Unassociated Document


     

    


    


    


    May 12, 2009

    


    


    Mr. Mark
Seremet

    268
Trinity Pass

    Pound
Ridge, New York 10576

    


    Dear
Mark:

    


    This will
confirm that you have personally executed and delivered the attached guarantee
(the “Guaranty”) of that certain financing dated April 6, 2009 between Wells
Fargo Bank and Zoo Publishing, Inc., (the “Loan”).

    


    In
consideration for you providing the Guaranty, Zoo Entertainment, Inc. (“Zoo”)
and you hereby agrees as follows:

    


    1. For so
long as the Loan and the Guaranty remain in full force and effect, Zoo shall pay
you a monthly fee of $10,000 per month; provided, however, if for any three
consecutive months no amount of the Loan is due and owing (but it has not been
terminated) for any one day during that time, the monthly  fee shall
not be owed for the following month.  You agree that so long as you
remain employed by Zoo or any of its subsidiaries, you will not withdraw the
Guaranty during the term of the Loan.   In addition, Zoo agrees
that your employment will not be terminated (except for cause under the terms of
your employment agreement with Zoo or its subsidiaries) and your status,
compensation and benefits with the company that employs you will not be
diminished as long as the Guaranty and the Loan are in
effect.   Zoo agrees that in the event you terminate employment
for any reason, Zoo will use its best efforts to have your name removed from the
Guaranty as soon as possible thereafter.  If the Guaranty is not
released by the end of the month following termination of employment the monthly
fee shall be doubled to $20,000 for each month thereafter until the Guaranty is
removed.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    2.
Promptly following the earlier of (a) the conversion of at least 25% of all
currently existing convertible debt of Zoo into equity of Zoo and (b) 180 days
from the date of this letter agreement (regardless of whether all or only a
portion of the currently existing convertible debt has been converted) and, in
each case, subject to the below, Zoo shall issue to you, options to acquire
shares of Zoo common stock equal to 6% of the then issued and outstanding shares
of common stock of Zoo (based on a fully diluted current basis assuming those
options and warrants that have an exercise price below $.40 per share (as
adjusted for stock splits, dividends, reorganizations and like events) are
exercised on that date but not counting the potential conversion to equity of
any outstanding convertible notes that have not yet been converted) inclusive of
any options or other equity securities or securities convertible into equity of
Zoo that you may own at the time of such issuance (the “New Options”); provided,
however, that any options that you own on the date of issuance of the New
Options with an exercise price that is higher than the exercise price of the New
Options shall be cancelled as of the date of the issuance of the New Options and
shall not be considered in determining your percentage ownership for purposes of
calculating the number of New Options to be granted to you.  The New
Options shall be issued under the Zoo 2007 Employee, Director and Consultant
Stock Plan and
standard form of nonqualified stock option agreement; provided however that in
the event the Guaranty on the Loan has not been released by Wells Fargo Bank as
of the date of the termination of the option due to termination of service, the
option termination date shall be extended until the earlier of the date of the
release of the Guaranty or the expiration of the ten year term.

    


    


     

    
      
        	 	
                Sincerely yours

                Zoo Entertainment, Inc.

              	 
	 	 	 	 
	 	
                By:
      

              	/s/ David
      Fremed	 
	 	 	David Fremed,
      CFO	 
	 	 	 	 
	 	 	 	 


      

    

     

    


    


    
      
        
          	
                  Accepted
      & Agreed:

                   

                   

                	 	 	 	 
	
                  /s/
      Mark Seremet

                	 	 	 	 
	
                  Mark
      Seremet