Document:

ValueAct SmallCap Master Fund,
L.P.

    435
Pacific Avenue, Fourth Floor

    San
Francisco, CA 94133

     

    June 21,
2010

     

    NeuMedia,
Inc.

    2000
Avenue of the Stars

    Suite
410

    Los
Angeles, CA  90067

     

    Trinad
Management, LLC

    2000
Avenue of the Stars

    Suite
410

    Los
Angeles, CA  90067

     

    Attention:  Rob
Ellin

     

    Rob
Ellin

    2000
Avenue of the Stars

    Suite
410

    Los
Angeles, CA  90067

     

    Re:           NeuMedia
Restructuring

     

    Gentlemen:

     

    Reference
is made to that certain Letter Agreement, dated as of the date hereof (the
“Restructuring
Agreement”), between ValueAct SmallCap Master Fund, L.P. (“VAC”), NeuMedia, Inc.,
formerly known as Mandalay Media, Inc. (“NeuMedia”), Jonathan
Cresswell, Nathaniel MacLeitch  and the other parties
thereto.  Capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to such terms by the Restructuring
Agreement.

     

    In partial consideration of the direct
and/or indirect benefits received by each party hereto pursuant to the
Restructuring Agreement and as part of the transactions contemplated thereby,
the parties hereto agree as follows:

     

    (a)           If
(i) an Insolvency Event (as defined below) occurs, (ii) NeuMedia is in material
default under the Amended and Restated Guaranty, which default has not been
cured after any applicable cure period, or (iii) Twistbox Entertainment, Inc. is
in material default under the Amended VAC Note, which default has not been cured
after any applicable cure period, then Rob Ellin will immediately resign from
all positions as an officer or director of NeuMedia and any of its subsidiaries
and shall not thereafter serve as an officer or director of NeuMedia or any of
its subsidiaries until such time as the Amended VAC Note has been repaid in
full.

     

    
      
         

      

      
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    (b)           Until
such time as the Amended VAC Note has been repaid in cash in full, Trinad
Management, LLC (“Trinad”) shall not elect to
treat (nor accept any liquidation preference or other payment in connection
with) any of the following transactions as a dissolution or winding up of
NeuMedia for purposes of Section 5 of the Certificate of Incorporation of
NeuMedia (and NeuMedia will not pay Trinad any liquidation preference or other
payment in connection with): (i) any conversion of all or any portion of any New
Senior Note into common stock of NeuMedia; (ii) the exercise of any Warrant
Agreement and the issuance of shares of capital stock of NeuMedia in respect of
such exercise; (iii) the issuance of any capital stock or options, rights or
warrants to purchase capital stock of NeuMedia to Rob Ellin, Trinad, Peter
Guber, Paul Schaeffer or any of their respective affiliates.

     

    (c)           NeuMedia
shall use best efforts to obtain all necessary consents and shareholder
approvals, including recommending an amendment to the Certificate of
Incorporation of NeuMedia, to, no later than three months following the date
hereof, amend Section 5 of the Certificate of Incorporation of NeuMedia to
provide that each of the transactions described under paragraph (b) shall not be
treated as a dissolution or winding up of NeuMedia for purposes thereof the
(“Charter
Amendment”).  Trinad and Rob Ellin shall vote or cause to be
voted all shares of capital stock of NeuMedia held by them at such time in favor
of such an amendment.

     

    (d)           Until
such time as the Amended VAC Note has been repaid in cash in full, none of Rob
Ellin, Trinad nor NeuMedia shall recommend or approve any amendment,
modification or waiver to the Certificate of Incorporation of NeuMedia if such
amendment, modification or waiver would result in (i) any change in the economic
or other rights, preferences or privileges of the Series A Preferred Stock, par
value $0.0001 per share, of NeuMedia (the “Series A Preferred Stock”) or
(ii) the creation or issuance of any capital stock of NeuMedia other than common
stock or preferred stock that has no cash dividend or payment required to be
made, including any change of control, liquidation preference or similar
payment.

     

    (e)           Until
such time as the Amended VAC Note has been repaid in cash in full, NeuMedia
shall not issue any additional shares of Series A Preferred Stock.

     

    (f)           Until
the earlier of the effective date of the Charter Amendment and such time as the
Amended VAC Note has been repaid in cash in full, Trinad shall not sell,
encumber, mortgage, hypothecate, assign, pledge, transfer or otherwise dispose
of, directly or indirectly, any shares of Series A Preferred Stock held by
Trinad on the date hereof; provided, however, this shall not prohibit conversion
of the Series A Preferred Stock into common stock of NeuMedia.

     

    “Insolvency Event” means any
event whereby NeuMedia or any of its subsidiaries shall be involved in financial
difficulties as evidenced:

     

    (i)           by
its commencement of a voluntary case under Title 11 of the United States Code as
from time to time in effect, or by its authorizing, by appropriate proceedings
of its Board of Directors or other governing body, the commencement of such a
voluntary case;

     

    (ii)          by
its filing an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material allegations of any
such petition;

     

    (iii)         by
the entry of an order for relief in any involuntary case commenced under said
Title 11;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    (iv)        
by its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief;

     

    (v)          by
the entry of an order by a court of competent jurisdiction (i) by finding it to
be bankrupt or insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its creditors,
or (iii) assuming custody of, or appointing a receiver or other custodian for
all or a substantial part of its property and such order shall not be vacated or
stayed on appeal or otherwise stayed within 60 days; or

     

    (vi)         by
its making an assignment for the benefit of, or entering into a composition
with, its creditors, or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial part of its
property.

     

    Each party hereto hereby represents and
warrants, severally and not jointly and solely as to itself and not as to any
other party hereto, to each of the other parties hereto that (i) such party
hereto has all requisite power and authority to execute and deliver this Letter
Agreement and to perform its obligations hereunder and (ii) when this Letter
Agreement is executed and delivered by such party, this Letter Agreement shall
constitute the legal, valid and binding obligations of such party enforceable in
accordance with their terms.

     

    Trinad hereby represents and warrants
that Trinad is the sole beneficiary of and holds, free and clear of any lien,
100,000 shares of Series A Preferred Stock, which constitute all of the issued
and outstanding shares of Series A Preferred Stock.

     

    This Letter Agreement and the
Restructuring Agreement contain the entire understandings of the parties with
respect to the subject matter of each such provision and supersede any prior
agreement between the parties.  This Letter Agreement may be executed
in any number of counterparts, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.

     

    This Letter Agreement shall be governed
by and construed in accordance with the internal, substantive laws of the State
of Delaware.

     

    The parties hereto agree that any
suit,  action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Letter Agreement
or the transactions contemplated hereby shall be brought exclusively in any
Delaware State court in the City of Wilmington, or in the United States District
Court for the District of Delaware, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.  Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such
court.  Without limiting the foregoing, each party agrees that service
of any process, summons, notice or document by U.S. registered mail to its
address set forth on the signature page hereto shall be deemed effective service
of process for any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Letter
Agreement or the transactions contemplated hereby brought against such party in
any such court as set forth in this paragraph.

     

    
      
         

      

      
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    Nothing in this Letter Agreement shall
confer any rights, remedies or claims upon any person not a party or a permitted
assignee of a party to this Letter Agreement

     

    The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Letter Agreement were not performed in accordance with their specific terms or
were otherwise breached.  It is accordingly agreed that the parties
hereto shall be entitled to seek an injunction or injunctions to prevent
breaches of this Letter Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.  Each party hereto agrees not to
question or otherwise challenge the assertion or enforceability of this remedy,
in and of itself, as described in this paragraph by any other party
hereto.

     

    [Remainder
of page intentionally left blank.]

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    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.

     

    
      
        
          	
                  Very
      truly yours,

                
	 
      
	
                  VALUEACT
      SMALLCAP MASTER FUND, L.P.

                
	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                
	
                  Address:

                	
                  435
      Pacific Avenue, Fourth Floor

                
	 
      	
                  San
      Francisco, CA 94133

                

        

      

    

     

    This
Letter 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

            

    

    

    TRINAD
MANAGEMENT, LLC

    

    
      
        
          	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

    
      	
              Address: 
      

            	
              2000
      Avenue of the Stars

            
	 
      	
              Suite
      410

            
	 
      	
              Los
      Angeles, CA  90067

            

    

    

    
      
        	
                 

              
	
                Rob
      Ellin

              

      

    

    
      	
              Address: 
      

            	
              2000
      Avenue of the Stars

            
	 
      	
              Suite
      410

            
	 
      	
              Los
      Angeles, CA  90067

            

    

     

    Signature
Page to Side LetterEXECUTION
COPY

    

    MUTUAL RELEASE
AGREEMENT

    

    MUTUAL RELEASE (this “Mutual Release”),
dated as of June 21, 2010 and effective as of the Closing (as defined under the
Letter Agreement (as defined below)), among ValueAct SmallCap Master Fund, L.P.,
a limited partnership organized under the laws of the British Virgin Islands
(“VAC”),
Antiphony (Management Holdings) Limited, a private limited company organized
under the laws of England and Wales (“Newco”), Nathaniel
MacLeitch (“MacLeitch”), Jonathan
Cresswell (“Cresswell” and,
together with VAC, Newco and MacLeitch, the “VAC/AMV Founders
Parties”), NeuMedia, Inc., a Delaware corporation (f/k/a Mandalay Media,
Inc.) (“NeuMedia”), Twistbox
Entertainment, Inc., a Delaware corporation (“Twistbox”), each of
Peter Guber, Robert Ellin, Paul Schaeffer, Adi McAbian, Richard Spitz, Ray
Schaaf, Keith McCurdy, Russell Burke and James Lefkowitz (collectively, the
“NeuMedia/AMV
Directors”), and Trinad Management, LLC, a Delaware limited liability
company (“Trinad” and together
with NeuMedia, Twistbox and the NeuMedia/AMV Directors, the “NeuMedia Parties”)
(each a “Party”
and collectively, the “Parties”).

    

    WHEREAS, certain of the VAC/AMV
Founders Parties, NeuMedia, an affiliate of Peter Guber and Trinad have entered
into that certain Letter Agreement, dated as of the date hereof (the “Letter Agreement”);
and

    

    WHEREAS, as part of the transactions
contemplated by the Letter Agreement and the other Transaction Documents, the
Parties wish to release certain known and unknown claims which they may have
against each other.

    

    NOW, THEREFORE, in consideration of the
promises and the representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

    

    1.           Defined
Terms.  Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Letter
Agreement.

     

    2.           Effectiveness.  This
Mutual Release shall become immediately and automatically effective without any
further action by the Parties upon the Closing.  In the event of a
termination of the Letter Agreement pursuant to Section 10 of the Letter
Agreement, this Mutual Release shall be void and of no force and effect ab initio.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    3.           Release by the VAC/AMV
Founders Parties.  In partial consideration of the benefits
received by it/him pursuant to the Letter Agreement, each VAC/AMV Founders
Party, on behalf of itself/himself and each of its/his respective Related
Parties (as defined below) (collectively, the “VAC/AMV Founders Releasing
Parties”) hereby releases, acquits and forever discharge the NeuMedia
Parties and their respective Related Parties (other than, in the case of
NeuMedia, AMV and its subsidiaries and its and their respective directors,
officers, employees, partners, equityholders, representatives, attorneys,
financial advisors, accountants and other professional advisors and agents and
each of its and their respective successors and assigns) (collectively, the
“NeuMedia Released
Parties”) from any and all claims, obligations, suits, judgments,
Damages, rights and causes of action whatsoever, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise (“Claims”), based in
whole or in part on any act, omission, transaction or occurrence from the
beginning of time through the Closing arising from or relating to any aspect of
the dealings or relationships between or among any VAC/AMV Founders Releasing
Party, on the one hand, and any NeuMedia Released Party, on the other hand (the
“Released
Matters”); provided, however, that (x) nothing
contained herein shall operate to release any NeuMedia Released Party from any
act or omission that constitutes fraud and (y) the foregoing release shall not
apply to any obligations arising under, in connection with or contemplated by
the Letter Agreement or any other Transaction Document.  “Related Parties”
means, with respect to any Party, such Party’s affiliates and its and their
respective directors, officers, employees, partners, equityholders,
representatives, attorneys, financial advisors, accountants and other
professional advisors and agents and each of its and their respective successors
and assigns.

     

    4.           Release by the NeuMedia
Parties.  In partial consideration of the direct and indirect
benefits received by it/him pursuant to the Letter Agreement, each NeuMedia
Party on behalf of itself/himself and each of its/his respective Related Parties
(collectively, the “NeuMedia Releasing
Parties”) hereby releases, acquits and forever discharge the VAC/AMV
Founders Parties and each of their respective Related Parties (collectively, the
“VAC/AMV Founders
Released Parties”) from any and all Claims based in whole or in part on
any Released Matters; provided, however, that (x) nothing
contained herein shall operate to release any VAC/AMV Founders Released Party
from any act or omission that constitutes fraud and (y) the foregoing release
shall not apply to any obligations arising under, in connection with or
contemplated by the Letter Agreement or any other Transaction
Document.

     

    5.           Unknown
Claims.  The Parties are aware that they may hereafter discover
claims or facts in addition to or different from those the Parties now know or
believe to be true with respect to the matters addressed by this Mutual
Release.  Nevertheless, it is the intention of the VAC/AMV Founders
Parties and the NeuMedia Parties, on behalf of themselves and their respected
Related Parties, to fully, finally and forever settle and release all such
matters, whether known or unknown, suspected or unsuspected, that now exist, may
exist or heretofore have existed.

     

    6.           Letter
Agreement.  Notwithstanding anything in this Mutual Release to
the contrary, nothing herein shall be deemed to release, waive, modify, amend or
otherwise affect the rights, duties, obligations or liabilities of parties to
the Letter Agreement.

     

    7.           Independent
Counsel.  The Parties have consulted with legal counsel prior
to signing this Mutual Release, and execute this Mutual Release voluntarily,
with the intention of fully and finally extinguishing the Released
Matters.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    8.           No Benefit to Third
Parties.  Nothing in this Mutual Release, express or implied,
is intended to confer upon any Person other than the VAC/AMV Founders Released
Parties and the NeuMedia Released Parties (which are express third party
beneficiaries hereof) or their respective successors or permitted assigns, any
right or remedy under or by reason of this Mutual Release.

     

    9.           Further
Assurances.  Subject to the other provisions of this Mutual
Release, the Parties hereto agree to execute, acknowledge and deliver such
further documents, and do all such other acts and things, as may be required by
law or as may be necessary, advisable or convenient to carry out the intent and
purpose of this Mutual Release.

     

    10.         No
Admission.  Nothing contained herein shall be construed as an
admission by any of the Parties of any liability of any kind to any of the other
Parties or to any other Person, all such liability being expressly
denied.

     

    11.         Amendment and
Waiver.  This Mutual Release may not be amended except by an
instrument in writing signed on behalf of each of the Parties.

     

    12.         Governing
Law.  This Mutual Release shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.

     

    13.         Jurisdiction; Service of
Process.  The Parties 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 Mutual Release shall be brought exclusively in federal or
state courts located in Wilmington, Delaware, and each of the Parties
irrevocably submits to the exclusive 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.  The Parties agree that any or all of them may file a copy of
this Section 13 with any court as written evidence of the knowing, voluntary and
bargained agreement among the Parties irrevocably to waive any objections to
jurisdiction, venue or convenience of forum.  Process in any
proceeding referred to in this Section 13 may be served on any Party anywhere in
the world and service via registered U.S. mail (or other equivalent) shall be
deemed sufficient service in any such suit, action or proceeding.

     

    14.         WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS MUTUAL RELEASE.

     

    15.         Headings.  The
section headings, titles and subtitles used in this Mutual Release are solely
for convenience and shall not be used in interpreting this Mutual Release and
shall not be construed in any way to limit, modify or affect the terms of this
Mutual Release.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    16.         Counterparts.  This
Mutual Release may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.  Delivery of an executed counterpart of a
signature page to this Mutual Release by facsimile or PDF shall be effective as
delivery of a manually executed counterpart to this Mutual Release.

     

    17.         Mutual
Drafting.  None of the Parties shall be considered the drafter
of this Mutual Release for the purpose of any statue, case law or rule of
interpretation or construction that would or might cause any provision to be
construed against the drafter.

     

    [SIGNATURE
PAGES FOLLOW]

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Parties have caused this
Mutual Release to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

     

    
      	
              VAC:

            	
              VALUEACT
      SMALLCAP MASTER

              FUND,
      L.P.

            
	 
      	 
      	 
      
	 
      	
              By: 

            	
                

            
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            
	 
      	 
      	 
      
	
              MacLeitch

            	
                

            
	 
      	
              Nathaniel
      MacLeitch

            
	 
      	 
      	 
      
	
              Cresswell:

            	
                

            
	 
      	
              Jonathan
      Cresswell

            
	 
      	 
      	 
      
	
              NeuMedia:

            	
              NEUMEDIA,
      INC.

            
	 
      	 
      
	 
      	
              By:

            	
                

            
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            
	 
      	 
      	 
      
	
              Twistbox:

            	
              TWISTBOX
      ENTERTAINMENT, INC.

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                

            
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            
	 
      	 
      
	
              NeuMedia/AMV
      Directors:

            	
                

            
	 
      	
              Peter
      Guber

            
	 
      	 
      	 
      
	 
      	
                

            
	 
      	
              Robert
      Ellin

            
	 
      	 
      	 
      
	 
      	
                

            
	 
      	
              Paul
      Schaeffer

            

    

    

    Signature
Page to Mutual Release Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                  

              
	 
      	
                Adi
      McAbian

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                Richard
      Spitz

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                Ray
      Schaaf

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                Keith
      McCurdy

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                Russell
      Burke

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                James
      Lefkowitz

              
	 
      	 
      	 
      
	
                Trinad:

              	TRINAD
      MANAGEMENT, LLC
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

    

    Signature
Page to Mutual Release Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
              Newco:

            	
              ANTIPHONY
      (MANAGEMENT

              HOLDINGS)
      LIMITED

            
	 
      	 
      	 
      
	 
      	
              By: 

            	
                

            
	 
      	 
      	
              Name:  Allison
      Bennington

            
	 
      	 
      	
              Title:    Director

            

    

    

    Signature
Page to Mutual Release Agreement

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