Document:

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

     

    ALL
INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBJECT TO THE TERMS OF, THE
SUBORDINATION AGREEMENT, DATED AS OF JUNE 21, 2010, AS THE SAME MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG TRINAD
CAPITAL MASTER FUND, LTD., AS AGENT, VALUEACT SMALLCAP MASTER FUND, L.P., AS
SUBORDINATED CREDITOR, AND EACH OF THE COMPANY AND TWISTBOX ENTERTAINMENT, INC.,
AS OBLIGOR AND ALL OTHER PARTIES THERETO.

     

    $___________

     

    NEUMEDIA,
INC.

     

    SENIOR SECURED CONVERTIBLE NOTE DUE JUNE 21, 2013

     

    
      	
              Section
      1.

            	
              General.

            

    

     

    
      FOR VALUE
RECEIVED, NEUMEDIA, INC., a Delaware corporation (the “Company”), hereby promises to
pay to the order of ___________________ (“Investor”) the principal sum
of _____________________________ ($________________), or such lesser amount as
shall then equal the outstanding principal amount hereof, together with interest
(“Interest”) thereon at
a rate (the “Interest
Rate”) equal to 10.0% per annum from, and including, June 21, 2010 to,
but excluding, June 21, 2013, each computed on the basis of a year of 360 days
comprised of twelve 30 day months.  All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder,
shall be due and payable on the earlier of (i) June 21, 2013 (the “Maturity Date”) or (ii) when
such amounts become due and payable as a result of, and following, an Event of
Default in accordance with Section 3.

       

    

    This Note (the “Note”) shall be prepayable
without penalty, in whole or in part, at any time at the Company’s option at
100% of the principal amount plus accrued but unpaid interest to and including
the date of prepayment.  The Company shall provide written notice to
the Investor at least ten (10) days before any prepayment of this
Note.  Any prepayments will be applied first to any accrued but unpaid
interest and then to unpaid principal.

     

    Unless the context otherwise requires,
an accounting term not otherwise defined has the meaning assigned to it in
accordance with the United States generally accepted accounting principles
(“GAAP”).

     

    Interest on this Note shall accrue
from, and including, the date hereof through and until repayment of the
principal amount of this Note and payment of all Interest in full, and shall be
payable in cash semi-annually in arrears on each January 1 and July 1 that the
Notes are outstanding or, if any such date shall not be a Business Day, on the
next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an “Interest Payment Date”), to
holders of record on each preceding December 15 and June 15 to the applicable
Interest Payment Date, beginning on July 1, 2010, by wire transfer of
immediately available funds to an account at a bank designated in writing by the
Investor on reasonable notice.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

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

     

    Notwithstanding
anything to the contrary set forth herein, until (and including) the Interest
Payment Date occurring on January 1, 2012, the Company may, at its option, in
lieu of making any cash payment to the Investor with respect to the Interest
Payment Dates occurring on or before January 1, 2012, elect that the amount of
any Interest due and payable on such date be added to the principal amount then
due under this Note.  This election by the Company to pay the Interest
by adding the amount of such payment to the principal under this Note is
hereafter referred to as the “PIK Election.”  The
Company shall provide written notice of the PIK Election to the Investor at
least five (5) days before the applicable Interest Payment Date. For the
avoidance of doubt, immediately after each PIK Election, the outstanding
principal amount of this Note shall equal the sum of (i) the outstanding
principal amount of this Note immediately before the PIK Election, and (ii) the
amount of Interest otherwise due and payable on the applicable Interest Payment
Date.

     

    
      	
              Section
      2.

            	
              Repurchase Right Upon
      a Fundamental Change.

            

    

     

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

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              Section
      3. 

            	
              Events of
      Defaults.

            

    

     

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

     

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

     

    (b)           The
Company shall fail to pay any interest owing under this Note when due, and such
failure shall continue for fourteen (14) days; or

     

    (c)           The
Company, Twistbox Entertainment, Inc., a Delaware corporation (a wholly owned
subsidiary of the Company and defined herein as the “Guarantor”) or any Subsidiary
shall fail to observe or perform any other covenant, obligation, condition or
agreement contained in this Note (other than those specified in clauses (a) or
(b) above), the Guarantee and Security Agreement, dated the date hereof, among
the Company, the Guarantor, the Subsidiaries party thereto, Investor and Trinad
Capital Management, LLC (as the same may be amended, supplemented or otherwise
modified from time to time, and together with all other documents, agreements
and instruments executed in connection therewith, the “Guarantee and Security
Agreement”), and, to the extent such failure is capable of being cured,
such failure shall continue for fourteen (14) days after notice is given to the
Company by the Investors holding more than 25% of the aggregate principal
balance of the Notes then outstanding; or

     

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

     

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

     

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

    
      
         

      

      
        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 Guarantor, the Company and the Subsidiaries and
the same shall remain undischarged for a period of sixty (60) days during which
execution shall not be effectively stayed, or any judgment, writ, assessment,
warrant of attachment, or execution or similar process shall be issued or levied
against a substantial part of the property of the Guarantor, the Company or any
Subsidiary and such judgment, writ, or similar process shall not be released,
stayed, vacated or otherwise dismissed within sixty (60) days after issue or
levy; or

     

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

     

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

     

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

     

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

     

    (l)           Guarantor
is in default under the VAC Note (as defined below).

     

    
      	
              Section
      4. 

            	
              Rights Of Investor
      Upon Default.

            

    

     

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Section
5.             Conversion
Rights.  This Note is convertible into capital stock of the
Company (the “Conversion
Shares”) in accordance with the conversion rights specified in Schedule 1 attached
hereto and incorporated herein by this reference.

     

    Section
6.             [Reserved].

     

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

    
 

    (a)          Indebtedness.  Incur,
create, assume or permit to exist any Indebtedness, except

     

    (i)           Indebtedness
under that certain Amended and Restated Senior Subordinated Secured Note, dated
of even date herewith (the “VAC
Note”), made by Guarantor in favor of ValueAct SmallCap Master Fund, L.P.
(“VAC”);

    

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

    

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

    

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

    

    “Indebtedness” means (i) all
indebtedness, whether or not contingent, for borrowed money or for the deferred
purchase price of property or services (but excluding trade accounts payable in
the ordinary course of business not overdue for more than sixty (60) days), (ii)
any other indebtedness that is evidenced by a note, bond, debenture or similar
instrument, (iii) all obligations under financing leases or letters of credit,
(iv) all obligations in respect of acceptances issued or created, (v) all
liabilities secured by any lien on any property, and (vi) all guarantee
obligations, in each case including the principal amount thereof, any accrued
interest thereon and any prepayment premiums or fees or termination fees with
respect thereto.

     

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

     

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

     

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

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

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

    

    For the avoidance of doubt, this
covenant shall not prohibit or restrict any distribution of any cash among or
between the Company, the Guarantor or any direct or indirect wholly-owned
Subsidiaries of the Company or the Guarantor.

    

    (c)         Dividends. Declare or make,
or agree to declare or make, directly or indirectly, any dividends on any Equity
Interests (as defined in the Guarantee and Security Agreement) or apply any of
its property or assets to the purchase, redemption or other retirement of, or
set apart any sum for the payment of any dividends on, or for the purchase,
redemption or other retirement of, or make any other distribution by reduction
of capital or otherwise in respect of, any Equity Interests, except repurchases
of equity incentive grants issued to employees, officers, directors and agents
of the Company and its Subsidiaries in the ordinary course of business, provided
that such repurchases shall not exceed $150,000 in any twelve (12) month
period.

    

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

    

    (e)         Management. Pay any
compensation (including, without limitation, base salary, bonus and benefits),
management fees or other payments of any kind to Rob Ellin and/or Trinad Capital
Management, LLC or any of its affiliates in  the aggregate in any
twelve (12) month period in excess of $360,000 provided however that
the Company may only make cash payments thereon up to $180,000 in any such
twelve (12) month period and any amounts not paid in cash shall be deferred
until the VAC Note is paid in full; provided further that
all or part of the deferred portion may be paid in kind by issuance of Company
common stock on such terms as may be approved by the disinterested directors of
the Company’s Board of Directors (which shall, for such purposes, not include
Rob Ellin, Peter Guber and Paul Schaeffer).

    

    Section
8.             Defenses.

     

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

     

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

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    Section
10.           Attorneys’ and Collection
Fees.

     

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

     

    Section
11.           Indemnification.

     

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

     

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

     

    Section
12.           Waivers.

     

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

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

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

     

    Section
13.           Amendments.

     

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

     

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

     

    (a)         THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA.

     

    (b)         THE
COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF THE STATE OF
CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES’ DISTRICT
COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN CONNECTION WITH THIS NOTE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT IN THE STATE
OF CALIFORNIA OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT INVESTOR MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COMPANY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     

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

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

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

     

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

     

    Section
15.           Successors and
Assigns.

     

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

     

    Section
16.           Notices.

     

    Whenever
notice is required to be given under this Note, unless otherwise provided
herein, such notice shall be delivered in accordance with the Guarantee and
Security Agreement.

     

    Section
17.           Entire
Agreement.

     

    The
Notes, the Guarantee and Security Agreement and the other Secured Transaction
Documents (as defined in the Guarantee and Security Agreement) constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereto and thereof.

     

    Section
18.           Headings.

     

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

     

    Section
19.           Severability.

     

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

     

    [Signature
Page Follows]

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

    Date:  ________,
2010

     

    
      
        	 
      	
                NeuMedia,
      Inc.

              
	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    Existing
Affiliate Transactions

     

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

    

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

    

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
1

    

    CONVERSION
RIGHTS

    

    1.           Conversion.

    

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

    

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

    

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

    

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

    
      
         

      

      
        12GUARANTEE
AND SECURITY AGREEMENT

     

    among

     

    TWISTBOX
ENTERTAINMENT, INC.,

     

    NEUMEDIA,
INC.,

     

    EACH OF
THE SUBSIDIARIES PARTY HERETO,

     

    THE
INVESTORS PARTY HERETO,

     

    and

     

    TRINAD
CAPITAL MANAGEMENT, LLC, as Collateral Agent

     

    Dated as
of June 21, 2010

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

     

    
      
        
          
            
              
                
                  
                    	 	 	
                            Page

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

                          	 
      	
                            2

                          	 
	 
      	 
      	 
      	 
      	 
      	 
	
                            Section 1.1

                          	 
      	
                            General Definitions

                          	 
      	
                            2

                          	 
	
                            Section 1.2

                          	 
      	
                            Other Definitions;
      Interpretation

                          	 
      	
                            10

                          	 
	
                            Section 1.3

                          	 
      	
                            Guarantee

                          	 
      	
                            11

                          	 
	
                            Section 1.4

                          	 
      	
                            Grant of Security

                          	 
      	
                            18

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 2.
      SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF
LIABILITY

                          	 
      	
                            19

                          	 
	 
      	 
      	 
      	 
      	 
      	 
	
                            Section 2.1

                          	 
      	
                            Security for Obligations

                          	 
      	
                            19

                          	 
	
                            Section 2.2

                          	 
      	
                            No Assumption of Liability

                          	 
      	
                            19

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 3.
      REPRESENTATIONS AND WARRANTIES AND COVENANTS

                          	 
      	
                            20

                          	 
	 
      	 
      	 
      	 
      	 
      	 
	
                            Section 3.1

                          	 
      	
                            Generally

                          	 
      	
                            20

                          	 
	
                            Section 3.2

                          	 
      	
                            Equipment and Inventory

                          	 
      	
                            24

                          	 
	
                            Section 3.3

                          	 
      	
                            Receivables

                          	 
      	
                            24

                          	 
	
                            Section 3.4

                          	 
      	
                            Investment Property

                          	 
      	
                            25

                          	 
	
                            Section 3.5

                          	 
      	
                            Letter of Credit Rights

                          	 
      	
                            28

                          	 
	
                            Section 3.6

                          	 
      	
                            Intellectual Property
      Collateral

                          	 
      	
                            28

                          	 
	
                            Section 3.7

                          	 
      	
                            Commercial Tort Claims

                          	 
      	
                            30

                          	 
	
                            Section 3.8

                          	 
      	
                            Deposit Accounts.

                          	 
      	
                            30

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 4.
      FURTHER ASSURANCES

                          	 
      	
                            31

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 5.
      COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

                          	 
      	
                            32

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 6.
      REMEDIES UPON DEFAULT

                          	 
      	
                            33

                          	 
	 
      	 
      	 
      	 
      	 
      	 
	
                            Section 6.1

                          	 
      	
                            Remedies Generally

                          	 
      	
                            33

                          	 
	
                            Section 6.2

                          	 
      	
                            Application of Proceeds of
    Sale

                          	 
      	
                            34

                          	 
	
                            Section 6.3

                          	 
      	
                            Investment Property

                          	 
      	
                            35

                          	 
	
                            Section 6.4

                          	 
      	
                            Grant of License to Use Intellectual
      Property

                          	 
      	
                            36

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 7.
      REIMBURSEMENT OF COLLATERAL AGENT

                          	 
      	
                            36

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 8.
      WAIVERS; AMENDMENTS

                          	 
      	
                            37

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 9.
      SECURITY INTEREST ABSOLUTE

                          	 
      	
                            38

                          	 
	 
      	 
      	 
      	 
	
                            ARTICLE 10.
      TERMINATION; RELEASE

                          	 
      	
                            38

                          	 

                  

                

              

            

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    ARTICLE 11.
      ADDITIONAL SUBSIDIARY GUARANTORS AND GRANTORS

                  	 
      	
                    39

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 12.
      COLLATERAL AGENT

                  	 
      	
                    39

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 13.
      NOTICES

                  	 
      	
                    41

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 14.
      BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS

                  	 
      	
                    42

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 15.
      SURVIVAL OF AGREEMENT; SEVERABILITY

                  	 
      	
                    43

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 16.
      GOVERNING LAW

                  	 
      	
                    43

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 17.
      COUNTERPARTS

                  	 
      	
                    43

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 18.
      HEADINGS

                  	 
      	
                    43

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

                  	 
      	
                    44

                  	 
	 
      	 
      	 
      	 
	
                    ARTICLE 20.
      WAIVER OF JURY TRIAL   

                  	
                      

                  	
                    45

                  	 

          

        

      

    

    

    SCHEDULES:

     

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

     

    Schedule 1.4(a)           Twistbox
Entertainment, Inc. and Twistbox Games Ltd. & Co. KG Collateral

     

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

     

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

     

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

     

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

     

    Schedule 3.2   List
of Locations of Equipment and Inventory

     

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

     

    Schedule 3.5   List
of Letters of Credit

     

    Schedule 3.6   List
of Intellectual Property

     

    Schedule 3.7   List
of Commercial Tort Claims

     

    Schedule 3.8   List
of Deposit Accounts

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    THIS GUARANTEE AND
SECURITY AGREEMENT IS SUBJECT TO
THE TERMS OF, THE SUBORDINATION AGREEMENT, DATED AS OF JUNE 21, 2010, AS THE
SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, BY
AND AMONG TRINAD CAPITAL MASTER FUND, LTD., AS AGENT, VALUEACT SMALLCAP MASTER FUND, L.P.,
AS SUBORDINATED
CREDITOR, AND EACH OF THE
COMPANY AND TWISTBOX ENTERTAINMENT, INC., AS OBLIGOR AND ALL OTHER PARTIES
THERETO.

     

    THIS
GUARANTEE AND SECURITY AGREEMENT, dated as of June 21, 2010 (this “Guarantee and Security
Agreement”), among Twistbox Entertainment, Inc., a Delaware corporation
(the “Company”), NeuMedia,
Inc. formerly known as Mandalay Media Inc., a Delaware corporation (the “Parent”) each of the
subsidiaries of the Parent identified on Schedule I1 as being a subsidiary
guarantor (each such subsidiary, individually a “Subsidiary Guarantor”
and, collectively, the “Subsidiary
Guarantors”; the Subsidiary Guarantors, the Parent and the Company are
referred to collectively herein as the “Grantors”), the
investors from time to time party hereto (including their successors and
permitted assigns, each an “Investor” and
collectively, the “Investors”) and
Trinad Capital Management, LLC, as collateral agent for the benefit of the
Secured Parties (including its successors and permitted assigns and in such
capacity, the “Collateral
Agent”).

     

    The
Parent is indebted to the Investors in the principal amount of $2,500,000
pursuant to one or more Senior Secured Convertible Notes due June 21, 2013,
dated June 21, 2010 (as amended, supplemented or otherwise modified, the “Senior Secured
Note”).

     

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

     

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

    
        

        
          

        

         

      

      
        1 
Please provide all updated schedules.

      

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    ARTICLE
1.

     

    DEFINITIONS;
GUARANTEE; GRANT OF SECURITY;

    CONTINUING
PERFECTION AND PRIORITY

     

    Section
1.1            General
Definitions

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

    “Permitted Liens”
means all of the following: (i) Liens for taxes, assessments or similar charges
incurred in the ordinary course of business that are not yet due and payable,
(ii) 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, (iii) Liens in favor of the Investors and (iv)
Liens by Grantors in favor of ValueAct SmallCap Master Fund, L.P. (together with
its permitted successors and assigns) as the holder of the Amended and Restated
Senior Subordinated Secured Note issued by the Company, dated June 21, 2010, in
the principal amount of $3,500,000; provided that the principal amount of such
subordinated Note does not exceed $3,500,000, (v) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent, (vi) purchase money liens or purchase money security interests upon
or in any property now or hereafter acquired or held by Grantor in the
ordinary course of business to secure indebtedness, (vii) liens and security
interests which, as of the date of this Guarantee and Security Agreement, have
been disclosed to Collateral Agent, and (viii) those liens and security
interests which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of Grantor's
assets.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    Section
1.2            Other Definitions;
Interpretation

     

    (a)         [Reserved]

     

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

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    Section
1.3            Guarantee

     

    (a)       
  Subsidiary
Guarantee; Limitation of Liability.

     

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

     

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

     

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

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

     

    (b)          Subsidiary Guarantee
Absolute.  Each Subsidiary Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Secured Transaction Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Collateral Agent or any Investors with respect
thereto.  The Obligations of each Subsidiary Guarantor under or in
respect of this Subsidiary Guarantee are independent of the Guaranteed
Obligations or any other Obligations of any other Grantor under or in respect of
the Secured Transaction Documents, and a separate action or actions may be
brought and prosecuted against each Subsidiary Guarantor to enforce this
Subsidiary Guarantee, irrespective of whether any action is brought against the
Company or any other Grantor or whether the Company or any other Grantor is
joined in any such action or actions.  The liability of each
Subsidiary Guarantor under this Subsidiary Guarantee shall be irrevocable,
absolute and unconditional irrespective of, and each Subsidiary Guarantor hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to, any or all of the following:

     

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

     

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

     

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

     

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

     

    (v)          any
failure of any Investors to disclose to any Grantor any information relating to
the business, condition (financial or otherwise), operations, performance,
properties or prospects of any other Grantor now or hereafter known to such
Investors (each Subsidiary Guarantor waiving any duty on the part of the
Investors to disclose such information);

     

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

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (vii)        any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by any Investors that
might otherwise constitute a defense available to, or a discharge of, any
Grantor or any other guarantor or surety, in each case other than payment in
full of the Guaranteed Obligations (other than contingent indemnification
obligations).

     

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

     

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

     

    (i)           promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Subsidiary Guarantee
and any requirement that any Investors protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take any action
against any Grantor or any other Person;

     

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

     

    (iii)         (A)  any
defense arising by reason of any claim or defense based upon an election of
remedies by any Investors that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Subsidiary Guarantor or other
rights of such Subsidiary Guarantor to proceed against any of the other
Grantors, any other guarantor or any other Person, and (B) any defense
based on any right of set-off or counterclaim against or in respect of the
Obligations of such Subsidiary Guarantor hereunder;

     

    (iv)
        any duty on the part of any
Investors to disclose to such Subsidiary Guarantor any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Grantor or any of its
Subsidiaries now or hereafter known by such Investors; and

     

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

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              A.

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

            

    

     

    
      	
               
      

            	
              B.

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

            

    

     

    
      	
               
      

            	
              C.

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

            

    

     

    
      	
               
      

            	
              D.

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

            

    

     

    
      	
               
      

            	
              E.

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

            

    

     

    
      	
               
      

            	
              F.

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

            

    

     

    
      	
               
      

            	
              G.

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

            

    

     

    
      	
               
      

            	
              H.

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

            

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    Section
1.4            Grant of
Security

     

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

     

    (i)           all
Accounts,

     

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

     

    (iii)         all
Chattel Paper, Documents and Instruments,

     

    (iv)         all
Commercial Tort Claims,

     

    (v)          all
Equipment,

     

    (vi)         all
General Intangibles,

     

    (vii)        all
Goods,

     

    (viii)       all
Insurance,

     

    (ix)          all
Instruments,

     

    (x)           all
Intellectual Property,

     

    (xi)          all
Inventory,

     

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

     

    (xiii)        all
Proceeds of Authorizations,

     

    (xiv)       all
Receivables and Receivables Records,

     

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

     

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

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    ARTICLE
2.

     

    SECURITY FOR OBLIGATIONS; NO
ASSUMPTION OF LIABILITY

     

    Section
2.1            Security for
Obligations

     

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

     

    Section
2.2            No Assumption of
Liability

     

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

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    ARTICLE
3.

     

    REPRESENTATIONS AND
WARRANTIES AND COVENANTS

     

    Section
3.1            Generally

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

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

     

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

     

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

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    Section
3.2           Equipment and
Inventory

     

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

     

    Section
3.3           Receivables

     

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

     

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

     

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

     

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

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

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

     

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

     

    Section
3.4           Investment
Property

     

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

     

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

     

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

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

    (c)          Voting and
Distributions.

     

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

     

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

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

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

     

    (d)          Covenants and
Agreements.  [Intentionally Omitted]

     

    Section
3.5           Letter of Credit
Rights

     

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

     

    Section
3.6           Intellectual Property
Collateral

     

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

     

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

     

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

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

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

     

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

     

    (iv)         In
no event shall it, either directly or through any agent, employee, licensee or
designee, file an application for any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar offices in the United States or any other country, unless it promptly
notifies the Collateral Agent in writing thereof and, upon request of the
Collateral Agent, executes and delivers any and all agreements, instruments,
documents and papers as the Collateral Agent may request to evidence the
Collateral Agent’s security interest in such Intellectual Property, and such
Grantor hereby appoints the Collateral Agent as its attorney in fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an interest,
is irrevocable.

     

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

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    Section
3.7           Commercial Tort
Claims

     

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

     

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

     

    Section
3.8           Deposit
Accounts.

     

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

     

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

     

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

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    ARTICLE
4.

     

    FURTHER
ASSURANCES

     

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

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    ARTICLE
5.

     

    COLLATERAL AGENT APPOINTED
ATTORNEY-IN-FACT

     

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

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    ARTICLE
6.

     

    REMEDIES UPON
DEFAULT

     

    Section
6.1           Remedies
Generally

     

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

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

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

     

    Section
6.2           Application of Proceeds of
Sale

     

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

     

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

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    Section
6.3           Investment
Property

     

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

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    Section
6.4           Grant of License to Use
Intellectual Property

     

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

     

    ARTICLE
7.

     

    REIMBURSEMENT OF COLLATERAL
AGENT

     

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

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    ARTICLE
8.

     

    WAIVERS;
AMENDMENTS

     

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

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    ARTICLE
9.

     

    SECURITY INTEREST
ABSOLUTE

     

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

     

    ARTICLE
10.

     

    TERMINATION;
RELEASE

     

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

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    ARTICLE
11.

     

    ADDITIONAL SUBSIDIARY
GUARANTORS AND GRANTORS

     

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

     

    ARTICLE
12.

     

    COLLATERAL
AGENT

     

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

     

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

     

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

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

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

     

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

     

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

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

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

     

    ARTICLE
13.

     

    NOTICES

     

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

     

    (a)          If
to the Company:

     

    Twistbox
Entertainment, Inc.

    14242
Ventura Blvd., Third Floor

    Sherman
Oaks, CA 91423

    Telephone:
(818) 301-6200

    Facsimile:
(818) 708-0598

    Attention:
Chief Executive Officer

    Attention:
General Counsel

    

    with a
copy to:

    

    Manatt,
Phelps & Phillips, LLP

    11355
West Olympic Boulevard

    Los
Angeles, California 90064

    Attention:  Richard
J. Maire, Esq.

    Facsimile:
(310) 312-4224

     

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

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    (c)          If
to the Collateral Agent:

     

    Trinad
Capital Management, LLC

    2000
Avenue of the Stars, Suite 410

    Los
Angeles, California 90067

    Telephone:
________________

    Facsimile:
_________________

    Attention:
_______________

     

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

     

    ARTICLE
14.

     

    BINDING EFFECT; SEVERAL
AGREEMENT; ASSIGNMENTS

     

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

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    ARTICLE
15.

     

    SURVIVAL OF AGREEMENT;
SEVERABILITY

     

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

     

    ARTICLE
16.

     

    GOVERNING
LAW

     

    THIS
GUARANTEE AND SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.  THE LAWS OF
ANY FOREIGN COUNTRY SHALL APPLY ONLY TO THE EXTENT SUCH APPLICATION IS MANDATORY
PURSUANT TO THE PRINCIPLES OF INTERNATIONAL PRIVATE LAW (CONFLICT OF
LAWS).

     

    ARTICLE
17.

     

    COUNTERPARTS

     

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

     

    ARTICLE
18.

     

    HEADINGS

     

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

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    ARTICLE
19.

     

    JURISDICTION; VENUE; CONSENT
TO SERVICE OF PROCESS

     

    EACH OF
THE GRANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF THE STATE OF
CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES’ DISTRICT
COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER 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 STATE OF CALIFORNIA COURT OR, TO
THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE SECURED PARTIES MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COMPANY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

     

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

     

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

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    ARTICLE
20.

     

    WAIVER OF JURY
TRIAL

     

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

     

    [Signature
Pages Follow]

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

     

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

     

    
      
        
          	 
      	
                  TWISTBOX
      ENTERTAINMENT, INC.

                
	 
      	 
      	 
      
	 
      	
                  By: 

                	
                    

                
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                
	 
      	 
      	 
      
	 
      	
                  NEUMEDIA,
      INC., formerly known as

                  Mandalay
      Media, Inc.

                
	 
      	 
      	 
      
	 
      	
                  By:

                	
                    

                
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                

        

      

    

    

    [Signature
Page to the Guarantee and Security Agreement]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                FOREIGN
      SUBSIDIARIES

              
	 
      	 
      
	 
      	
                TWISTBOX
      ENTERTAINMENT LTD.

                (RUSSIA)

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              
	 
      	 
      	 
      
	 
      	
                TWISTBOX
      ENTERTAINMENT LIMITED

                (UK)

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              
	 
      	 
      	 
      
	 
      	
                TWISTBOX
      ENTERTAINMENT LTDA

                (BRAZIL)

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              
	 
      	 
      	 
      
	 
      	
                WAAT
      MEDIA CHILE SA

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              
	 
      	 
      
	 
      	
                TWISTBOX
      ENTERTAINMENT OF

                ARGENTINA

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

     

    [Signature
Page to the Guarantee and Security Agreement]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                WAAT
      MEDIA COLUMBIA

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              
	 
      	 
      	 
      
	 
      	
                DOMESTIC
      SUBSIDIARIES

              
	 
      	 
      
	 
      	
                WAAT
      MEDIA CORP.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

     

    [Signature
Page to the Guarantee and Security Agreement]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	 
      	
                TRINAD
      CAPITAL MANAGEMENT,

              
	 
      	
                LLC,
      as Collateral Agent

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

     

    [Signature
Page to the Guarantee and Security Agreement]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
I

    

    SUBSIDIARIES

    

    
      	
               
      

            	
              1.

            	
              WAAT
      Media Corp. (domestic)

            

    

    
      	
               
      

            	
              2.

            	
              Twistbox
      Entertainment Ltd. (Russia)

            

    

    
      	
               
      

            	
              3.

            	
              Twistbox
      Entertainment Limited (UK)

            

    

    
      	
               
      

            	
              4.

            	
              Twistbox
      Entertainment LTDA (Brazil)

            

    

    
      	
               
      

            	
              5.

            	
              WAAT
      Media Chile SA

            

    

    
      	
               
      

            	
              6.

            	
              Twistbox
      Entertainment of Argentina

            

    

    
      	
               
      

            	
              7.

            	
              WAAT
      Media Columbia

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