AMENDED CASH COLLATERAL AGREEMENT

This Cash Collateral Agreement (“Agreement”) is entered into this 19th day of

February 2008, by and between TeeVee Toons, Inc., as debtor and debtor in possession

(“Debtor”) and Bernard National Loan Investors Ltd. (“Agent”), as agent for certain financial

institutions from time to time (“Lenders”), as amended to incorporate certain changes directed by

the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”)

and negotiated with the Official Unsecured Creditors’ Committee appointed in Debtor’s chapter

11 case (“Creditors’ Committee”).

W I T N E S S E T H:
WHEREAS, prior to the filing of the petition, Debtor, Agent and Lenders entered

into the First Amended and Restated Loan Agreement dated as of September 28, 2007, as

amended as of February 4, 2008 (as amended, “Loan Agreement”), pursuant to which Debtor

borrowed the principal sum of $6,725,000, plus unpaid interest and other charges. Debtor’s

subsidiaries, TVT Music Enterprises LLC (“Music LLC”), Wax Trax Records, Inc., and TVT

Music, Inc. are guarantors under the Loan Agreement.

WHEREAS, also prior to the petition date, Debtor and Music LLC entered into

the Intercompany Promissory Note dated as of September 28, 2007, as amended as of February

4, 2008 (as amended, “Intercompany Note”), pursuant to which Debtor borrowed the principal

sum of $10,515,277, plus unpaid interest and other charges. Wax Trax Records, Inc. is a

guarantor under the Intercompany Note. Agent and Music LLC entered into an intercreditor

agreement pursuant to which Agent is authorized to act on behalf of Music LLC with respect to

possession or control of those parties’ common collateral.

WHEREAS, also prior to the filing of the petition, Music LLC, Agent and

Lenders entered into the First Amended and Restated First Lien Loan Agreement dated as of

September 28, 2007, as amended as of February 4, 2008 (as amended, “First Lien Loan

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Agreement”), pursuant to which Music LLC borrowed the principal sum of $13,000,000, plus

unpaid interest and other charges. The obligations under the Second Lien Loan Agreement are

secured by, among other things, Debtor’s stock in TVT Music, Inc. Also prior to the filing of the

petition, Music LLC, Agent and Lenders entered into the Second Lien Loan Agreement dated as

of September 28, 2007, as amended as of February 4, 2008 (as amended, “Second Lien Loan

Agreement”), pursuant to which Music LLC borrowed the principal sum of $14,000,000, plus

unpaid interest and other charges. TVT Music Inc. is a guarantor under the First Lien Loan

Agreement and the Second Lien Loan Agreement. (The Loan Agreement, the First Lien Loan

Agreement and the Second Lien Loan Agreement are collectively referred to as the “Pre-petition

Loan Agreements.”)

WHEREAS, the obligations owing under the Pre-petition Loan Agreements are

secured by security interests in and liens on substantially all of Debtor’s assets, including without

limitation all of Debtor’s cash, accounts receivable, inventory and deposit accounts maintained at

Bank of America, N.A. (“Pre-petition Collateral”) in favor of Agent.

WHEREAS, on February 19, 2008, Debtor filed a voluntary petition for relief

under chapter 11 of title 11 of the United States Code (“Bankruptcy Code”) with the Bankruptcy

Court, thereby commencing this case.

WHEREAS, on February 21, 2008 the Bankruptcy Court entered its Interim
Order Authorizing Debtor to Use Cash Collateral and Granting Adequate Protection (Docket No.

27), pursuant to which Debtor was authorized to use cash and cash equivalents in which both

Debtor and Agent have an interest (“Cash Collateral”), in accordance with the terms of the

Interim Order. As stated above, this Agreement is amended to incorporate certain changes

directed by the Bankruptcy Court and negotiated with the Creditors’ Committee.

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 NOW, THEREFORE, in consideration of the promises, covenants and

agreements contained herein, the parties hereto agree as follows:

1. Consent to Use Cash Collateral. During the term of this Agreement, and
provided Debtor is not in default under this Agreement, Agent and Lenders consent to Debtor’s

use of Cash Collateral, and Agent and Lenders will make available to Debtor such Cash

Collateral, to the extent it is in Agent’s and / or Lenders’ possession, custody or control,

specifically to be used in the amounts and for the purposes set forth in the budget (“Budget”)

annexed hereto at “Exhibit 1.”

2. Adequate Protection. As adequate protection to Agent and Lenders and in

exchange for Debtor’s use of Cash Collateral following the filing of the petition, Debtor agrees

to the following and hereby makes the grants set forth below to the extent of any diminution in

value of the Pre-petition Collateral (which grants shall not constitute cross-collateralization

except insofar as to accord Agent and Lenders adequate protection against any diminution in

value of the Pre-petition Collateral):

A. Pay on the first date of each month during the term of this

Agreement interest on the obligations owing under the Loan Agreement at the pre-petition non-

default rate under the Loan Agreement. In the event the Bankruptcy Court subsequently

determines that Agent and Lenders are under-secured or unsecured with respect to their claims
under the Loan Agreement, then the interest payments made pursuant to this Paragraph 2(A)

shall be re-characterized as payments towards the principal owing under the Loan Agreement or

towards the distribution on account of any unsecured claim, and in the event Agent and Lenders

are unsecured the interest payments may be subject to disgorgement.

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 B. Grant to Agent first priority replacement security interests in and

liens on cash and cash equivalents acquired after the filing of the petition, including accounts

receivable.

C. Grant to Agent first priority additional security interests in and

liens on any and all previously unencumbered assets of Debtor.

D. Grant to Agent first priority security interests in and liens on

causes of action under Bankruptcy Code section 549 on account of collateral encumbered by the

post-petition security interest and liens in favor of Agent and/or Lenders granted under this

Agreement, but not causes of action under sections 544, 545, 547, 548, and 549 (other than as

set forth immediately above). (The collateral subject to the replacement and additional security

interests and liens granted pursuant to this paragraph 2(A)-(D) is collectively referred to as

“Additional Collateral.”)

3. Super-priority. In the event the adequate protection granted in section 2 of

this Agreement does not provide the Agent with protection for the diminution of value of the

Pre-petition Collateral, Agent will be granted a super-priority claim pursuant to Bankruptcy

Code section 507(b), to the extent of any failure to provide the Agent with protection for the

diminution of value of the Pre-petition Collateral, with that claim having priority over all claims

allowed under Bankruptcy Code section 507(a).

4. Carve-Out. Notwithstanding any interest of Agent and Lenders in Pre-
petition Collateral and Post-petition Collateral, Debtor may pay, including from Cash Collateral,

the expenses set forth in the Budget, including, without limitation, all fees payable to the United

States Trustee pursuant to 28 U.S.C. § 1930 and any statutory interest accrued pursuant to 31

U.S.C. § 3717, and fees and expenses to be paid to professionals duly retained by Debtor or the

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Creditors’ Committee, after an award of compensation has been made by the Bankruptcy Court,

pursuant to Bankruptcy Code section 330 or 331.

5. Status of Perfection of Security Interests / Liens. All of Agent’s security

interests and liens granted hereunder shall be deemed validly perfected against Debtor, Debtor’s

bankruptcy estate, any trustee appointed in Debtor’s bankruptcy case, Debtor’s successors and

assigns and all creditors and parties in interest in Debtor’s bankruptcy case. Agent shall not be

required to file financing statements or make recordings on real property records to perfect the

liens and security interests granted hereunder. Notwithstanding the foregoing, Agent may file

financing statements and make recordings on real property records to evidence the liens and

security interests granted hereunder, and Debtor shall cooperate with Agent in signing such

documents as Agent may reasonably require to make such filings.

6. Waivers / Releases / Stipulation as to Validity and Priority of Debt.

Debtor agrees that it is indebted to Agent and / or Lenders under the Pre-petition Loan

Agreements in the amounts set forth in the “WHEREAS” clauses above, and that Agent and / or

Lenders hold allowed secured claims in such amounts. Debtor further agrees that Agent holds an

interest in Pre-petition Collateral pursuant to valid and properly perfected security interests and

liens of a first and second priority, respectively, under the terms of the Pre-petition Loan

Agreements. Debtor waives and releases any rights to contest the amount, validity, priority and
extent of the claims, security interests and liens granted to Agent and Lenders under the Pre-

petition Loan Agreements and this Agreement, any rights or claims under Bankruptcy Code

section 506(c), and any other rights or claims against Agent or Lenders of any nature. The

parties to this Agreement hereby acknowledge that the waivers and releases provided herein are

fully binding in accordance with their terms notwithstanding California Civil Code section 1542

and / or any similar state or federal law, and hereby waive all rights which may exist thereunder.

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(California Civil Code section 1542 provides: “A general release does not extend to claims

which the creditor does not know or suspect to exist in his or her favor at the time of executing

the release, which if known by him or her must have materially affected his settlement with the

debtor.”) No person may use any Cash Collateral to challenge the amount, validity, priority or

extent of the claims, security interests and liens grated to Agent and Lenders under the Pre-

petition Loan Agreements and this Agreement. Notwithstanding the above, the Creditors’

Committee and/or any other party in interest will have 60 days following entry of an Order

approving the appointment of Creditors’ Committee counsel (or such longer period as the

Creditors’ Committee may obtain for cause shown or by stipulation or agreement with Agent and

Lenders before expiration of such period) solely for the purpose of investigating any challenge to

the amount, validity, priority or extent of Agent’s and Lenders’ claims, security interests and

liens under the Pre-petition Loan Agreements, after which time the Creditors’ Committee and/or

all parties in interest waives and releases any and all such rights. (Agent and Lenders reserve all

rights with respect to any such challenge by the Creditors’ Committee or otherwise.)

7. Reporting and Inspection Requirements. Debtor shall furnish to Agent

copies of all monthly operating statements filed with the United States Trustee on the date such

statements are filed. In addition, not later than the fifteenth (15th) day of the subsequent month,

Debtor shall provide Agent (with a copy to the Creditors’ Committee) with a report on the Cash
Collateral used by Debtor, which report shall also include all cash receipts and disbursements, all

accounts receivable generated, all inventory acquired, and payables incurred. Debtor shall

permit Agent’s representatives reasonable access during normal business hours to Debtor’s

books and records for purposes of inspection and copying.

8. Debtor’s Representations. Debtor represents and warrants that: (a) it is a

corporation validly organized and existing under the laws of its state of incorporation; (b) it is

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authorized to do business in the state of its principal place of business and in each state in which

Pre-petition Collateral or Additional Collateral is located; (c) subject to approval of the

Bankruptcy Court, it is duly authorized to enter into this Agreement; (d) by entering into this

Agreement it is not violating any law, judgment, decree or order; (e) it has good title to all assets

which serve as Pre-petition Collateral and Additional Collateral free and clear of any and all

security interests, liens and encumbrances, except for those in favor of Agent and / or Lenders as

set forth in this Agreement; and (f) all statements in the “WHEREAS” clauses in this Agreement

are true.

9. Debtor’s Covenants. During the term of this Agreement, Debtor agrees to:

(a) maintain its business operations only at premises identified in writing to Agent; (b) keep

accurate books and records of its business operations and financial affairs; (c) maintain adequate

insurance against theft, fire and other standard business losses of its personal property; (d)

maintain all personal and other property in good repair and condition; (e) pay all post-petition

obligations as they come due and in accordance with the Bankruptcy Code and other applicable

laws and rules; (f) comply with applicable law; and (g) comply with all Orders of the Bankruptcy

Court.

10. Default. The occurrence of any of the following constitutes an “Event of

Default” by Debtor: (a) the failure to make any payment provided in this Agreement; (b) the
filing by the Debtor of any appeal, request for rehearing on, or other challenge to the Bankruptcy

Court Order approving this Agreement; (c) the failure to comply with the reporting and access

requirements provided in this Agreement; (d) the breach of any other representation or warranty

in this Agreement, excluding nonmaterial misstatements or representations with respect to non-

Debtor entities; (e) the use of Cash Collateral in a way that exceeds by 10% or more from the

Budget as a whole or from any weekly or individual line-item in the budget; (f) the appointment

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of a chapter 11 trustee or examiner with any powers other than those set forth in Bankruptcy

Code sections 1106(a)(3) and (4), unless Agent consents to such powers; (g) the dismissal of

Debtor’s case or conversion to a case under chapter 7; and (h) the granting of relief from the

automatic stay to permit any party to recover possession of any property used in Debtor’s

businesses or operations of a value of $25,000 or greater, or of properties used in Debtor’s

businesses or operations of an aggregate value of $50,000 or greater.

11. Default Remedies. Upon the occurrence of any Event of Default, Debtor’s

authority to use Cash Collateral shall immediately terminate, and, in the event Agent gives

Debtor and the Creditors’ Committee notice of such default, and unless such default is cured or

an order of the Bankruptcy Court is entered staying surrender, then within five (5) business days

after such notice is given, Debtor shall forthwith surrender possession of any and all Pre-petition

Collateral and Additional Collateral to Agent, and Agent shall have relief from the automatic

stay without further Order of the Bankruptcy Court to enforce its rights as secured creditor.

12. Term. This Agreement shall commence upon approval by the Bankruptcy

Court, and end three weeks following the filing of Debtor’s petition (as shown in the Budget).

The term may be extended by written agreement of all parties (and the Debtor shall provide

notice of such extension to the Creditors’ Committee and all other parties in interest by filing

notice with the Court, including any additional budget), without further Order of the Bankruptcy
Court.

13. Bankruptcy Court Approval. This Agreement is subject to the approval of

the Bankruptcy Court, and shall be null and void if such approval is not granted. Debtor agrees

to use its best efforts to seek approval of the Bankruptcy Court as promptly as possible.

14. Notices. Notices pursuant to this Agreement shall be in writing and shall

be deemed given when sent by (a) hand delivery, (b) facsimile, or (c) e-mail at the addresses for

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the parties listed below. Otherwise notices shall be deemed given when received. Notices shall

be sent to:

If to Debtor: Steve Gottlieb, President

TVT Records
23 East 4th Street, 3rd Floor
New York, NY 10003
Fax: (212) 673-5516
Email: [email protected]

With a copy to: Alec P. Ostrow and Constantine Pourakis

Stevens & Lee, P.C.
485 Madison Avenue
New York, New York 10022
Fax: (212) 319-8505
Email: [email protected] / [email protected]

If to Agent: Steve Campbell

D.B. Zwirn & Co., LP
745 Fifth Avenue, 17th Floor
New York, New York 10151
Fax: (646) 720-9074
Email: [email protected]

With a copy to: Evan Jones, Jill Matichak,

Jennifer Taylor and Laine Mervis
O’Melveny & Myers LLP
400 S. Hope Street
Los Angeles, CA 90071
Fax: (213) 430-6407
Email: [email protected] / [email protected] /
[email protected] / [email protected]

If to Creditors’ Carole Neville and Sara L. Chenetz

Committee: Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, New York 10020
Fax: 212 768-6953
Email: [email protected] /
[email protected]

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 15. Entire Agreement. This Agreement represents the entire agreement of the

parties with regard to the subject of use of Cash Collateral. No prior or contemporaneous

agreement, written or oral, may be used to supplement, amend, or modify any of the provisions

of this Agreement.

16. Modification. This Agreement, including the Budget, may be modified

only in a writing signed by all parties, without further Order of the Bankruptcy Court or other

notice.

17. Choice of Law / Jurisdiction. To the extent not governed by the

Bankruptcy Code, this Agreement shall be governed by the laws of the State of New York,

without regard to such State’s choice of law rules. The parties consent to jurisdiction over any

matter relating to this Agreement before the Bankruptcy Court, or, if no such jurisdiction exists,

then in the applicable state or federal Court in the State of New York.

18. Severability. In the event any portion of this Agreement is held

unenforceable, the enforceability of any other provision shall not be affected.

19. Section Headings. The section headings contained in this Agreement are

for reference purposes only and shall not affect in any way the meaning or interpretation of this

Agreement.

20. Assignability, Binding Effect and Survival. This Agreement shall inure to
the benefit of and shall be binding upon the parties, their successors and assigns. Debtor may not

assign this Agreement without Agent’s consent. Agent may assign this Agreement to any

assignee to which it assigns its rights under the Pre-petition Loan Agreements.

21. Counterparts. This Agreement may be signed in counterpart originals,

which taken together shall constitute one Agreement. This Agreement may be signed by

facsimile signatures, which shall be deemed the equivalent of original signatures for all purposes.

10

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 IN WITNESS WHEREOF, the parties hereto have duly executed this

Agreement as of the date first above written.

TEEVEE TOONS, INC.

By: /s/ Steve Gottlieb

Its: President

BERNARD NATIONAL LOAN INVESTORS,

LTD., AS AGENT FOR LENDERS

By: /s/ Laine Mervis

Its: Counsel

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