SECONDARY
      SUBORDINATION AGREEMENT

     

    SECONDARY
      SUBORDINATION AGREEMENT
      (this
“Agreement”)
      dated
      as of October 31, 2007 among (a) YA Global Investments, L.P., a Cayman Islands
      exempt limited partnership, (“YA
      Global”),
      (b)
      eBaum’s World, Inc., a New York corporation (“EBW”
and,
      together with YA Global, the “Senior
      Creditors”),
      (c)
      the holders of Junior Debentures (as defined below) named on Schedule
      I
      hereto
      (collectively, the “Junior
      Creditors”),
      and
      (d) Handheld Entertainment, Inc., a Delaware corporation (the “Company”).

     

    RECITALS

     

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement, dated as of August
      2,
      2007, YA Global has agreed, upon the terms and subject to the conditions
      contained therein, to purchase (among other things) the YA Convertible
      Debentures, which shall be convertible into the Company’s Common Stock;
      and

     

     WHEREAS,
      certain
      obligations of the Company to YA Global are secured by
      security interests in all of the assets of the Company and of each of the
      Company's subsidiaries as evidenced by the Security Agreements, including a
      pledge of all
      of
      the issued and outstanding capital stock of EBW Acquisition, Inc., a Delaware
      corporation and wholly-owned subsidiary of the Company (“EBW
      Acquisition”);
      and


     

    WHEREAS,
      EBW,
      the Company, and EBW Acquisition have entered into that certain Asset Purchase
      Agreement, dated as of August 1, 2007, pursuant to which, among other things,
      EBW sold to EBW Acquisition substantially all of the assets of EBW relating
      to
      the operation of eBaumsworld.com; and

     

    WHEREAS,
      pursuant to the Asset Purchase Agreement the Company is, or may be, obligated
      to
      make certain payments to EBW, either in cash or in Common Stock, or a
      combination of each, including without limitation payments of Par B Shares,
      Par
      C Shares, Performance Earn Out Cash Payments, and Earn Out Payments (as each
      of
      these terms are defined in the Asset Purchase Agreement), which may be or become
      due to EBW (the “EBW Payments”); and

     

    WHEREAS,
      in
      order to secure to EBW the payment of the EBW Payments, which may be or become
      due to EBW, including all sums reasonably expended by EBW for protection of
      its
      interests, such as expenses of collection after the occurrence of an Event
      of
      Default as defined in the Pledge Agreement, the Company has granted to EBW
      a
      pledge of all of the issued and outstanding capital stock of EBW Acquisition
      as
      specified in the Pledge Agreement; and

     

    WHEREAS,
      each of
      the Junior Creditors is purchasing Junior Debentures pursuant to an Additional
      Securities Purchase Agreement among the Company and the Junior Creditors;
      and

     

    WHEREAS,
      it is a
      condition precedent to YA Global’s purchase of Convertible Debentures, and a
      condition precedent to EBW’s obligation to consummate the transactions
      contemplated by the Asset Purchase Agreement, that the Company, the Junior
      Creditors, YA Global and EBW enter into this Agreement, providing, among other
      things, that the security interests granted to the Senior Creditors shall be
      senior to any security interests granted to the Junior Creditors, irrespective
      of the time or order of attachment or perfection, subject to certain limitations
      and certain rights of the Junior Creditors as set forth herein;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    AGREEMENTS

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing, the mutual agreements herein contained and
      other
      good and valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the parties hereto, intending to be legally bound, hereby agree
      as
      follows:

     

    1.  Definitions.
      Terms
      not otherwise defined herein have the same respective meanings given to them
      in
      the Securities Purchase Agreement. In addition, the following terms shall have
      the following meanings: 

     

    Additional
      Securities Purchase Agreement.
      The
      additional securities purchase agreement of even date herewith (as amended,
      amended and restated, supplemented or otherwise modified and in effect from
      time
      to time, including any replacement agreement therefor) among the Company and
      each Junior Creditor.

     

    Asset
      Purchase Agreement.
      Means
      the Asset Purchase Agreement made and entered into as of August 1, 2007, by
      and
      among the Company, EBW Acquisition and EBW (as amended, amended and restated,
      supplemented or otherwise modified and in effect from time to time, including
      any replacement agreement therefor, in each case, pursuant to the terms hereof).
      

     

    Bankruptcy
      Code.
      The
      provisions of Title 11 of the United States Code, as amended from time to time
      and any successor statute and all rules and regulations promulgated thereunder
      or any state insolvency, debtor relief or assignment for the benefit of creditor
      law.

     

    Common
      Stock.
      Shall
      mean the common stock, par value $0.0001, of the Company and the stock of any
      other class into which such shares may hereafter be changed or
      reclassified.

     

    Credit
      Party
      or
Credit
      Parties.
      Collectively, the Company and its subsidiaries, any other guarantor of all
      or
      any portion of the Senior Debt or the Subordinated Debt and any other Person
      granting a security interest in and Lien on such Person’s assets to secure the
      obligations arising under the Senior Debt or the Subordinated Debt.

     

    Discharge
      of all Senior Debt.
      Shall
      mean the payment in full of all Senior Debt.

     

    EBW
      Senior Debt.
      All
      obligations created or evidenced by the Asset Purchase Agreement, any of the
      other EBW Senior Debt Documents or any related documents, solely to the extent
      related to the EBW Payments, or any subsequent notes, instruments or agreements
      of indebtedness, liabilities or obligations of any type or form whatsoever
      relating thereto in favor of EBW.

     

    EBW
      Senior Debt Documents.
      Collectively, (i) the Asset Purchase Agreement, (ii) the Pledge Agreement,
      (iii) any protected payments escrow agreement executed and delivered in
      connection with the Asset Purchase Agreement, by and among EBW, EBW Acquisition
      and LaSalle Bank National Association, as escrow agent, and (iii) any and all
      other documents or instruments evidencing or further guarantying or securing
      directly or indirectly any of the EBW Senior Debt, whether now existing or
      hereafter created, as each such agreement, document or instrument may be
      amended, restated or otherwise modified and in effect from time to
      time.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    Junior
      Debentures.
      Shall
      mean all such “Junior Secured Convertible Debentures” purchased under the
      Additional Securities Purchase Agreement (as amended, amended and restated,
      supplemented or otherwise modified and in effect from time to time, including
      any replacement agreement therefor).

     

    Lien.
      With
      respect to any asset, any mortgage, lien, pledge, charge, security interest
      or
      encumbrance of any kind, or any other type of preferential arrangement that
      has
      the practical effect of creating a security interest, in respect of such
      asset.

     

    Person.
      Any
      natural person, corporation, general or limited partnership, limited liability
      company, firm, trust, association, government, governmental agency or other
      entity, whether acting in an individual, fiduciary or other
      capacity.

     

    Pledge
      Agreement.
      The
      pledge agreement made on or about the date hereof by the Company in favor of
      the
      Senior Creditors and the collateral agent identified therein.

     

    Proceeding.
      Any
      voluntary or involuntary insolvency, bankruptcy, receivership, custodianship,
      liquidation, dissolution, reorganization, assignment for the benefit of
      creditors, appointment of a custodian, receiver, trustee or other officer with
      similar powers or any other proceeding for the liquidation, dissolution or
      other
      winding up of a Person.

     

    Permitted
      Junior Payments.
      Means
      any scheduled payments of principal, interest or premium on the Junior
      Convertible Debentures; provided that (i) such payments are made strictly in
      accordance with the terms of the Additional Securities Purchase Agreement and
      the Junior Convertible Debentures and (ii) no conditions to such payments were
      modified, amended, or waived by any party in any manner adverse to the rights
      of
      any holder of the Senior Debt. 

     

    Securities
      Purchase Agreement.
      The
      securities purchase agreement dated as of August 2, 2007 (as amended, amended
      and restated, supplemented or otherwise modified and in effect from time to
      time, including any replacement agreement therefor) between the Company and
      YA
      Global.

     

    Security
      Agreements.
      The
      security agreement dated as of the date hereof (as amended, amended and
      restated, supplemented or otherwise modified and in effect from time to time,
      including any replacement agreement therefor) between the Company, each
      subsidiary of the Company, and YA Global, and the patent security agreement
      dated as of the date hereof (as amended, amended and restated, supplemented
      or
      otherwise modified and in effect from time to time, including any replacement
      agreement therefor) between the Company, each subsidiary of the Company, and
      YA
      Global. 

     

    Senior
      Debt.
      All YA
      Senior Debt and all EBW Senior Debt.

     

    Senior
      Debt Documents.
      All YA
      Senior Debt Documents and all EBW Senior Debt Documents.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Subordinated
      Debt.
      All
      principal, interest, fees, costs, enforcement expenses (including legal fees
      and
      disbursements), collateral protection expenses and other reimbursement or
      indemnity obligations created or evidenced by the Additional Securities Purchase
      Agreement or the Junior Convertible Debentures issued thereunder, or any of
      the
      other Subordinated Debt Documents. Without
      limiting the foregoing, Subordinated Debt shall expressly include any and all
      interest accruing or out of pocket costs or expenses incurred after the date
      of
      any filing by or against the Company or any other Credit Party of any petition
      under the federal Bankruptcy Code or any other bankruptcy, insolvency or
      reorganization act regardless of whether any Junior Creditor’s claim therefor is
      allowed or allowable in the case or proceeding relating thereto.

     

    Subordinated
      Debt Documents.
      Collectively, (i) the Additional Securities Purchase Agreement, (ii) all Junior
      Convertible Debentures issued pursuant to the Additional Securities Purchase
      Agreement, (iii) any and all other documents and instruments evidencing or
      creating the Subordinated Debt and (iv) all guaranties, mortgages, security
      agreements, pledges and other collateral guarantying or securing directly or
      indirectly any Subordinated Debt, whether now existing or hereafter created,
      as
      each such agreement, document or instrument may be amended, restated or
      otherwise modified and in effect from time to time.

     

    YA
      Convertible Debentures.
      Shall
      mean all such “Convertible Debentures” purchased under the Securities Purchase
      Agreement (as amended, amended and restated, supplemented or otherwise modified
      and in effect from time to time, including any replacement agreement
      therefor).

     

    YA
      Senior Debt.
      All
      principal, interest, fees, costs, enforcement expenses (including legal fees
      and
      disbursements), collateral protection expenses and other reimbursement or
      indemnity obligations created or evidenced by the Securities Purchase Agreement
      or the YA Convertible Debentures issued thereunder, or any of the other YA
      Senior Debt Documents, or any other indebtedness owed by the Company to YA
      Global. Subject
      to the foregoing, YA Senior Debt shall expressly include any and all interest
      accruing or out of pocket costs or expenses incurred after the date of any
      filing by or against the Company or any other Credit Party of any petition
      under
      the federal Bankruptcy Code or any other bankruptcy, insolvency or
      reorganization act regardless of whether YA Global’s claim therefor is allowed
      or allowable in the case or proceeding relating thereto. For the avoidance
      of
      doubt, nothing contained in this definition shall limit YA Global’s rights under
      Section 8 hereof.

     

    YA
      Senior Debt Documents.
      Collectively, (i) the Securities Purchase Agreement, (ii) all YA Convertible
      Debentures issued pursuant to the Securities Purchase Agreement, (iii) the
      Security Agreements, (iv) the Pledge Agreement, (v) any and all other documents
      and instruments evidencing or creating the YA Senior Debt and (vi) all
      guaranties, mortgages, security agreements, pledges and other collateral
      guarantying or securing directly or indirectly any YA Senior Debt, whether
      now
      existing or hereafter created, as each such agreement, document or instrument
      may be amended, restated or otherwise modified and in effect from time to
      time.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    2.  General. 

     

    (a)  Subordination.
      The
      Subordinated Debt shall be and hereby is subordinated and the payment thereof
      is
      deferred until the Discharge of all Senior Debt, whether now or hereafter
      incurred or owed by the Company or any other Credit Parties. 

     

    (b)  Permitted
      Payments.
      Notwithstanding the terms of Section 2(a) above, the Company shall be permitted
      to pay, and the Junior Creditors shall be permitted to accept, (i) any and
      all
      non-cash Permitted Junior Payments, and (ii) any Permitted Junior Payments
      consisting of cash provided that (x) at the time of such payment no “Payment
      Blockage Period,” as defined in subsection (c) below, is in effect
      and (y)
      the making of such payment shall not cause a Payment Blockage Period to be
      in
      effect. 

     

    (c)  Payment
      Blockages.
      For
      purposes of this Agreement, a “Payment Blockage Period” shall mean:

     

    (i)  in
      the
      case of any Event of Default (as defined in the YA Convertible Debentures or
      in
      the Pledge Agreement), or any event that with the passage of time or giving
      notice would constitute an Event of Default in the payment of principal or
      interest (whether in cash or in Common Stock or through conversion or
      redemption) with respect to any Senior Debt, whether at maturity, at scheduled
      times for payment or otherwise, that occurs and is continuing (a “Payment
      Default”),
      the
      time period from the date that any Senior Creditor provides written notice
      of
      the Payment Default to the Company
      (in which case, the Company shall promptly forward such notice to each Junior
      Creditor) until
      the
      earliest of (i) two hundred seventy (270) days after the date of the Company’s
      receipt of such Payment Default notice, (ii) thirty (30) days after the
      acceleration of the maturity of any Senior Debt, (iii) the date upon which
      all
      Senior Debt shall be paid in full or (iv) the date, if any, on which such
      Payment Default is cured or waived in writing pursuant to the Senior Debt
      Documents; or 

    


    (ii)  in
      the
      case of any Event of Default, or any event that with the passage of time or
      giving notice would constitute an Event of Default, with respect to the Senior
      Debt other than a Payment Default, that occurs and is continuing, and that
      permits any Senior Creditor to accelerate the maturity of the Senior Debt (a
      “Non-Payment Default”), the time period from the date that any Senior Creditor
      provides written notice of the Non-Payment Default to the Company (in which
      case, the Company shall promptly forward such notice to each Junior Creditor)
      until the earliest of (i) three hundred sixty (360) days after the date of
      the
      Company’s receipt of such Non-Payment Default notice, (ii) thirty (30) days
      after the acceleration of the maturity of any Senior Debt, (iii) the date upon
      which all Senior Debt shall be paid in full or (iv) the date, if any, on which
      such Non-Payment Default is cured or waived in writing pursuant to the Senior
      Debt Documents; or

    


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (iii)  in
      the
      event that a Payment Blockage Period shall not be in effect under clauses (c)(i)
      or (ii) above, and an event of default under any of the Subordinated Debt
      Documents with respect to the payment or acceleration of any Permitted Junior
      Payment shall have occurred and be continuing (a “Permitted
      Junior Payment Default”),
      the
      time period from the date that any Junior Creditor provides notice to the Senior
      Creditors that it desires to pursue its rights and remedies under the
      Subordinated Debt Documents with respect to the Permitted Junior Payment
      Default, until the earliest of (i) two hundred seventy (270) days after the
      date
      of the Senior Creditors’ receipt of such Permitted Junior Payment Default
      notice, (ii) thirty (30) days after the acceleration of the maturity of any
      Senior Debt, (iii) the date upon which all Senior Debt shall be paid in full
      or
      (iv) the date, if any, on which such Permitted Junior Payment Default is cured
      or waived in writing pursuant to the Subordinated Debt Documents and any related
      cross-default is cured or waived in writing pursuant to the Senior Debt
      Documents. 

    


    (d) Limitation
      on Payment Blockages.
      During
      any three hundred sixty-five (365) day period, no more than two (2) Non-Payment
      Default notices may be used to invoke Payment Blockage Periods. The Junior
      Creditors shall not be prohibited from receiving any Permitted Junior Payments
      for more than three hundred sixty (360) days in the aggregate during any such
      three hundred sixty-five (365) day period.

    


    (e) Restrictions
      on Action.
      Subject
      to the terms and conditions set forth below in this subsection (e), the Junior
      Creditors shall not take any “Action,” as defined in subsection (f) below, until
      the earliest of:

    


    (i)  the
      date
      on which the Senior Debt shall be paid in full; 

    


    (ii)  the
      date
      on which the Company commences a Proceeding; or

    


    (iii)  the
      date
      on which an order for relief is entered against the Company in a
      Proceeding;

    


    provided,
      however,
      that if
      such Action is based exclusively on an Event of Default which in any case was
      the cause of the commencement of a Payment Blockage Period, and such Payment
      Blockage Period ends without such underlying Event of Default having been cured
      or waived, then if any Junior Creditor provides twenty (20) days’ written notice
      to the Senior Creditors that it intends to pursue its rights and remedies under
      the Subordinated Debt Documents, it shall be permitted to proceed with an Action
      as allowed by the Subordinated Debt Documents.

    


    Notwithstanding
      the foregoing, if any Junior Creditor is permitted hereunder to accelerate
      the
      maturity of all or any portion of the Permitted Junior Payments, and does so
      at
      a time at which no Proceeding is then pending, based upon an acceleration of
      Senior Debt and such acceleration is rescinded by the Senior Creditors (whether
      or not any existing Payment Default or Non-Payment Default has been cured or
      waived), then all Actions taken by such Junior Creditor shall likewise be
      rescinded if such Actions were based on account of such acceleration of Senior
      Debt by the Senior Creditors.

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    (f) Definition
      of Action.
      For
      purposes of this Agreement, “Action” shall mean (i) the exercise of any and all
      remedies permitted by the Subordinated Debt Documents or applicable law upon
      any
      defaults thereunder, including without limitation causing any acceleration
      of
      the maturity of all or any portion of the Permitted Junior Payments, (ii) the
      commencement of any other action or proceeding to recover any amounts due or
      to
      become due with respect to the Permitted Junior Payments, (iii) joining in,
      soliciting any Person to commence, or causing the commencement of, any
      Proceeding involving the Company (whether direct or indirect), (iv) any judicial
      levy, foreclosure, possession or similar judicial enforcement against all or
      a
      portion of the collateral for Subordinated Debt (the “Collateral”),
      (v)
      any non-judicial foreclosure assisted by the Company or any other Person,
      including transfers in lieu of foreclosure or voluntary surrender of possession
      of all or any portion of the Collateral, and/or (vi) any non-judicial
      enforcement effort against the Collateral, whether voluntary or involuntary,
      including without limitation, any repossession, setoff or turnover (including
      any asset sales received after any notice of default) of all or a portion of
      the
      Collateral.

    


    3.  Enforcement.
      Until
      the Discharge of all Senior Debt, the Junior Creditors shall not have any right
      of subrogation, reimbursement, restitution, contribution or indemnity whatsoever
      from any assets of the Company or any Credit Party or any provider of collateral
      security for the Senior Debt. The Junior Creditors further waive any and all
      rights with respect to marshalling.

     

    4.  Payments
      Held in Trust.
      The
      Junior Creditors will hold in trust and immediately pay over to the Senior
      Creditors, for the account of the Senior Creditors, in the same form of payment
      received, with appropriate endorsements, for application to the Senior Debt,
      any
      payment, distribution, security or proceeds received by the Junior Creditors
      at
      any time with respect to the Subordinated Debt contrary to the terms of this
      Agreement.
      The
      Junior Creditors shall not be charged with knowledge of the existence of any
      facts which would prohibit the making of any payment in respect of the
      Subordinated Debt, unless and until the Company shall have received written
      notice from any Senior Creditor of a Payment Default or a Non-Payment Default.
      Prior to its receipt of any such written notice, each Junior Creditor shall
      be
      entitled in all respects to assume no such facts exist and to receive payments
      otherwise permitted hereunder without the obligation to hold them in trust
      for
      the Senior Creditor.

     

    5.  Defense
      to Enforcement.
      If any
      Junior Creditor, in contravention of the terms of this Agreement, shall
      commence, prosecute or participate in any suit, action or proceeding against
      the
      Company or any Credit Party, then the Company may interpose as a defense or
      plea
      the making of this Agreement, and any Senior Creditors may intervene and
      interpose such defense or plea in its name or in the name of the Company or
      such
      Credit Party. If any Junior Creditor, in contravention of the terms of this
      Agreement, shall attempt to collect any of the Subordinated Debt or enforce
      any
      of the Subordinated Debt Documents, then any Senior Creditors or the Company
      may, by virtue of this Agreement, restrain the enforcement thereof in the name
      of the Senior Creditors or in the name of the Company. If any Junior Creditor,
      in contravention of the terms of this Agreement, obtains any cash or other
      assets of the Company or any Credit Party as a result of any administrative,
      legal or equitable actions, or otherwise, then such Junior Creditor shall
      forthwith pay, deliver and assign to the Senior Creditors, for the account
      of
      the Senior Creditors, with appropriate endorsements, any such cash for
      application to the Senior Debt and any such other assets as collateral for
      the
      Senior Debt.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    6.  Bankruptcy,
      etc.

     

    6.1.  Payments
      Relating to Subordinated Debt.
      At any
      meeting of creditors of the Company or in the event of any case or proceeding,
      voluntary or involuntary, for the distribution, division or application of
      all
      or part of the assets of the Company or the proceeds thereof, whether such
      case
      or proceeding be for the liquidation, dissolution or winding up of the Company
      or its business, a receivership, insolvency or bankruptcy case or proceeding,
      an
      assignment for the benefit of creditors or a proceeding by or against the
      Company for relief under the federal Bankruptcy Code or any other bankruptcy,
      reorganization or insolvency law or any other law relating to the relief of
      debtors, readjustment of indebtedness, reorganization, arrangement, composition
      or extension or marshalling of assets or otherwise, the Senior Creditors are
      hereby irrevocably authorized at any such meeting or in any such proceeding
      to
      receive or collect for the benefit of the Senior Creditors any cash or other
      assets of the Company distributed, divided or applied by way of dividend or
      payment, or any securities issued on account of any Subordinated Debt, and
      apply
      such cash to or to hold such other assets or securities as collateral for the
      Senior Debt, and to apply to the Senior Debt any cash proceeds of any
      realization upon such other assets or securities that the Senior Creditors
      in
      their discretion elect to effect, until the Discharge of all Senior Debt,
      rendering to the Junior Creditors any surplus to which the Junior Creditors
      are
      then entitled.

     

    6.2.  Securities
      by Plan of Reorganization or Readjustment.
      Notwithstanding the foregoing provisions of Section
      6.1,
      the
      Junior Creditors shall be entitled to receive and retain any securities of
      the
      Company, EBW Acquisition or any other corporation or other entity provided
      for
      by a plan of reorganization or readjustment the payment of which securities
      is
      subordinate, at least to the extent provided in this Agreement with respect
      to
      Subordinated Debt, to the payment of all Senior Debt under any such plan of
      reorganization or readjustment (“Junior
      Securities”).

     

    6.3.  Subordinated
      Debt Voting Rights.
      At any
      such meeting of creditors or in the event of any such case or proceeding, the
      Junior Creditors shall retain the right to vote and otherwise act with respect
      to the Subordinated Debt (including, without limitation, the right to vote
      to
      accept or reject any plan of partial or complete liquidation, reorganization,
      arrangement, composition or extension), provided
      that the
      Junior Creditors shall not vote with respect to any such plan or take any other
      action in any way so as to contest (i) the validity of any Senior Debt or
      any collateral therefor or guaranties thereof, (ii) the relative rights and
      duties of any holders of any Senior Debt established in any instruments or
      agreements creating or evidencing any of the Senior Debt with respect to any
      of
      such collateral or guaranties or (iii) any of the Junior Creditors’
obligations and agreements set forth in this Agreement.

     

    6.4.  Liquidation,
      Dissolution, Bankruptcy Generally. In
      the
      event of any Proceeding involving any Credit Party:

     

    (a) the
      Senior Creditors are hereby authorized to file an appropriate claim for and
      on
      behalf of any Junior Creditor on account of the Subordinated Debt, if such
      Junior Creditor does not file, and there is not otherwise filed on behalf of
      such Junior Creditor, a proper claim or proof of claim in the form required
      in
      any Proceeding prior to thirty (30) days before the expiration of the time
      to
      file such claim or claims, and in connection with such authorization, each
      Junior Creditor hereby irrevocably authorizes, empowers, and appoints each
      Senior Creditor as such Junior Creditor’s agent and attorney-in-fact to execute,
      verify, deliver and file such proofs of claim and to receive and collect any
      and
      all dividends, payments, or other disbursements made thereon in whatever form
      the same may be paid or issued and to apply the same on account of the Senior
      Debt (other than distributions of Junior Securities);

    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    (b)  Each
      Junior Creditor agrees not to (a) object to (i) any use of cash collateral
      by
      the Company or any other Credit Party under Section 363 of the Bankruptcy Code
      (or under a similar provision of any applicable insolvency laws of any foreign
      jurisdiction) consented to by any Senior Creditor or any borrowing by the
      Company or any other Credit Party from any Senior Creditor, (ii) any grant
      of a
      lien or security interest by any Person in favor of any Senior Creditor, under
      Section 364 of the Bankruptcy Code (or under a similar provision of any
      applicable insolvency laws of any foreign jurisdiction), (iii) any adequate
      protection sought by a Senior Creditor in such Proceeding, or (iv) any
      debtor-in-possession financing that YA Global may seek to provide in such
      Proceeding; (b) assert (or support any Person in asserting) any right it may
      have to "adequate protection" in such Proceeding; or (c) seek, directly or
      through an affiliate, to provide debtor-in-possession financing in such
      Proceeding without the prior written consent of YA Global.

    


    (c)  No
      Junior
      Creditor will seek to have the automatic stay lifted or modified with respect
      to
      any security interest held by it unless each Senior Creditor is also seeking
      or
      has sought to have the automatic stay lifted or modified, and each Junior
      Creditor waives any objection to any Senior Creditor’s election to lift or
      modify the automatic stay except to the extent an unsecured creditor may object
      to such motion;

    


    (d)  Each
      Junior Creditor shall execute and deliver to the Senior Creditor all such
      agreements, instruments and other documents confirming the above authorizations,
      and shall take all such other action as may be reasonably requested by any
      Senior Creditor to enforce such claims and carry out the intent of this
Section
      6.4;

    


    (e)  The
      Senior Debt shall continue to be treated as Senior Debt and the provisions
      of
      this Agreement shall continue to govern the relative rights and priorities
      of
      the Senior Creditors and the Junior Creditors even if all or part of the Senior
      Debt or the Liens securing same are subordinated, set aside, avoided,
      invalidated or disallowed in connection with any Proceeding;

    


    (f)  To
      the
      extent that the Senior Creditors receive payments (whether in cash, property
      or
      securities) on the Senior Debt which are subsequently invalidated, declared
      to
      be fraudulent or preferential, set aside and/or required to be repaid to a
      trustee, receiver or any other party under any bankruptcy law, state or federal
      law, common law or equitable cause, then, to the extent of such payment or
      proceeds received, the Senior Debt, or part thereof, intended to be satisfied
      shall be revived and continue in full force and effect as if such payments
      or
      proceeds had not been received by the Senior Creditor; and

    


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (g)  Notwithstanding
      any other provision of this Agreement, (i) each Junior Creditor shall be
      entitled to file any necessary responsive or defensive pleadings in opposition
      to any motion, claim, adversary proceeding or other pleading made by any Person
      objecting to or otherwise seeking the disallowance of the claims of such Junior
      Creditor, (ii) each Junior Creditor shall be entitled to file any pleadings,
      objections, motions or agreements which assert rights or interests available
      to
      creditors of the Credit Parties arising under either the Bankruptcy Code or
      applicable non-bankruptcy law, and (iii) subject to Section
      6.4(a),
      each
      Junior Creditor shall be entitled to file any proof of claim and other filings
      and make any arguments and motions that are, in each case, in accordance with
      the terms of this Agreement and necessary to preserve their rights with respect
      to the Subordinated Debt.

    


    7.  Priority
      of Security Interest.
      All
      security interests in favor of the Senior Creditors (including the security
      interest created in favor of the collateral agent on behalf of the Senior
      Creditors pursuant to the Pledge Agreement) covering the Senior Debt shall
      be
      senior to any security interest in favor of the Junior Creditors covering the
      Subordinated Debt, irrespective of the time of the execution, delivery or
      issuance thereof or the filing or recording for perfection of any security
      interest therein or the filing of any financing statement or continuation
      statement relating thereto.

     

    7.1.  Further
      Assurances.
      Each
      Junior Creditor hereby agrees, upon request of any Senior Creditor at any time
      and from time to time, to execute such other documents or instruments as may
      be
      requested by such Senior Creditor further to evidence of public record or
      otherwise the senior priority of the Senior Debt as contemplated
      hereby.

     

    7.2.  Books
      and Records.
      Each
      Junior Creditor further agrees to maintain on its books and records such
      notations as the Senior Creditors may reasonably request to reflect the
      subordination contemplated hereby and to perfect or preserve the rights of
      the
      Senior Creditors hereunder. A copy of this Agreement may be filed as a financing
      statement in any Uniform Commercial Code recording office.

     

    8.  Senior
      Creditors’ Freedom of Dealing.
      Each
      Junior Creditor agrees, with respect to the Senior Debt Documents and any and
      all collateral therefor or guaranties thereof, that the Company and any Senior
      Creditor may agree to increase the amount of the debt owed to such Senior
      Creditor under the Senior Debt Documents or otherwise modify the terms of any
      of
      the Senior Debt Documents, and any Senior Creditor may grant extensions of
      the
      time of payment or performance to and make compromises, including releases
      of
      collateral or guaranties, and settlements with the Company and all other persons
      in connection with the Senior Debt Documents, in each case without the consent
      of the Junior Creditors and without affecting the agreements of the Junior
      Creditors contained in this Agreement.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    9.  Modification
      or Sale of the Subordinated Debt Documents.
      No
      Junior Creditor will, at any time while this Agreement is in effect, modify
      any
      of the terms of any of the Subordinated Debt or any terms of the Subordinated
      Debt Documents relating to the Subordinated Debt in a manner that would increase
      the amount of the Subordinated Debt or accelerate the anticipated payment
      schedule related to the Subordinated Debt; nor will any Junior Creditor sell,
      transfer, pledge, assign, hypothecate or otherwise dispose of any or all of
      the
      Subordinated Debt to any Person other than a Person who agrees in a writing,
      satisfactory in form and substance to the Senior Creditors, to become a party
      hereto and to succeed to the rights and to be bound by all of the obligations
      of
      the Junior Creditors hereunder. In the case of any such disposition by a Junior
      Creditor, such Junior Creditor will notify the Senior Creditors at least 10
      days
      prior to the date of any of such intended disposition.
      Neither
      any Junior Creditor nor the Company may waive, amend, or modify any conditions
      to any Junior Creditor’s right to receive any Permitted Junior Payments under
      the Junior Convertible Debentures in any manner adverse to the rights and
      benefits of the Senior Creditors hereunder.

     

    10.  No
      Alteration to Subordination Agreement.
      This
      Agreement is solely intended to govern the relative rights of the Senior
      Creditors, on the one hand, and the Junior Creditors, on the other hand, with
      respect to Senior Debt and Subordinated Debt. Nothing contained in this
      Agreement shall impair or otherwise modify, as among the Company, YA Global
      and
      EBW, the obligations and rights of such parties under the Subordination
      Agreement among the Company, YA Global and EBW, dated as of October 31, 2007,
      which remains in full force and effect.

     

    11.  Company’s
      Obligations Absolute.
      Nothing
      contained in this Agreement shall impair, as between the Company and the Junior
      Creditors, the obligation and right of the Company to pay to the Junior
      Creditors all amounts payable in respect of the Subordinated Debt as and when
      the same shall become due and payable in accordance with the terms thereof,
      or
      prevent the Junior Creditors (except as expressly otherwise provided in
Section
      2,
      Section
      3
      or
Section
      6)
      from
      exercising all rights, powers and remedies otherwise permitted by the
      Subordinated Debt Documents and by applicable law upon a default in the payment
      of the Subordinated Debt or under any Subordinated Debt Document as permitted
      herein.
      To the
      extent that any payment received by Junior Creditors with respect to the
      Subordinated Debt must be paid to the Senior Creditors hereunder, as between
      the
      Company and such Junior Creditors such payment shall be deemed a payment of
      Senior Debt and not Subordinated Debt.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    12.  Termination
      of Subordination.
      This
      Agreement shall continue in full force and effect, and the obligations and
      agreements of the Junior Creditors and the Company hereunder shall continue
      to
      be fully operative, until the Discharge of all Senior Debt. To the extent that
      the Company or any guarantor of or provider of collateral for the Senior Debt
      makes any payment on the Senior Debt that is subsequently invalidated, declared
      to be fraudulent or preferential or set aside or is required to be repaid to
      a
      trustee, receiver or any other party under any bankruptcy, insolvency or
      reorganization act, state or federal law, common law or equitable cause (such
      payment being hereinafter referred to as a “Voided
      Payment”),
      then
      to the extent of such Voided Payment, that portion of the Senior Debt that
      had
      been previously satisfied by such Voided Payment shall be revived and continue
      in full force and effect as if such Voided Payment had never been made. In
      the
      event that a Voided Payment is recovered from a Senior Creditor an Event of
      Default shall be deemed to have existed and to be continuing under the Senior
      Debt Documents from the date of such Senior Creditor’s initial receipt of such
      Voided Payment until the full amount of such Voided Payment is restored to
      such
      Senior Creditor. During any continuance of any such Event of Default, this
      Agreement shall be in full force and effect with respect to the Subordinated
      Debt. To the extent that any Junior Creditor has received any payments with
      respect to the Subordinated Debt subsequent to the date of the Senior Creditor’s
      initial receipt of such Voided Payment and such payments have not been
      invalidated, declared to be fraudulent or preferential or set aside, or required
      to be repaid to a trustee, receiver, or any other party under any bankruptcy
      act, state or federal law, common law or equitable cause, such Junior Creditor
      shall be obligated and hereby agrees that any such payment so made or received
      shall be deemed to have been received in trust for the benefit of such Senior
      Creditor, and such Junior Creditor hereby agrees to pay to such Senior Creditor,
      upon demand, the full amount so received by such Junior Creditor during such
      period of time to the extent necessary to restore fully to such Senior Creditor
      the amount of such Voided Payment. Upon the Discharge of all Senior Debt, which
      payment shall be final and not avoidable, this Agreement will automatically
      terminate without any additional action by any party hereto. 

     

    13.  Notices.
      All
      notices and other communications which are required and may be given pursuant
      to
      the terms of this Agreement shall be in writing and shall be sufficient and
      effective in all respects if given in writing, telecopied, delivered in person,
      deposited with Federal Express or other overnight delivery service for overnight
      delivery, or mailed by registered or certified mail, postage prepaid, as
      follows:

     

    
      	
              If
                to the Senior Creditors:

            	 	
              YA
                Global Investments, L.P.

              101
                Hudson Street

              Suite
                3700

              Jersey
                City, New Jersey 07303

              Attention:
                Mark Angelo

              Facsimile:
                (201) 985-8266

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Troy
                Rillo, Esq.

              101
                Hudson Street

              Suite
                3700

              Jersey
                City, New Jersey 07303

              Facsimile:
                (201) 985-1964

            
	 	 	 
	
              and
                to:

            	 	
              Eric
                Bauman

              2590
                Brighton-Henrietta Townline Road

              Rochester,
                New York 14623-2712

              Facsimile:
                (585) 292-0722

               

              and

               

              Neil
                Bauman

              2590
                Brighton-Henrietta Townline Road

              Rochester,
                New York 14623-2712

              Facsimile:
                (585) 292-0722

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Harris
                Beach PLLC

              99
                Garnsey Road

              Pittsford,
                New York 14534

              Attention:
                Patrick J. Dalton, Esq.

              Facsimile:
                (585) 419-8818

            


    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company:

            	 	
              Handheld
                Entertainment, Inc.

              539
                Bryant Street, Suite 403

              San
                Francisco, CA 94107

              Attention:
                President

              Facsimile:
                415-495-7708

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Haynes
                and Boone, LLP

              153
                East 53rd
                Street, Suite 4900

              New
                York, NY 10022

              Attention:
                Harvey J. Kesner, Esq.

              Facsimile:
                212-884-8233

            
	 	 	 
	
              If
                to Carl Page,
                in his capacity as a Junior Creditor:

            	 	
              Carl
                Page

              c/o
                Handheld Entertainment, Inc.

              539
                Bryant Street, Suite 403

              San
                Francisco, CA 94107

              Facsimile:
                415-495-7708

            
	 	 	 
	
              If
                to Eric Bauman,
                in his capacity as a Junior Creditor:

            	 	
              Eric
                Bauman

              2590
                Brighton-Henrietta Townline Road

              Rochester,
                New York 14623-2712

              Facsimile:
                (585) 292-0722

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Harris
                Beach PLLC

              99
                Garnsey Road

              Pittsford,
                New York 14534

              Attention:
                Patrick J. Dalton, Esq.

              Facsimile:
                (585) 419-8818

            
	 	 	 
	
              If
                to any other Junior Creditor:

            	 	
              c/o
                Chicago Investment Group, LLC

              190
                South LaSalle Street, 8th Floor, Ste. 850

              Chicago,
                Illinois 60603

              Attention:
                Richard Lynch

              Facsimile:
                (312) 857-2050

            


    

     

    or
      such
      other address or addresses as any party hereto shall have designated by written
      notice to the other parties hereto. Notices shall be deemed given and effective
      upon the earlier to occur of (i) the third day following deposit thereof in
      the
      U.S. mail, (ii) the first day following deposit with Federal Express or other
      overnight delivery service for overnight delivery, or (iii) receipt by the
      party
      to whom such notice is directed.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    14.  Governing
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK,
      WITHOUT
      GIVING EFFECT TO ANY PROVISION THEREOF WHICH WOULD REQUIRE THE APPLICATION
      OF
      THE LAW OF ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO HEREBY CONSENTS
      AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF
      NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
      ANY
      CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO PERTAINING TO THIS AGREEMENT
      OR TO
      ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, PROVIDED,
      THAT
      EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE
      COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY,
      AND
      THAT CERTAIN BANKRUPTCY ACTIONS OR PROCEEDINGS MAY REQUIRE ANOTHER JURISDICTION
      OR VENUE. SUBJECT TO THE FOREGOING, EACH OF THE PARTIES HERETO HEREBY EXPRESSLY
      SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
      COMMENCED IN ANY SUCH COURT, AND HEREBY WAIVES ANY OBJECTION THAT SUCH PERSON
      MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS
      AND
      HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
      APPROPRIATE BY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY WAIVES PERSONAL
      SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
      OR
      SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
      MAY
      BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT THE ADDRESS
      SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
      UPON THE EARLIER OF SUCH PERSON’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
      DEPOSIT IN THE UNITED STATES MAIL, REGISTERED OR CERTIFIED, WITH PROPER POSTAGE
      PREPAID.

     

    15.  Waiver
      of Jury Trial.
      EACH OF
      THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
      ANY
      ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
      ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
      OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE PARTIES HERETO HEREBY
      WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
      REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
      CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR
      ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
      IT
      WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
      AND
      (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
      AMONG
      OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    16.  Miscellaneous. 

     

    (a) This
      Agreement may be executed in several counterparts and by each party on a
      separate counterpart, each of which when so executed and delivered shall be
      an
      original, and all of which together shall constitute one instrument. In proving
      this Agreement, it shall not be necessary to produce or account for more than
      one such counterpart signed by the party against which enforcement is sought.
      

     

    (b) This
      Agreement may not be amended except in a writing signed by the parties hereto.
      Any Senior Creditor may, in its sole and absolute discretion, without any
      consent or approval of the Junior Creditors, waive any provisions of this
      Agreement benefiting such Senior Creditor; provided,
      however,
      that
      such waiver shall be effective only if in writing and signed by such Senior
      Creditor and, if such action affects the Company or any other Senior Creditor,
      if also signed by each affected party, and shall be limited to the specific
      provision or provisions expressly so waived. 

     

    (c) This
      Agreement shall be binding upon the permitted successors and assigns of the
      parties hereto and shall inure to the benefit of the parties hereto and their
      respective successors and assigns. This Agreement may not be assigned by any
      party hereto without the prior written consent of the other parties hereto.
      Notwithstanding the immediately preceding sentence, upon written notice (i)
      any
      Junior Creditor may assign this Agreement to the extent provided in Section
      9
      and (ii) any Senior Creditor may assign this Agreement to any Person who or
      which agrees in a writing to become a party hereto and to succeed to the rights
      and be bound by all of the obligations of such Senior Creditor
      hereunder.

     

    [Signature
      pages follow immediately]

    


     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Secondary Subordination Agreement as of the
      date first above written.

    
      	 	 	 
	YA
              GLOBAL:	
              YA
                GLOBAL INVESTMENTS, L.P.

            
	 	
              By:
                Yorkville Advisors, LLC, its Investment Manager

            
	 
 	 
 	 
 
	 	By:  	/s/ Mark
              Aneglo
	 	
              
Name:
              Mark Angelo
	 	
              Title:
                President and Foudner

            


    

     

    
      	 	 	 
	EBW:	
              EBAUM’S
                WORLD, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Eric
              Bauman
	 	
              

              Name:
                Eric Bauman

            
	 	
              Title:
                President

            



      	 	 	 
	COMPANY:	
              HANDHELD
                ENTERTAINMENT, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ William
              J. Bush 
	 	
              

              Name:
                William J. Bush

            
	 	
              Title:
                Chief Financial Officer

            


    

     

    [Junior
      Creditor counterpart signature pages follow]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    JUNIOR
      CREDITOR COUNTERPART SIGNATURE PAGE

     

    IN
      WITNESS WHEREOF,
      the
      undersigned Junior Creditor has executed this counterpart signature page to
      the
      Secondary Subordination Agreement as of the date first above
      written.

     

    
      	
              JUNIOR
                CREDITOR:  
                

            	 	 
	
              (If
                an
                entity)  


            	   	
            
	 	
              

            
	 	 	 
	 	By:  	 
	 	
              

              Name:

            
	 	
              Title:

            


    

     

    
      	
              (If
                an
                individual)    

            	 
	 	
              Name:

            


    

     

    
      	
              
                Address:    
                  

              

            	  
	 	   
              
	 	  

	 	Attention:
	 	Facsimile: