

    “Frank
      T.
      Matarazzo shall cease to serve as Chief Executive Officer of the Company.”

     

    4.    Repricing
      Outstanding Options and Warrants.
      The
      undersigned hereby further agree that, notwithstanding anything in the
      Transaction Documents to the contrary, the exercise price of all options and
      warrants issued by the Company which are currently outstanding shall be set
      at
      $0.65 per share.

     

    5.    Filing
      of 8-K.
      On or
      before 5:30 pm (New York time) on the date after all undersigned have signed
      this letter agreement, the Company shall file a Current Report on Form 8-K,
      reasonably acceptable to each undersigned disclosing the material terms of
      this
      letter agreement, which shall include this letter agreement as an attachment
      thereto.

     

    6.    Independent
      Nature of Purchasers' Obligations and Rights.
      The
      Company has elected to provide all Purchasers with the same terms and letter
      agreement for the convenience of the Company and not because it was required
      or
      requested to do so by the Purchasers. The obligations of each Purchaser under
      this letter agreement, and any Transaction Document, are several and not joint
      with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance or non-performance of the obligations
      of any other Purchaser under this letter agreement or any Transaction Document.
      Nothing contained herein or in any Transaction Document, an no action taken
      by
      any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers
      as
      a partnership, an association, a joint venture or any other kind of entity,
      or
      create a presumption that the Purchasers are in any way acting in concert or
      as
      a group with respect to such obligations or the transactions contemplated by
      this letter agreement or the Transaction Documents. Each Purchaser shall be
      entitled to independently protect and enforce its rights, including, without
      limitation, the rights arising out of this letter agreement or out of the other
      Transaction Documents, and it shall not be necessary for any other Purchaser
      to
      be jointed as an additional party in any proceeding for such purpose. Each
      Purchaser has been represented by its own separate legal counsel in their review
      and negotiation of this letter agreement and the Transaction
      Documents.

     

    7.    Miscellaneous.
      Subject
      to the waivers and agreements provided herein, the Transactions Documents shall
      remain in full force and effect. Except as expressly set forth herein, this
      letter agreement shall not be deemed to be a waiver, amendment or modification
      of any provisions of the Transaction Documents or of any right, power or remedy
      of the Purchasers, or constitute a waiver of any provision of the Transaction
      Documents (except to the extent herein set forth), or any other document,
      instrument and/or agreement executed or delivered in connection therewith,
      in
      each case whether arising before or after the date hereof or as a result of
      performance hereunder or thereunder. The Purchasers reserve all rights,
      remedies, powers or privileges available under the Transaction Documents, at
      law
      or otherwise, subject to the terms of this letter agreement. This letter
      agreement shall not constitute a novation or satisfaction and accord of the
      Transaction Documents or any other document, instrument and/or agreement
      executed or delivered in connection therewith. This letter agreement shall
      be
      governed by and construed in accordance with the laws of the State of New
      York.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    Please
      indicate your acknowledgment of and agreement to the foregoing by signing a
      copy
      of this letter and returning an executed original to the Company.
This
      letter agreement may be executed by the parties hereto in counterparts, and
      execution may be evidenced by facsimile or other electronic transmission of
      a
      signed signature page by any party hereto, and all of such counterparts together
      shall constitute one and the same instrument.

     

    
      	 	 	Sincerely,
	 
 	 
 	 
 
	 	 	/s/ Frank Matarazzo
	 	 	 
	 	Frank Matarazzo
	 	Chief Executive
              Officer

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    [DEBENTURE
      HOLDER SIGNATURE PAGE]

    

    

    ACCEPTED
      AND AGREED:

     

    
      	DKR SOUNDSHORE OASIS HOLDING
              FUND
              LTD.	 	 	 
	By: DKR Oasis Management
              Company
              LP, its investment manager	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Barbara Burger	 	 	Dated:
              02/04/2008
	Name:	
              
Barbara
              Burger	 	 	
            
	Title: 	Authorized signatory	 	 	 

    

    
       

      
        	ALPHA CAPITAL ANSTALT	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Konrad Ackerman	 	 	Dated:
                02/11/2008
	Name:	
                
Konrad
                Ackerman	 	 	
              
	Title: 	Director	 	 	 

      

      
        
           

          
            	GEMINI MASTER FUND,
                    LTD.	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Steven W. Winters	 	 	Dated:
                    02/11/2008
	Name:	
                    
Steven
                    W. Winters	 	 	
                  
	Title: 	President of the
                    Investment
                    Manager	 	 	 

          

          
            
               

              
                	WHALEHAVEN CAPITAL
                        FUND
                        LIMITED	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Brian Mazella	 	 	Dated:
                        02/07/2008
	Name:	
                        
Brian
                        Mazella	 	 	
                      
	Title: 	CFO	 	 	 

              

              
                
                   

                  
                    	
                            CMS
                              CAPITAL

                          	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Howard Weiss	 	 	Dated:
                            02/06/2008
	Name:	
                            
Howard
                            Weiss	 	 	
                          
	Title:
	Director	 	 	 

                  

                  
                    
                       

                      
                        	BRIO CAPITAL
                                L.P.	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Shaye Hirsch	 	 	Dated:
                                02/11/2008
	Name:	
                                
Shaye
                                Hirsch	 	 	
                              
	Title:
	Manager
                                of General
                                Partner	 	 	 

                      

                       

                      
                        
                          
                          

                        

                        -4-THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED
      (THE “SECURITIES ACT”), OR
      APPLICABLE STATE SECURITIES
      LAWS
AND
      MAY
      NOT BE SOLD, TRANSFERRED,
      OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
      TO
      AN
      EFFECTIVE
      REGISTRATION STATEMENT
      UNDER
      THE
      SECURITIES ACT
      AND
      APPLICABLE
      STATE
      SECURITIES LAWS OR PURSUANT TO AN
      APPLICABLE
      EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT AND
      APPLICABLE
      STATE
      SECURITIES LAWS.

    

      
        	
                $16,500,000

              
	 
	
                TWISTBOX
                  ENTERTAINMENT, INC.

              
	 
	
                SENIOR
                  SECURED NOTE DUE JANUARY 30,
                  2010

              

      

    

     

    Section
      1. General.

     

    FOR
      VALUE
      RECEIVED, TWISTBOX ENTERTAINMENT, INC., a Delaware corporation
      (the “Company”),
      hereby
      promises to pay to the order of VALUEACT SMALLCAP
      MASTER FUND, L.P. (the “Investor”),
      the
      principal sum of SIXTEEN MILLION
      FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($16,500,000.00),
      or
      such
      lesser amount as shall then equal the outstanding principal amount hereof,
      together with interest
      (“Interest”)
      thereon
      at a rate (the “Interest
      Rate”) equal
      to
      (i) 9.00% per annum from, and including, July 30, 2007 to, but excluding, July
      30, 2008 and (ii) 10.00% per annum from, and
      including, July 30, 2008 to, but excluding, January 30, 2010, each computed
      on
      the basis of a
      year of
      360 days comprised of twelve 30 day months. All unpaid principal, together
      with
      any then
      unpaid and accrued interest and other amounts payable hereunder, shall be due
      and payable on the earlier of the January 30, 2010 (the “Maturity
      Date”); or
      (ii)
      when such amounts become due and payable as a result of, and following, an
      Event
      of Default in accordance with Section 3. This Note shall be prepayable without
      penalty, in whole or in part, at any time at the Company’s option
      at
      100% of the principal amount plus accrued but unpaid interest to and including
      the date of
      prepayment. Any prepayments will be applied first to any accrued but unpaid
      interest and then
      to
      unpaid principal.

     

    This
      Note
      is one of a duly authorized issue of notes of the Company (this note being
      referred
      to as the “Note”
      and,
      collectively, all similar notes issued by the Company being referred
      to as the “Notes”),
      issued
      in
      the aggregate principal amount limited to $16,500,000.00 pursuant
      to the Securities Purchase Agreement, dated as of July 30, 2007 (as the same
      may
      be amended,
      supplemented or otherwise modified from time to time, the “Securities
      Purchase Agreement”)
      by
      and
      among the Company and the Investor party thereto, and is entitled to the
benefits
      thereof and to the exercise of the remedies provided thereby or otherwise
      available in respect
      thereof. Capitalized terms used herein without definition have the meanings
      assigned thereto
      in the Securities Purchase Agreement. Unless the context otherwise requires,
      an
accounting
      term not otherwise defined has the meaning assigned to it in accordance with
      the
United
      States generally accepted accounting principles (“GAAP”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Interest
      on this Note shall accrue from, and including, the date of issuance through
      and
until
      repayment of the principal amount of this Note and payment of all Interest
      in
      full, and shall be
      payable in cash semi-annually in arrears on each January 1 and July 1 that
      the
      Notes are outstanding
      or, if any such date shall not be a Business Day, on the next succeeding
      Business Day
      to
      occur after such date (each date upon which interest shall be so payable, an
      “Interest
      Payment
      Date”), to
      holders of record on each preceding December 15 and June 15 to the applicable
      Interest Payment Date, beginning on January 1, 2008, by wire transfer of
      immediately available
      funds to an account at a bank designated in writing by the Investor on
      reasonable notice.

     

    Notwithstanding
      the foregoing provisions of this Section 1, any overdue principal of,
overdue
      Interest on, and any other overdue amounts payable under, this Note shall bear
      interest, payable
      on demand in immediately available funds, for each day from the date payment
      thereof was
      due
      to the date of actual payment at a rate equal to the sum of (i) the Interest
      Rate and (ii) an additional
      two percent (2.00%) per annum. Subject to applicable law, any interest that
      shall accrue
      on
      overdue interest on this Note as provided in the preceding sentence and shall
      not have been
      paid
      in full in cash on or before the next Interest Payment Date to occur after
      the
      date on which
      the
      overdue interest became due and payable shall itself be deemed to be overdue
      interest on
      this
      Note to which the preceding sentence shall apply. In addition, notwithstanding
      the foregoing
      provisions of this Section 1, if an Event of Default has occurred and is
      continuing, then,
      so
      long as such Event of Default is continuing, all outstanding principal of this
      Note shall bear
      interest, after as well as before judgment, at a rate equal to the sum of (i)
      the Interest Rate and
      (ii)
      an additional two percent (2.00%) per annum.

     

    Section
      2. Repurchase
      Right Upon a Fundamental Change.

     

    Notwithstanding
      anything to the contrary contained herein and in addition to any other
right
      of
      the Investor, upon the occurrence of a Fundamental Change the Investor shall
      have the right
      for
      a period of thirty days, by written notice to the Company, to require the
      Company to repurchase
      all of this Note on the repurchase date that is five Business Days after the
      date of delivery of such notice to the Company at a price equal to 100% of
      the
      outstanding principal amount under this Note plus all accrued and unpaid
      interest on such principal amount to, but excluding,
      the date of such repurchase plus any other amounts due hereunder. A “Fundamental
      Change”
      shall
      be
      deemed to have occurred upon the occurrence of any of the following events:
      (a)
      any merger or consolidation of the Company with or into another Person or any
      sale of all or substantially
      all of the stock or assets of the Company, unless (i) the holders of capital
      stock of the
      Company immediately prior to such transaction are entitled to exercise, directly
      or indirectly, 50%
      or
      more of the voting power of all shares of capital stock entitled to vote
      generally in the election
      of directors of the continuing or surviving corporation, and (ii) such
      Fundamental Change
      does not result in a reclassification, conversion, exchange or cancellation
      of
      the Common
      Stock, (b) the approval of a plan relating to the liquidation or dissolution
      of
      the Company
      by its stockholders or (c) the Company’s first
      domestic
      or foreign public offering of its capital
      stock. A “Person”
      means
      any
      individual, corporation, partnership, joint venture, association,
      joint-stock company, trust, unincorporated organization, limited liability
      company or government
      or other entity.

    

    Section
      3. Events
      of Defaults.

     

    
      The
        occurrence of any of the following shall constitute an “Event
        of Default” under
        this Note:

       

      (a) The
        Company shall fail to pay any principal owing under this Note when due;
        or

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (b) The
      Company shall fail to pay any interest owing under this Note when due, and
      such
      failure shall continue for thirty (30) days; or

     

    (c)
      The
      Company or any Subsidiary shall fail to observe or perform any other
covenant,
      obligation, condition or agreement contained in this Note (other than those
      specified in clauses
      (a) or (b) above) or the Guarantee and Security Agreement, dated the date
      hereof, among the
      Company, the Subsidiaries party thereto and ValueAct SmallCap Master Fund,
      L.P.,
      as
      Collateral
      Agent for the benefit of the Investor (as the same may be amended, supplemented
      or otherwise
      modified from time to time, and together with all other documents, agreements
      and instruments
      executed in connection therewith, the “Guarantee
      and Security Agreement”), and,
      to
      the
      extent such failure is capable of being cured, such failure shall continue
      for
      sixty (60) days after
      notice is given to the Company by the Investor holding more than 25% of the
      aggregate principal
      balance of the Notes then outstanding to comply with such provisions contained
      in the Note
      or
      the Guarantee and Security Agreement; or

     

    (d)
      The
      Company or any Subsidiary shall (i) fail to make any payment when due
under
      the
      terms of any bond, debenture, note or other evidence of indebtedness to be
      paid
      by the Company
      or such Subsidiary (excluding this Note, which default is addressed by clauses
      (a) and (b)
      above, but including any other evidence of indebtedness of the Company or such
      Subsidiary) and
      such
      failure shall continue beyond any period of grace provided with respect thereto,
      or (ii) default
      in the observance or performance of any other agreement, term or condition
      contained in any such bond, debenture, note or other evidence of indebtedness,
      and the effect of such failure or
      default is to cause, or permit the holder thereof to cause, indebtedness of
      the
      Company and the Subsidiaries
      in an aggregate amount of One Million Dollars ($1,000,000) or more to become
      due
prior
      to
      its stated date of maturity; or

     

    (e)
      An
      involuntary proceeding shall be commenced or an involuntary petition shall
      be
filed
      seeking (i) liquidation, reorganization or other relief in respect of the
      Company or any Subsidiary
      or its debts, or of a substantial part of its assets, under any federal, state
      or foreign bankruptcy,
      insolvency, receivership or similar law now or hereafter in effect or (ii)
      the
appointment
      of a receiver, trustee, custodian, sequestrator, conservator or similar official
      for the Company
      or any Subsidiary or for a substantial part of the Company's or such
      Subsidiary’s
assets,
      and, in any such case, such proceeding or petition shall continue undismissed
      for 60 days or
      an
      order or decree approving or ordering any of the foregoing shall be entered;
      or

    

    (f)
      The
      Company or any Subsidiary shall (i) voluntarily commence any proceeding
or
      file
      any petition seeking liquidation, reorganization or other relief under any
      federal, state or foreign
      bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
      (ii) consent
      to the institution of, or fail to contest in a timely and appropriate manner,
      any proceeding or
      petition described in clause (e) of this Section, (iii) apply for or consent
      to
      the appointment of a
      receiver, trustee, custodian, sequestrator, conservator or similar official
      for
      the Company or any Subsidiary
      or for a substantial part of the Company’s or such
      Subsidiary’s
      assets, (iv) file an answer
      admitting the material allegations of a petition filed against it in any such
      proceeding, (v) make
      a
      general assignment for the benefit of creditors or (vi) take any action for
      the
      purpose of effecting
      any of the foregoing; or

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g)
      One
      or
      more judgments for the payment of money in an amount in excess of Five
Million
      Dollars ($5,000,000) in the aggregate, outstanding at any one time, shall be
      rendered against
      the Company and the Subsidiaries and the same shall remain undischarged for
      a
      period of sixty
      (60) days during which execution shall not be effectively stayed, or any
      judgment, writ, assessment,
      warrant of attachment, or execution or similar process shall be issued or levied
      against
      a
      substantial part of the property of the Company or any Subsidiary and such
      judgment, writ,
      or
      similar process shall not be released, stayed, vacated or otherwise dismissed
      within sixty (60)
      days
      after issue or levy; or

    

    (h)
      Any
      Note
      or the Guarantee and Security Agreement shall be asserted in writing
by
      the
      Company or any Subsidiary not to be in full force and effect, or the Company
      or
      any Subsidiary
      shall disavow any of its obligations thereunder;

    

    (i)
      Any
      Lien
      purported to be created under the Guarantee and Security Agreement shall
      be
      asserted by the Company or any Subsidiary not to be, a valid and perfected
      Lien
      on any Collateral,
      with the priority required by the Guarantee and Security Agreement;
      or

    

    (j)
      The
      Company shall have failed to make filings within sixty (60) days of the date
      hereof with the United States Patent and Trademark Office in respect of the
      security interests granted
      in the Company’s Trademarks
      (as
      defined in the Guarantee and Security Agreement) to the
      Investor under the Guarantee and Security Agreement; or

    

    (k) Any
      Event
      of Default under and as defined in the Guarantee and Security Agreement
      shall have occurred.

     

    Section
      4. Rights
      Of Investor Upon Default.

    

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

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)
      Upon
      the
      occurrence of an event specified in Section 3 that with the giving of
notice
      or
      passage of time would be an Event of Default, the Company may assign the right
      to one or more of its then existing shareholders, to purchase the Notes from
      the
      Investor and acquire all, but
      not
      less than all, of such Investor’s right,
      title and
      interest herein at a price equal to 100% of the
      outstanding principal amount under this Note plus all accrued and unpaid
      interest on such principal
      amount to, but excluding, the date of such purchase plus any other amounts
      due
hereunder.
      The Company may assign its right to repurchase the Notes by giving the Investor
      written
      notice five business days before the specified purchase date. In any event
      the
      purchase date
      may
      take place after the occurrence of an Event of Default without the Investor's
      prior written
      consent.

    

    Section
      5. Affirmative
      Covenants.

    

    Until
      all
      principal and interest and any other amounts due and payable under this Note
      have
      been
      paid in full in cash, the Company shall, and shall cause each Subsidiary
      to:

    

    (a)
      promptly
      upon the Company's receipt of the proceeds of issuance of the Note, pay
in
      full
      the Indebtedness existing as of the date hereof listed on Exhibit A
      hereto;

    

    (b)
      make,
      within sixty (60) days of the date hereof, filings with the United States
Copyright
      Office in respect of the security interests granted in the Company’s Copyrights
      (as defined
      in the Guarantee and Security Agreement) to the Investor under the Guarantee
      and
Security
      Agreement; provided, that such period shall be extended to the extent required
      by the United
      States Copyright Office in connection with the recordation of the security
      interest granted in
      the
      Company’s Copyrights; provided, further, that no filings shall be required to be
      made by the
      Company or any Subsidiary in respect of the Exclusive Distribution Agreement
      dated October
      30, 2000 between Vivid Interactive, Inc. and WAAT Corporation, Inc. recorded
      with the United
      States Copyright Office on February 8, 2001;

    

    (c)
      provide
      written notice to the Investor promptly upon becoming aware of: (i) the
      occurrence of any Event of Default, or any event which with the giving of notice
      or passage of time, or both, would constitute an Event of Default, hereunder;
      (ii) the occurrence of each and every event which would be an event of default
      (or an event which with the giving of notice or lapse of time would be an event
      of default) under any indebtedness for borrowed money, such notice
      to
      include the names and addresses of the holders of such indebtedness and the
      amount thereof;
      and (iii) any loss or damage to any Collateral (as defined in the Guarantee
      and
      Security Agreement)
      in excess of $500,000;

    

    (d)
      do
      or
      cause to be done all things necessary to preserve, renew and keep in full
force
      and
      effect its legal existence and the rights, licenses, permits, privileges and
      franchises material
      to the conduct of its business; and

    

    (e)
      maintain,
      with financially sound and reputable insurance companies, adequate insurance
      for its insurable properties, all to such extent and against such risks,
      including fire, casualty,
      fidelity, business interruption and other risks insured against by extended
      coverage, as is
      customary with companies in the same or similar businesses operating in the same
      or similar locations;
      and

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    The
      Company shall maintain a Consolidated EBITDA (as defined below) for any period
      of
      four
      consecutive fiscal quarters (the “Reference
      Period”) commencing
      with the Reference Period
      ending on March 31, 2008 of greater than negative $8,500,000. The Company shall
      calculate
      the Company's Consolidated EBITDA with respect to each fiscal month within
      75
      days of
      the
      end of such month and provide Investor the necessary information to validate
      such calculation.

     

    As
      used
      herein “Consolidated
      EBITDA” shall
      mean, with respect to the Company, for any
      period, the Consolidated Net Income of the Company for such period adjusted
      to
      add thereto (to
      the
      extent deducted from the net revenues in determining consolidated net income),
      without duplication,
      the sum of:

    

    (a) consolidated
      income tax expense;

     

    (b) consolidated
      depreciation and amortization expense;

     

    (c) Consolidated
      Fixed Charges;

    

    (d)
      non-cash
      charges relating to employee benefit or other management compensation
plans
      of
      the Company or any of its Subsidiaries or any non-cash compensation charge
      arising from
      any
      grant of stock, stock options or other equity-based awards of the Company or
      any
      of its Subsidiaries
      (excluding in each case any non-cash charge to the extent that it represents
      an
      accrual of or reserve for cash expenses in any future period or amortization
      of
      a prepaid cash expense
      incurred in a prior period);

    

    (e)
      non-cash
      losses or charges relating to impairment of goodwill and other intangible
assets,
      less the amount of all cash payments made by the Company or any of its
      Subsidiaries during
      such period to the extent such payments relate to non-cash charges that were
      added back in
      determining Consolidated EBITDA for such period or any prior period;
      and

    

    (f)
      non-recurring
      income and expenses that are of a non-operating and non-cash nature
      including but not limited to: diminution in value of an asset, impairment in
      the
      value of goodwill
      or contracts, and changes in accounting policy or accounting methods which
      are
consistent
      with GAAP. Notwithstanding the foregoing none of the above shall include
restructuring
      charges, expenses or write-offs that are expected to result in current or future
      cash outlays;

    

    provided,
      that
      consolidated income tax expense and depreciation and amortization of a
Subsidiary
      that is a less than wholly-owned Subsidiary shall only be added to the extent
      of
      the equity
      interest in such Subsidiary.

    

    As
      used
      herein “Consolidated
      Fixed Charges” shall
      mean, with respect to the Company, for
      any
      period, the aggregate amount (without duplication and determined in each case
      in
accordance
      with GAAP) of:

    

    (a)
      interest
      expensed or capitalized, paid, accrued, or scheduled to be paid or accrued
      of
      the
      Company and Subsidiaries during such period, (x) including (1) original issue
      discount and non-cash interest payments or accruals on any Indebtedness, (2)
      the
      interest portion of all deferred payments obligations, (3) all commissions,
      discounts and other fees and charges owed with respect to bankers' acceptances
      and letters of credit financings and currency and interest swap
      hedging obligations and (4) legal costs and expenses, and advisory fees paid
      in
      connection with
      equity or debt financing activities on behalf of the Company or its
      Subsidiaries, but (y) less any
      interest income, in each case to the extent attributable to such period;
      and

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    (b) the
      amount of dividends accrued or payable (or guaranteed) by the Company or
Subsidiaries
      in respect of capital stock of the Company (other than by
      Subsidiaries).

     

    Additionally,
      for the purpose of calculating Consolidated EBITDA:

     

    (a)
      acquisitions
      that have been made by the Company or any of its Subsidiaries, including
      through mergers or consolidations and including any related financing
      transactions, during
      the four-quarter reference period or subsequent to such reference period and
      on
      or prior to the
      date
      of calculation will be given pro forma effect as if they had occurred on the
      first day of the
      four-quarter reference period and consolidated cash flow for such reference
      period will be calculated
      on a pro forma basis in accordance with Regulation S-X under the Securities
      Act;

     

    (b)
      the
      Consolidated Net Income attributable to discontinued operations, as determined
      in accordance with GAAP, and operations or businesses disposed of on or prior
      to
the
      date
      of calculation, will be excluded; and

     

    (c)
      the
      Consolidated Fixed Charges attributable to discontinued operations of the
Company
      or any of its Subsidiaries, as determined in accordance with GAAP, and
      operations or businesses
      disposed of on or prior to the date of calculation, will be excluded, but only
      to the extent
      that the obligations giving rise to such fixed charges will not be obligations
      of the Company
      or its Subsidiaries following the date of calculation.

     

    As
      used
      herein “Consolidated
      Net Income” shall
      mean, with respect to the Company,
      for any period, the aggregate net income of the Company and wholly owned
Subsidiaries
      and its pro
      rata share
      of
      the net income of its other Subsidiaries for such period, on a
      consolidated basis, determined in accordance with GAAP; provided
      that

    

    (a)
      the
      net
      income (but not loss) of any Person that is not a Subsidiary or that is
accounted
      for by the equity method of accounting will be included only to the extent
      the
      amount of
      dividends or distributions paid in cash to the specified Person or a Subsidiary
      of the Person;

    

    (b)
      the
      net
      income of any Subsidiary will be excluded to the extent, but only to the
extent,
      that the declaration or payment of dividends or similar distributions by that
      Subsidiary of that
      net
      income is not at the time permitted by the operation of the terms of its charter
      or any agreement,
      instrument, judgment, decree, order, statute, rule or governmental regulation
      applicable
      to that Subsidiary; and

    

    (c) the
      cumulative effect of a change in accounting principles will be
      excluded.

     

     Section
      6. Negative
      Covenants.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    Until
      all
      principal and interest and any other amounts due and payable under this Note
      have
      been
      paid in full in cash, the Company shall not, and shall not permit any Subsidiary
      to, without
      the prior written approval of the Investor holding a majority in principal
      amount of the Notes:

    

    (a)
      create,
      incur, assume or permit to exist (i) all indebtedness, whether or not
contingent,
      for borrowed money or for the deferred purchase price of property or services,
      (ii) any
      other
      indebtedness that is evidenced by a note, bond, debenture or similar instrument,
      (iii) all obligations
      under financing leases or letters of credit, (iv) all obligations in respect
      of
acceptances
      issued or created, (v) all liabilities secured by any lien on any property,
      and
      (vi) all guarantee
      obligations, in each case including the principal amount thereof, any accrued
      interest thereon
      and any prepayment premiums or fees or termination fees with respect thereto
      ((i)-(vi)
      together, “Indebtedness”)
      except:

    

    (i) Indebtedness
      with respect to trade accounts of the Company or any Subsidiary
      arising in the ordinary course of business,

    

    (ii) Indebtedness
      of any Subsidiary in favor of the Company or another Subsidiary,

    

    (iii) Indebtedness
      under the Notes,

    

    (iv)
      Indebtedness
      in an amount less than $500,000 per incurrence; provided however,
      that the aggregate amount of indebtedness that can be incurred pursuant to
      this
Section
      6(a)(iv) shall not exceed $3,000,000 and all such Indebtedness shall be
subordinated
      in right of payment to the Notes and shall have an average weighted maturity
      after the Maturity Date,

    

    (v)
      Indebtedness in connection with a receivables facility not in excess of the
      lesser of (x) $5,000,000 or (y) 85% of the Net Receivable Balance (as defined
      in
      the Guarantee and Security Agreement) at any point in time, which Indebtedness
      shall rank pari passu in right of payment to the Notes (the “Receivables
      Facility”),

    

    (vi) Indebtedness
      in favor of VAC relating to an acquisition of another entity by
      the
      Company,

    

    (vii)
      Indebtedness incurred in connection with equipment leases entered into in
the
      ordinary course of business subsequent to the date hereof not exceeding $250,000
      in the
      aggregate, and

    

    (viii)
      Indebtedness
      existing as of the date hereof listed on Exhibit B hereto;

    

    (b)
      create,
      incur, assume or suffer to exist any mortgage, pledge, security interest,
assignment,
      lien (statutory or other), claim, encumbrance, license or sublicense or security
      interest
      (collectively, a “Lien”)
      in
      or
      upon any of its assets, except:

    

    (i) Liens
      existing on July 30, 2007,

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (ii) Liens
      in
      favor of the Company or any Subsidiaries,

     

    (iii) Liens
      for
      taxes, assessments or similar charges incurred in the ordinary course
      of
      business that are not yet due and payable,

     

    (iv) Liens
      created pursuant to the Guarantee and Security Agreement,

     

    (v)
      Liens
      created pursuant to the Receivables Facility as follows: (1) Liens on
(x)
      an
      amount of cash not to exceed $1,000,000 which shall be placed in a Deposit
      Account that shall not be commingled with and shall be separate from the Deposit
      Accounts
      in which the Investor has an existing Lien, and (y) all right, title and
      interest in, to
      and
      under all Receivables (the terms “Deposit
      Account” and
      “Receivables”
      shall
      have the
      meanings ascribed to such terms in the Guarantee and Security Agreement) and
      (2)
subject
      to an intercreditor agreement reasonably acceptable to the Collateral Agent
      which shall
      contain customary limitations on the exercise of remedies and pay-over
      provisions, Liens
      on
      assets other than those described in the foregoing clauses (x) and (y) that
      are
junior
      and subordinate in right, priority, operation, effect and all other respects
      to
      all Liens
      on
      such assets in favor of the Collateral Agent securing the Obligations (the
      terms
“Collateral
      Agent” and
      “Obligations”
      shall
      have the meanings ascribed to such terms in the Guarantee and Security
      Agreement),

     

    (vi) Liens
      created to secure indebtedness incurred pursuant to Section 6(a)(vi)
hereof,

    

    (vii)
      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,

    

    (viii)
      Liens
      created in connection with equipment leases pursuant to Section 6(a)(vii),
      and

    

    (ix) licenses
      relating to the Company’s intellectual property granted in the ordinary
      course of business.

    

    (c) create,
      incur, assume or permit to exist any guarantee, directly or indirectly,
except:

    

    (i)
      Indebtedness
      with respect to trade accounts of the Company or any Subsidiary arising in
      the
      ordinary course of business, including, without limitation, guaranteed
      minimum payments required to be made under agreements entered into by the
Company
      or any Subsidiary in the ordinary course of business, consistent with current
      practice,

     

    
      
        (ii)
          Indebtedness
          under the Notes, and

         

      

    

    
      
        (iii)Indebtedness
          incurred pursuant to Section 6(a)(v);

         

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

      

    

    (d) change
      to
      any material extent the principal type of business conducted by it on
July
      30,
      2007;

     

    (e)
      excluding
      (x) the transactions with Affiliates as of the date hereof and as set forth
      on
      Exhibit C hereto (each, an “Existing
      Affiliate Transaction”) and
      (y)
      transactions between or among
      the
      Company and its Subsidiaries, enter into any transaction, including, without
      limitation,
      the purchase, sale, or exchange of property or the rendering of any service,
      with any Affiliate
      (each, an “Affiliate
      Transaction”),
      unless

     

    (i)
      the
      Affiliate Transaction is in the ordinary course of and pursuant to the
      reasonable requirements of the Company’s or such Subsidiary’s business and upon
      fair and reasonable terms no less favorable to the Company or such Subsidiary
      than would obtain
      in
      a comparable arm’s length transaction with a Person not an Affiliate;
      and

    

    (A)
      if
      the Affiliate Transaction or series of related Affiliate Transactions
      involves aggregate consideration less than or equal to $2,000,000, the
      Company shall deliver to the Investor a resolution of the Board of Directors
      of
the
      Company set forth in an officers' certificate certifying that such Affiliate
      Transaction
      complies with this covenant and that such Affiliate Transaction has been
      approved by a majority of the disinterested members of the Board of Directors
      of the Company; and

    

    (B)
      if
      the
      Affiliate Transaction or series of related Affiliate Transactions
      involves aggregate consideration greater than $2,000,000, the Company
      shall either deliver to the Investor an opinion as to the fairness to the
Company
      of such Affiliate Transaction from financial point of view issued by an
accounting,
      appraisal or investment banking firm of national standing or shall receive
      the Investor's affirmative written consent.

    

    (f)
      declare
      any dividends on any shares of any class of its capital stock or membership
      interests, or apply any of its property or assets to the purchase, redemption
      or
      other retirement
      of, or set apart any sum for the payment of any dividends on, or for the
      purchase, redemption
      or other retirement of, or make any other distribution by reduction of capital
      or otherwise in respect of, any shares of any class of its capital stock or
      membership interests; provided,
      however, any Subsidiary wholly owned by the Company may pay dividends directly
      to the
      Company;

    

    (g) issue
      or
      sell any shares, or rights to acquire any shares, of preferred stock,
whether
      hereafter designated, of any Subsidiary;

    

    (h) sell
      or
      transfer any of the Company’s technology or intellectual property other
than
      licenses in the ordinary course of business;

    

    (i)
      purchase
      or acquire the obligations or stock of, or any other interest in, or make
any
      loan
      or advance or any other investment in any Person (other than a Person that
      is
      directly or indirectly
      100% owned by the Company or as a result of such purchase, acquisition, loan,
      advance
      or investment will be directly or indirectly 100% owned by the Company),
      except:

    (i) direct
      obligations issued or guaranteed by the United States of America with
      a
      maturity not exceeding two years,

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (ii) commercial
      paper rated at least A-2 or the equivalent thereof by S&P or at least P-2 or
      the equivalent thereof by Moody’s with a maturity not exceeding two
      years,

     

    (iii)
      money
      market accounts or certificates of deposit with a maturity not exceeding
      two years issued by a commercial bank having a combined capital and surplus
      of
      at
      least $100,000,000, chartered under the laws of the United States or one of
      the
      states thereof
      and a member of the Federal Reserve System,

     

    (iv) loans
      or
      advances made in the ordinary course of business to employees or directors,
      and

     

    (v)
      payments
      in connection with the retirement of up to $3,000,000 in the aggregate
      of indebtedness of the Company existing on July 30, 2007 incurred pursuant
      to
Section
      6(a)(iv);

    

    (j)
      create
      or
      acquire any new Subsidiary, unless (A) (i) such Subsidiary, if required
under
      the
      terms of the Guarantee and Security Agreement, promptly, and in no event later
      than five
      Business Days, becomes a party to the Guarantee and Security Agreement in the
      manner provided therein and complies with all of the terms, provisions and
      requirements thereof, including,
      without limitation, taking such actions to create and perfect Liens on such
      Subsidiary’s assets, and (ii) the Investor shall have received an opinion of
      counsel of such Subsidiary
      containing such opinions that are reasonably acceptable to the Investor and
      that
      are materially identical in substance to the opinions received on the date
      hereof with respect to the Subsidiaries entering into the Guarantee and Security
      Agreement on the date hereof or (B) if such
      Subsidiary is a foreign Subsidiary and 65% of such Subsidiary's capital stock
      is
      pledged to the
      Investor under the Guarantee and Security Agreement;

     

    (k) enter
      into any sale and leaseback transaction;

    

    (1)
      merge
      with or into or consolidate with any other Person unless the holders of capital
      stock of the Company immediately prior to such transaction are entitled to
      exercise, directly
      or indirectly, 50% or more of the voting power of all shares of capital stock
      entitled to vote generally in the election of directors of the continuing or
      surviving corporation, or sell, lease,
      or
      otherwise dispose of all or substantially all of its properties or
      assets;

    

    (m)
      enter
      into or suffer to exist or become effective any consensual encumbrance or
restriction
      on the ability of any Subsidiary of the Company to (i) make any dividend
      payments in respect
      of any capital stock of such Subsidiary held by the Company, (ii) repay or
      prepay any indebtedness
      owed to or by the Company or any other Subsidiary of the Company, (iii) transfer
      any
      of
      its assets to the Company or any other Subsidiary of the Company, except for
      such restrictions existing under or by reason of (x) this Note or the Guarantee
      and Security Agreement,
      (y) the Receivables Facility or (z) customary restrictions on the assignment
      of
agreements,
      leases and licenses entered into in the ordinary course of
      business;

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (n)
      knowingly
      take any action that could reasonably be likely to result in (i) the
approval
      of a plan relating to the liquidation or dissolution of the Company by its
      stockholders or (ii)
      any
      event specified in Section 3(e) or Section 3(f) hereof; and

    

    (o)
      permit
      the Subsidiaries that are not party to the Guarantee and Security Agreement
      to have assets in an aggregate amount greater than $250,000 individually or
      $1,000,000
      in the aggregate.

     

    Section
      6A. Company's
      Issuance of Securities.

    

    The
      Investor agrees that the Company shall not be prohibited from, nor be deemed
      in
breach
      of
      the provisions of any Transaction Document due to, issuing any equity
      security.

     

    Section
      7. Defenses.

    

    The
      obligations of the Company under this Note shall not be subject to reduction,
      limitation,
      impairment, termination, defense, set-off, counterclaim or recoupment for any
      reason.

     

    Section
      8. Guarantee
      and Security Agreement.

    

    This
      Note
      is a senior secured obligation of the Company. The Company’s obligations under
      this Note are (i) guaranteed by certain of its Subsidiaries, and (ii) secured
      by
      a security interest
      in substantially all of the assets of the Company and such Subsidiaries, in
      each
      case pursuant
      to the terms and provisions of the Guarantee and Security Agreement. This Note
      is subject
      to the terms and provisions of the Guarantee and Security Agreement, and the
      Investor, by
      its
      acceptance of this Note, hereby acknowledges and agrees to such terms and
      provisions.

     

    Section
      9. Transfer
      of Note; Lost or Stolen Note.

    

    (a)
      The
      Investor may sell, transfer or otherwise dispose of all or any part of this
      Note
(including
      without limitation pursuant to a pledge) to any Person or entity as long as
      such
      sale, transfer
      or disposition is in accordance with the provisions of the Securities Purchase
      Agreement. From
      and
      after the date of any such sale, transfer or disposition, the transferee hereof
      shall be deemed
      to
      be the holder of a Note in the principal amount acquired by such transferee,
      and
      the Company
      shall, as promptly as practicable, issue and deliver to such transferee a new
      Note identical
      in all respects to this Note, in the name of such transferee and, if such
      transferee acquires
      less than the entire principal amount of this Note, the Company shall
contemporaneously
      issue to the Investor a new Note identical in all respects to this Note,
representing
      the outstanding balance of this Note. The Company shall be entitled to treat
      the
original
      Investor as the holder of this entire Note unless and until it receives written
      notice of the sale,
      transfer or disposition hereof.

    

    (b)
      Upon
      receipt by the Company of evidence of the loss, theft, destruction or
mutilation
      of this Note, and (in the case of loss, theft or destruction) of indemnity
      or
      security reasonably
      satisfactory to the Company, and upon surrender and cancellation of the Note,
      if
      mutilated, the Company shall execute and deliver to the Investor a new Note
      identical in all respects
      to this Note.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Section
      10. Attorneys’
      and Collection Fees.

     

    Should
      the indebtedness evidenced by this Note or any part hereof be collected at
      law
      or in equity or in bankruptcy, receivership or other court proceedings, the
      Company agrees to pay, in
      addition to the principal and interest due and payable hereon, all costs of
      collection, including reasonable
      attorneys’ fees and expenses, incurred by the Investor or its agent in
      collecting or enforcing
      this Note.

    

    Section
      11. Indemnification

     

    (a)
      The
      Company shall indemnify the Investor, and any other Person directly or
indirectly
      controlling or controlled by or under direct or indirect common control with
      such Investor
      (each an “Affiliate”
      of
      the
      Investor) (each such Person being called an “Indemnitee”)
      against,
      and hold each Indemnitee harmless from, any and all losses, claims, damages,
      liabilities and
      related expenses, including the fees, charges, disbursements of any counsel
      for
      any Indemnitee,
      incurred by or asserted against any Indemnitee by a third party arising out
      of,
      in connection
      with, or as a result of (i) the execution or delivery of this Note, the
      Securities Purchase
      Agreement, the Guarantee and Security Agreement or any agreement or instrument
      contemplated hereby or thereby, the performance by the parties hereto of their
      respective obligations
      hereunder or the consummation of or the use of the proceeds therefrom, (ii)
      the
      breach by the Company or any Subsidiary of any representation, warranty,
      covenant or agreement contained herein, in the Securities Purchase Agreement
      or
      in the Guarantee and Security
      Agreement, or (iii) any actual or prospective claim, litigation, investigation
      or proceeding
      relating to any of the foregoing, whether based on contract, tort or any other
      theory and regardless of whether any Indemnitee is a party thereto; provided
      that such indemnity shall not,
      as
      to any Indemnitee, be available to the extent that such losses, claims, damages,
      liabilities or
      related expenses are determined by judgment of a court of competent jurisdiction
      to have primarily
      resulted from the gross negligence or willful misconduct of such
      Indemnitee.

     

    (b)
      To
      the
      extent permitted by applicable law, the Company shall not assert, and
hereby
      waives, any claim against any Indemnitee, on any theory of liability, for
      special, indirect, consequential
      or punitive damages arising out of, in connection with, or as a result of,
      this
      Note, the Securities Purchase Agreement, the Guarantee and Security Agreement
      or
      any agreement or instrument contemplated hereby or thereby, or the use of the
      proceeds thereof, other than claims predicated
      upon the gross negligence or willful misconduct of such Indemnitee.

     

    Section
      12. Waivers.

    

    (a)
      The
      Company hereby waives presentment, demand for payment, notice of dishonor,
      notice of protest and all other notices or demands in connection with the
      delivery, acceptance,
      performance or default of this Note. No delay by the Investor in exercising
      any
power
      or
      right hereunder shall operate as a waiver of any power or right, nor shall
      any
      single or partial
      exercise of any power or right preclude other or further exercise thereof,
      or
      the exercise thereof,
      or the exercise of any other power or right hereunder or otherwise; and no
      waiver whatsoever
      or modification of the terms hereof shall be valid unless set forth in writing
      by the Investor
      and then only to the extent set forth therein.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (b)
      The
      Company covenants (to the extent that it may lawfully do so) that it shall
      not
at
      any
      time insist upon, plead, or in any manner whatsoever claim or take the benefit
      or advantage
      of, any usury law wherever enacted, now or at any time hereafter in force,
      that
      may affect
      the covenants or the performance of this Note; and the Company (to the extent
      that it may lawfully do so) hereby expressly waives all benefit or advantage
      of
      any such law, and covenants that
      it
      shall not, by resort to any such law, hinder, delay or impede the execution
      of
      any power herein
      granted to the Investor, but shall suffer and permit the execution of every
      such
      power as though
      no
      such law has been enacted.

    

    Section
      13. Amendments.

     

    No
      amendment, modification or other change to, or waiver of any provision of,
      this
      Note may
      be
      made unless such amendment, modification or change is set forth in writing
      and
      is signed by
      the
      Company and Investor holding more than 75% of the aggregate principal balance
      of
      the Notes.

     

    Section
      14. Governing
      Law; Jurisdiction; Consent to Service of Process; Waiver of Jury
      Trial.

     

    (a)
      THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
      GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
      LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
      LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b).

     

    (b)
      THE
      COMPANY 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 LENDER MAY OTHERWISE HAVE TO
      BRING
      ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST
      THE COMPANY OR ITS PROPERTIES
      IN
THE
      COURTS OF ANY JURISDICTION.

     

    (c)
      THE
      COMPANY HEREBY
      IRREVOCABLY
      AND UNCONDITIONALLY
      WAIVES,
      TO THE FULLEST EXTENT IT MAY LEGALLY
      AND
      EFFECTIVELY DO SO, ANY
      OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
      OF
      ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
      THIS
      NOTE, THE SECURITIES
      PURCHASE AGREEMENT OR THE GUARANTEE AND SECURITY
      AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.
      EACH OF THE PARTIES HERETO
      HEREBY IRREVOCABLY
      WAIVES, TO THE
      FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
      FORUM
      TO
      THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (d)
      EACH
      PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE
      OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 16.
      NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT
      TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
      BY
      LAW.

     

    (e)
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
      BY
      APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
      PROCEEDING
      DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
      TO THIS NOTE,
      THE
      SECURITIES
      PURCHASE AGREEMENT, THE
      GUARANTEE
      AND
      SECURITY
      AGREEMENT
      OR
      THE
      TRANSACTIONS
      CONTEMPLATED
      HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
      TORT
      OR
      ANY
      OTHER THEORY). EACH
      PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
      AGENT
      OR
      ATTORNEY
      OF
      ANY
      OTHER
      PARTY
      HAS
      REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
      IN
      THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
      (B)
      ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
      HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
      MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     

    Section
      15. Successors
      and Assigns.

    

    The
      terms
      and conditions of this Note shall inure to the benefit of and be binding upon
      the
      respective successors (whether by merger or otherwise) and
      permitted assigns of the Company
      and the Investor. The Company may not assign its rights or obligations under
      this Note.

     

    Section
      16. Notices.

    

    Whenever
      notice is required to be given under this Note, unless otherwise
      provided herein,
      such notice shall be delivered in accordance with Section 9.4 of the Securities
      Purchase
      Agreement.

    

    Section
      17. Entire
      Agreement.

    

    The
      Securities Purchase Agreement, the Notes, the Guarantee and Security Agreement
      and the other Transaction Documents constitute the full and entire understanding
      and agreement between
      the parties with regard to the subjects hereto and thereof.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Section
      18. Headings.

     

    The
      headings used in this Note are used for convenience only and are not to be
      considered in construing or interpreting this Note.

    

    Section
      19. Severability.

     

    In
      case
      any one or more of the provisions of this Note shall be held invalid, illegal
      or
      unenforceable,
      in any respect for any reason, the validity, legality and enforceability of
      any
such
      provision in every other respect and of the remaining provisions shall not
      in
      any way be affected or
      impaired thereby, it being intended that all of the provisions hereof shall
      be
      enforceable to
      the
      fullest extent permitted by law.

    

    [Signature
      Page Follows]

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Senior Secured Note to be duly
      executed
      by its duly authorized officer as of the date indicated below.

    

    Date:
      July 30, 2007

     

    
      	 	 	 
	 	TWISTBOX ENTERTAINMENT,
              INC.
	 
 	 
 	 
 
	
            	By:	/s/
              Ian
              Aaron
	 	
              

              Name:
                IAN AARON

              Title:
                PRES.
                / CEO

            

    

     

    Note
      No.
      1

    Amount:
      $16,500,000.000

    Investor
      Name: ValueAct SmallCap Master Fund, L.P.

    Address:
      435 Pacific Avenue, 4th Floor

    San
      Francisco, CA 94133 

    Telephone:
      (415) 249-1237

    Facsimile:
      (415) 249-1242

     

    
      
        
        

      

      
        17

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