Document:

Exhibit
      10.8

    

    BACKUP
      SERVICING AGREEMENT

    

    This
      Backup Servicing Agreement
      (this
“Agreement”)
      is
      made and entered into as of February 28, 2007 (the “Effective
      Date”),
      by
      and between DEUTSCHE BANK NATIONAL
      TRUST
      COMPANY, a New York banking corporation, operating out of its offices in Santa
      Ana, California (the "Trustee"),
      solely in its capacity as trustee of the NovaStar Mortgage Funding Trust, Series
      2007-1 (the “Trust”)
      pursuant to the Pooling Agreement (as hereinafter defined) and Countrywide
      Home
      Loans Servicing LP, having a principal office at 4500 Park Granada CH-11,
      Calabasas, California 91302 (the "Backup
      Servicer"
      or
      "Countrywide").

    

    1. ACCEPTANCE
      AND TERMS AND CONDITIONS:
      By
      acceptance of this Agreement, Backup Servicer agrees to be bound by, and to
      comply with all the terms and conditions of this Agreement, and the Pooling
      Agreement.
      All
      capitalized terms used herein, and not otherwise defined herein, shall have
      their respective meanings as set forth in the Pooling Agreement.

    

    2. SCOPE
      OF WORK:
      The
      Pooling Agreement has specified the services to be provided by Backup Servicer
      to the Trust, (the “Services”)
      as
      more specifically set forth on Exhibit A hereto. No later than the time of
      execution of this Agreement, the Trustee shall provide Backup Servicer a copy
      of
      the executed Pooling and Servicing Agreement, dated as of February 1, 2007
      (the
“Pooling
      Agreement”)
      by and
      among NovaStar Mortgage Funding Corporation, as Depositor (the “Depositor”),
      NovaStar Mortgage, Inc., as Servicer and as Sponsor (the “Servicer”
and
      the
“Sponsor”),
      U.S.
      Bank National Association, as Custodian (the “Custodian”)
      and
      Deutsche Bank, as Trustee. Services shall be provided to the Trust in accordance
      with the procedures described in the Pooling Agreement and on Exhibit A hereto.
      

    

    3. FEES
      AND EXPENSES:
      For the
      Services performed and provided under this Agreement, Backup Servicer shall
      be
      paid pursuant to the Pooling Agreement in accordance with the terms
      thereof.

    

    4. TERM:
      Subject
      to the termination provisions of this Agreement, this Agreement shall be in
      effect for so long as the Pooling Agreement has not terminated pursuant to
      Section 11.01 thereof (the “Term”
of
      this
      Agreement).

    

    5. PAYMENT:
      Prior
      to becoming the successor Servicer, and except as otherwise provided on Exhibit
      A hereto, any fee payable to Backup Servicer shall be paid on each Distribution
      Date, as set forth in Section 4.01 of the Pooling Agreement and if Backup
      Servicer becomes the successor Servicer under the Pooling Agreement, then Backup
      Servicer as successor Servicer shall be entitled to retain Servicing Fees and
      other reimbursable amounts as provided in the Pooling Agreement. 

    

    6. APPOINTMENT
      AS AGENT:
      The
      Backup Servicer is hereby appointed as provided in the Pooling Agreement to
      act
      as successor to the Servicer during the Term solely to the extent necessary
      for
      Backup Servicer to render Services in accordance with the terms and conditions
      of this Agreement and the Pooling Agreement, and Backup Servicer hereby accepts
      such appointment. In all other respects, the status of Backup Servicer to the
      Trust shall be that of an independent contractor and not any other relationship
      including agent, partner, joint venturer or employee, and Backup Servicer shall
      act consistently with its independent contractor status in connection with
      such
      other matters. Backup Servicer shall not make any representation to any person
      inconsistent with this paragraph. None of Backup Servicer’s employees or agents
      shall be deemed employees of the Trustee or of the Trust.

    

    7. SUBCONTRACTOR
      APPROVAL:
      Backup
      Servicer shall not assign this Agreement or the Services hereunder or delegate
      its rights or duties hereunder or any portion thereof, without the prior written
      approval of the Trustee and the Sponsor; provided, however, that, without the
      Trustee’s or the Sponsor’s consent, Backup Servicer may (a) outsource certain
      specific functions to a third party, and (b) in order to fulfill its obligations
      as Backup Servicer hereunder, delegate certain specific functions to any entity
      that is directly or indirectly owned by Backup Servicer or any entity
      controlling, controlled by or under common control with, Backup Servicer. Backup
      Servicer shall remain liable for the conduct of any subcontractor, including
      any
      third party to which it outsources or otherwise delegates its specific
      functions, to the same extent as Backup Servicer’s liability under this
      Agreement. Backup Servicer shall be solely responsible for the compensation
      due
      to any such subcontractor for Services rendered in connection with this
      Agreement. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    8. REPRESENTATIONS
      AND WARRANTIES OF BACKUP SERVICER:
      Backup Servicer
      shall
      provide all Services with at least the same degree of care as that used by
      prudent mortgage servicing institutions which provide similar services. Backup
      Servicer warrants and represents that (a) it is duly organized and in good
      standing under applicable law; (b) it has the full power and authority to
      perform under this Agreement and under the Pooling Agreement, and (c) the
      execution and delivery of this Agreement will not conflict with or result in
      a
      breach of the terms and conditions of any other agreement to which Backup
      Servicer is a party. Backup Servicer further warrants and represents that any
      Services provided by Backup Servicer: (i) shall comply with all applicable
      laws,
      regulations, standards and codes, and (ii) shall otherwise fully conform in
      all
      respects to the Scope of Work document included as part of this Agreement.
      Backup Servicer shall promptly correct nonconforming Services at no additional
      charge.

    

    9. REPRESENTATIONS
      AND WARRANTIES OF THE TRUSTEE:
      The
      Trustee warrants and represents that (a) it is duly organized and in good
      standing under applicable law; and (b) it has the full power and authority
      to
      perform under this Agreement pursuant to the powers vested in it under the
      Pooling Agreement and as provided therein to execute and deliver this
      Agreement.

    

    10. INTELLECTUAL
      PROPERTY RIGHTS WARRANTY:
      In addition to its representations and warranties under Section 8 above,
Backup
      Servicer warrants and represents that it owns, or has the right to use or
      license (and sublicense where applicable) under valid and enforceable
      agreements, all intellectual property or proprietary rights, including
      copyrights, patents or pending applications for patent protection, derivative
      works, publicity rights, trade secrets, trademarks, trade names, service marks,
      logos, and all improvements or modifications of the foregoing (collectively,
      “Intellectual Property”), in any and all jurisdictions and in any and all media,
      reasonably necessary for or related to the performance of the Services. Backup
      Servicer further represents and warrants the performance of the Services and
      the
      Trustee’s use of any materials furnished by Backup Servicer shall not infringe
      or violate the Intellectual Property rights of any third party.

    

    11. INDEMNIFICATION
      BY THE BACKUP SERVICER:

    

    (a) Backup
      Servicer hereby agrees to indemnify, hold harmless and defend the Trustee and
      the Trust, their respective successors and assigns, and each of their officers,
      directors and employees (collectively, the “Indemnitees”), at Backup Servicer’s
      sole expense, from any judgment, loss, damage, penalty, cost, fine and/or
      expense (including reasonable attorneys' fees) that the Indemnitees may suffer
      or incur by reason of any claim or the defense of any claim, suit, or proceeding
      to the extent caused by: 

    

    (i) any
      acts
      or omissions, negligence or willful or wanton misconduct of Backup Servicer,
      its
      subcontractors, and or any of their officers, agents, servants, or employees,
      whether attributable wholly or in part, resulting in liability or injury to
      the
      Indemnitees; 

    

    (ii) the
      breach or alleged breach of any of the undertakings, representations or
      warranties made by Backup Servicer; 

    

    (b) Backup
      Servicer shall defend, at its sole expense, every such claim, suit, or
      proceeding, and shall be given authority, information, and assistance for,
      at
      Backup Servicer's sole expense, the defense of such claim, suit, or proceeding.
      Backup Servicer shall pay all judgments, losses, damages, penalties, costs,
      fines, and expenses awarded against the Indemnitees in every such claim, suit,
      or proceeding and indemnify, defend and hold harmless the Indemnitees at Backup
      Servicer’s sole expense, from any judgment, loss, damage, penalty, cost, fine
      and/or expense (including reasonable attorneys' fees) which any of them may
      incur by reason thereof. 

    

    (c) Backup
      Servicer shall indemnify, hold harmless, and defend the Indemnitees, at Backup
      Servicer's sole expense, against every claim, suit, proceeding, judgment, loss,
      damage, penalty, cost, fine and/or expense (including reasonable attorneys'
      fees) brought against or imposed upon the Indemnitees for any violation or
      alleged violation of any applicable law by Backup Servicer or by any officer,
      agent, employee, or subcontractor of Backup Servicer.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (d) Backup
      Servicer hereby agrees to perform all required obligations with respect to
      compliance with the Exchange Act as set forth in the Pooling Agreement and
      to
      fully indemnify the parties thereto with respect to any noncompliance with
      such
      obligations.

    

    (e) With
      regard to each of (a), (b), (c) and (d) above, the Indemnitees shall have the
      right to participate in the defense and settlement of any claims.

    

    12. INDEMNIFICATION
      OF BACKUP SERVICER:

    

    The
      Trust
      hereby agrees to indemnify, hold harmless and defend Backup Servicer, its
      successors and assigns, and each of their officers, directors and employees
      (collectively, the “Backup Servicer Indemnitees”), at the Trust’s sole expense,
      from any judgment, loss, damage, penalty, cost, fine and/or expense (including
      reasonable attorneys' fees) that the Backup Servicer’s Indemnitees may suffer or
      incur by reason of any claim or the defense of any claim, suit, or proceeding,
      to the same extent and on the same terms as the Servicer is indemnified, as
      provided in Section 6.03 of the Pooling Agreement; provided that, in addition,
      the Backup Servicer's Indemnities shall also be indemnified by the Trust for
      any
      claims, etc. based upon the acts or omissions of the prior Servicer, any
      originator of any Mortgage Loan or of any other third party. 

    

    13. POOLING
      AGREEMENT INDEMNITEES.
      The
      Indemnification arrangements provided for in Sections 11 and 12 hereof are
      in
      addition to any indemnification arrangements which may be provided for in the
      Pooling Agreement.

    

    14. LIMITATION
      OF LIABILITY OF BACKUP SERVICER AND OTHERS:
      Neither
      Backup Servicer nor any of the officers, employees or agents of Backup Servicer
      shall be under any liability to the Trust or the Trustee for any action taken
      or
      for refraining from the taking of any action, to the same extent as the Servicer
      would not be so liable under such circumstances, as provided in Section 6.03
      of
      the Pooling Agreement. 

    

    15. LIMITATION
      ON LIABILITY:
      NONE OF THE TRUSTEE, THE TRUST OR THE BACKUP SERVICER SHALL, UNDER ANY
      CIRCUMSTANCES, BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
      PUNITIVE, OR CONSEQUENTIAL LOSSES, DAMAGES, COSTS, OR EXPENSES
      WHATSOEVER.

    

    16. TRUSTEE
      CAPACITY: 
      It is expressly understood and agreed by the parties hereto that,
      notwithstanding the execution of this Agreement by Trustee on behalf of the
      Trust, Trustee shall perform only as required pursuant to the Pooling Agreement
      and each of the representations, undertakings and agreements herein made by
      the
      Pooling Agreement is made and intended for the purpose of binding only the
      Trust, and that the Trustee in its individual capacity shall not be personally
      liable under any circumstance for the payment of any indebtedness, expense,
      or
      obligation or be personally liable for the breach or failure of any obligation,
      representation, warranty or covenant made or undertaken except as provided
      in
      the Pooling Agreement. The Trustee shall be afforded all of the rights,
      protections and immunities available to the Trustee under the Pooling Agreement
      in connection with its performance hereunder. 

    

    17. TERMINATION: 
      The
      Trustee may, at the direction of the Servicing Rights Pledgee (as defined in
      the
      Pooling Agreement) terminate all or any part of this Agreement upon thirty
      (30)
      days prior written notice to Backup Servicer, in which case Backup Servicer
      shall be entitled to retain the Servicing Fees accruing prior to the date of
      termination. In the event of such termination Backup Servicer shall immediately
      stop rendering Services hereunder and shall immediately cause any of its
      subcontractors to cease work and deliveries. To the extent the termination
      occurs pursuant to this Section, the Trust shall, at the expense of the
      Servicing Rights Pledgee, reimburse Backup Servicer for all costs and expenses
      incurred in connection with the transition of Services.

    

    18. AMENDMENT: 
      This
      Agreement may be amended from time to time by the parties hereto, provided
      that
      any amendment be accompanied by a letter from the Rating Agencies that the
      amendment will not result in the downgrading, qualification or withdrawal of
      the
      rating then assigned to any Class of Certificates.

    

    19. GOVERNING
      LAW:
      THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
      YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
      RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
      WITH SUCH LAWS.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    20. NOTICES:
      All
      demands, notices and communications hereunder shall be in writing and shall
      be
      deemed to have been duly given if when delivered to:

    

    

    
      	 	
              a)

            	
              in
                the case of the Backup Servicer: 

            

    

    

    Countrywide
      Home Loans/Portfolio Services Group

    1800
      Tapo
      Canyon Rd, MS SV2-103A

    Simi
      Valley, CA 93063

    Attention:
      Tom Lin

    

    
      	 	
              b)

            	
              in
                the case of Rating Agencies:

            

    

    

    Standard
      & Poor’s, a division of The McGraw-Hill Companies, Inc.

    55
      Water
      Street - 41st Floor

    New
      York,
      New York 10041

    Attention:
      Daniel Larkin

    

    Moody’s
      Investors Service, Inc.

    99
      Church
      Street

    New
      York,
      New York 10007

    Attention:
      Rachel Peng

    

    
      	 	
              c)

            	
              in
                the case of the Trustee:

            

    

    

    Deutsche
      Bank National Trust Company

    1761
      East
      St. Andrew Place

    Santa
      Ana, CA 92705

    Attention:
      Trust Administration -- NS0701

    

    21. SEVERABILITY
      OF PROVISIONS:
      If any
      one or more of the covenants, agreements, provisions or terms of this Agreement
      shall be for any reason whatsoever held invalid, then such covenants,
      agreements, provisions or terms shall be deemed severable from the remaining
      covenants, agreements, provisions or terms of this Agreement and shall in no
      way
      affect the validity or enforceability of the other provisions of this
      Agreement.

    

    22. THIRD-PARTY
      BENEFICIARIES:
      This
      Agreement will inure to the benefit of and be binding upon the parties hereto,
      the parties to the Pooling Agreement and the Certificateholders and their
      respective successors and permitted assigns. Except as otherwise provided in
      this Agreement, no other Person will have any right or obligation hereunder.
      The
      Trustee shall have the right to exercise all rights of the Trust under this
      Agreement. The Sponsor and its officers and directors (in their corporate or
      individual capacity) shall have the right to bring an action against the Backup
      Servicer as it relates to a failure of the Backup Servicer to comply with its
      obligations under Section 11(d) of this Agreement.

    

    23. COUNTERPARTS:
      This
      instrument may be executed in any number of counterparts, each of which so
      executed shall be deemed to be an original, but all such counterparts shall
      together constitute but one and the same instrument.

    

    24. EFFECT
      OF HEADINGS AND TABLE OF CONTENTS:
      The
      Article and Section headings herein and the Table of Contents are for
      convenience only and shall not affect the construction hereof.

    

    25. NO
      PETITION:
      The
      Backup Servicer, by entering into this Agreement, hereby covenants and agrees
      that it will not at any time institute against the Trust, or join in any
      institution against the Trust, any bankruptcy proceedings under any United
      States federal or state bankruptcy or similar law in connection with any
      obligations of the Trust. This section shall survive the satisfaction and
      discharge of the Pooling Agreement by one year.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    26. NO
      RECOURSE:
      The
      Backup Servicer acknowledges that no recourse may be had against the Trust,
      except as may be expressly set forth in this Agreement.

    

    27. CONSENT
      TO JURISDICTION:
      The
      parties to this Agreement each hereby irrevocably submits to the non exclusive
      jurisdiction of any New York State or federal court sitting in the Borough
      of
      Manhattan in The City of New York in any action or proceeding arising out of
      or
      relating to this Agreement or the transactions contemplated hereby, and all
      such
      parties hereby irrevocably agree that all claims in respect of such action
      or
      proceeding may be hard and determined in such New York State or federal court
      and hereby irrevocably waive, to the fullest extent that they may legally do
      so,
      the defense of an inconvenient forum to the maintenance of such action or
      proceeding. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
      EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
      ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY.

    

    28. RELATIONSHIP
      TO POOLING AGREEMENT.
      In the
      event of any inconsistency between this Agreement and the Pooling Agreement,
      the
      Pooling Agreement shall control.

    

    

     

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
      have
      caused this Agreement to be executed by their duly authorized representatives
      as
      of the day and year first above written.

     

     

    
      	
              DEUTSCHE
                BANK NATIONAL
                TRUST

              COMPANY,
                not in its individual 

              capacity
                but solely as Trustee 

            	
              COUNTRYWIDE
                HOME LOANS SERVICING LP,

              as
                Backup Servicer

              By:
                Countrywide GP, INC.

            
	 	 
	 	 
	
              By:/s/
                Ronaldo Reyes            

            	
              By:/s/
                Thomas P. Lin            

            
	
              Name:Ronaldo
                Reyes            

            	
              Name:Thomas
                P. Lin            

            
	
              Title:Vice
                President              

            	
              Title:Senior
                Vice President         

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    

    SCOPE
      OF WORK

    

    Dated
      as of February 28, 2007

    

    (a)
      Compensation:

    

    The
      Servicer shall pay a nonrefundable initial fee of $15,000 to Countrywide to
      act
      as cold Backup Servicer. Such fee shall be payable within thirty days of the
      execution of this Agreement. Thereafter, until such time as the Backup Servicer
      is terminated, or becomes the Successor Servicer, the Backup Servicer shall
      receive a monthly fee payable as provided in Section 4.01(a)(i) of the Pooling
      Agreement, equal to the greater of (1) 1/12 of 0.01% per annum times the Pool
      Balance as of the first day of the related Due Period (as defined in the Pooling
      Agreement) and (2) $2,250.

    

    If
      appointed as Successor Servicer under the Pooling Agreement, Countrywide shall
      be entitled to compensation based on the greater of (a) the Servicing Fee
      provided for in the Pooling Agreement or (b) the aggregate servicing fee per
      mortgage loan as set forth on Exhibit B attached hereto plus reimbursement
      of
      any compensating interest and prepayment interest shortfall obligations. In
      addition Countrywide shall be entitled to receive all other compensation
      otherwise payable to the Servicer under the related Pooling Agreement, including
      but not limited to the late fees, interest on deposits into the collection
      and
      escrow accounts as well as any other ancillary income payable to the Servicer.
      Such servicing compensation shall begin to accrue on the effective date of
      any
      servicing transfer. 

    

    (b)
      Responsibilities of Backup Servicer:

    

    For
      so
      long as Countrywide acts as Backup Servicer, the Servicer shall provide to
      Countrywide a monthly pool activity tape no later than the 18th day of each
      month (in a format acceptable to Countrywide). Countrywide shall retain such
      reports as Backup Servicer for the Trust and shall have no further obligations
      to render Services as Backup Servicer. Upon request, in anticipation of
      transferring the servicing to Countrywide, and no earlier than sixty (60) days
      prior notice of the anticipated transfer, the Servicer shall provide Countrywide
      with a preliminary electronic data file as of the last cut off date from the
      Servicer.

    

    The
      Backup Servicer has no reporting, monitoring or reconciliation obligations
      during the back-up servicing period (i.e., prior to becoming the successor
      Servicer).

    

    If
      the
      Backup Servicer becomes the successor Servicer under the Pooling Agreement,
      the
      Backup Servicer shall thereafter perform all of the duties of the Servicer
      under
      the Pooling Agreement.

    

    (c)
      Costs and Expenses:

    

    Countrywide
      and the Trust shall each be responsible for its own expenses in connection
      with
      the performance of its obligations under this Agreement, which include, but
      are
      not limited to, its legal and accounting fees and data conversion costs. Without
      limiting the generality of the foregoing, in connection with the transfer of
      servicing from the terminated Servicer to Countrywide, Countrywide shall be
      reimbursed from the terminated Servicer (or, if not from the terminated
      Servicer, then as provided in Section 3.07 of the Pooling Agreement) for (i)
      all
      servicing transfer costs and expenses incurred by Countrywide not to exceed
      $10
      per loan, (ii) its out-of-pocket costs incurred to transfer any third party
      contracts including but not limited to the transfer of flood insurance
      monitoring and real estate tax service contracts with respect to the Mortgage
      Loans, (iii) any other documented third party costs or expenses in connection
      with the physical transfer of servicing to Countrywide, and (iv) any costs
      to
      correct any material errors or insufficiencies in the servicing data.
      Countrywide shall not be responsible for any fees or expenses related to the
      preparation and recording of assignments, transfer of servicing in MERS and
      any
      other third party costs. If Countrywide is terminated as successor Servicer
      without cause by the Trustee at the direction of the Servicing Rights Pledgee
      (as defined in the Pooling Agreement), Countrywide shall be entitled to a
      service release fee to be paid by the Servicing Rights Pledgee equal to $10.00
      per loan (subject to a minimum of $10,000 per transfer) and shall be entitled
      to
      100% reimbursement of any advances made pursuant to the Pooling Agreement
      including but not limited to unpaid delinquency advances, servicing advances,
      and prepayment interest shortfall advances.

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    EXHIBIT
      B

    

    MINIMUM
      SERVICING FEES

    

    

    
      	
              Minimum
                Servicing Fee

            	
              1st
                lien

            	
              2nd
                lien

            	 
	
              Current

            	
              $  
                10.00

            	
              $ 
                 10.00

            	
              per
                loan/mo

            
	
              30
                days delinquent

            	
              $  
                35.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              60
                days delinquent

            	
              $  
                75.00

            	
              $  
                75.00

            	
              per
                loan/mo

            
	
              90
                days delinquent

            	
              $  
                90.00

            	
              $  
                65.00

            	
              per
                loan/mo

            
	
              120+
                days delinquent

            	
              $  
                90.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              Foreclosure

            	
              $
                150.00

            	
              $
                225.00

            	
              per
                loan/mo

            
	
              Bankruptcy

            	
              $  
                35.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              REO

            	
              $
                300.00

            	
              $
                300.00

            	
              per
                loan/month

            

    

    

    
      
         

      

      
        iUnassociated Document

    ESCROW
      AGREEMENT 

    

    This
      ESCROW AGREEMENT (the “Agreement”),
      dated
      as of November 13, 2006 (the “Effective
      Date”),
      is
      made by and among Zeus Promotions, LLC, a Delaware limited liability company
      (“Zeus”),
      Handheld Entertainment, Inc., a Delaware corporation (“Handheld”),
      John
      Kowal, an individual (the “Member”),
      and
      Niesar Curls Bartling & Whyte, LLP, a California limited liability
      partnership, as escrow agent (the “Escrow
      Agent”).

     

    R
      E C
      I T A L S:

     

    WHEREAS,
      Zeus and Handheld are parties to that certain Membership Interest Purchase
      Agreement, dated as of November 13, 2006 (the “Purchase
      Agreement”),
      pursuant to which Handheld will purchase, and Zeus will sell, one hundred
      percent (100%) of the outstanding membership interest of Dorks, LLC (the
“Interest”),
      which
      is entirely owned by Zeus;

     

    WHEREAS,
      Article 7 of the Purchase Agreement provides for the indemnification of Handheld
      by Zeus and Member from certain losses that may be incurred by it;
      and

     

    WHEREAS,
      consummation of the Purchase Agreement is conditioned upon the execution and
      delivery of this Agreement and this Agreement is an essential part of the
      consideration for which Handheld is willing to enter into the Purchase Agreement
      and to consummate the transactions contemplated thereby.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises, and for other good and
      valuable consideration, the receipt and adequacy of which is hereby
      acknowledged, it is hereby agreed as follows:

     

    1. Appointment
      of Escrow Agent.
      

     

    (a) The
      parties hereto hereby designate and appoint the Escrow Agent as escrow agent
      to
      act in accordance with the terms of this Agreement, and the Escrow Agent agrees
      to act as such escrow agent on the terms, conditions and provisions provided
      in
      this Agreement. 

     

    (b) On
      or
      before the Effective Date, Handheld will deposit:

     

    (i) Twenty
      Five Thousand Dollars ($25,000.00) in cash (the “Escrow
      Amount”)
      with
      the Escrow Agent for the account of Zeus. The Escrow Amount, together with
      any
      interest accrued thereon, shall be hereinafter referred to as the “Escrow
      Account.”
The
      Escrow Agent shall hold, administer, distribute and dispose of the Escrow
      Account in accordance with the terms and conditions of this Agreement;

     

    2. Escrow
      Account.
      

     

    (a) The
      Escrow Agent shall establish the Escrow Account as an Attorney Trust Account
      with such bank with offices in San Francisco, California, as it shall deem
      appropriate. Gerald V. Niesar shall be the only signatory on the Escrow Account.
      The Escrow Agent shall provide each of Handheld, Zeus and Member with complete
      information concerning the Escrow Account, including a telephone access code
      allowing each to determine the balance of the Escrow Account on any banking
      day.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3. Payments
      From Escrow.
      The
      Escrow Agent shall hold the Escrow Account in accordance with this Agreement
      and
      shall make payments from the Escrow Account only as provided by Sections 3
      and 4
      hereof or as further directed in writing by both Zeus and Handheld:

     

    (a) In
      the
      event the Escrow Agent is duly instructed to disburse funds from the Escrow
      Account to any party, (i) the Escrow Agent shall disburse such funds by mailing
      a check to such party at the address set forth in the instruction; or (ii)
      if
      the Escrow Agent is instructed to transfer funds from the Escrow Account to
      any
      bank for the account of any party, the Escrow Agent shall disburse such funds
      by
      electronic transfer; provided, however, that the Escrow Agent may require the
      party issuing the instruction to agree to appropriate security procedures to
      verify that the instruction is that of such issuing party;

     

    (b) Handheld
      shall be paid such amounts as are authorized to be paid to Handheld pursuant
      to
      Section 4 below.

     

    (c) Six
      (6)-months following the Effective Date, Zeus shall be paid an amount equal
      to
      the entire Unclaimed Deposit (as hereinafter defined). For purposes of this
      agreement, the “Unclaimed
      Deposit”
shall
      mean the entire balance of the Escrow Account then remaining, minus the
      aggregate of the then existing Claim Reserves for Open Claims and any interest
      accrued thereon. 

     

    (d) Within
      two banking days of the Escrow Agent’s having received a copy of a Final
      Determination (as hereinafter defined) for an Open Claim, the amount payable
      to
      Handheld under the Final Determination for such Open Claim shall be paid to
      Handheld from the Claim Reserve for such Open Claim and the balance of such
      Claim Reserve shall then be paid to Zeus, to the extent authorized in Section
      4
      below.

     

    (e) Within
      two banking days of the Escrow Agent’s having received a joint written
      instruction by Handheld and Zeus that an Open Claim is no longer disputed,
      the
      Escrow Agent shall pay the Claim Reserve for such Open Claim plus any interest
      accrued thereon to Zeus; provided, however that if the date set forth in Section
      3(c) has not yet passed, such portion of the Claim Reserve plus any interest
      accrued thereon shall simply cease to be a reserved portion of the Escrow
      Account. 

     

    4. Handheld
      Claims.
      The
      procedure for payments from the Escrow Account shall be as follows:

     

    (a) From
      time
      to time prior to the date identified in Section 3(c) above as Handheld
      determines that it is entitled to an indemnification payment under Article
      VII
      of the Purchase Agreement, it may request payment from the Escrow Account by
      giving written notice of its claim to the Escrow Agent and Zeus in accordance
      with the provisions of Section 13 below, certifying in such notice (i) the
      nature of the claim, (ii) the amount thereof if then ascertainable and, if
      not
      then ascertainable, the estimated maximum amount thereof (provided however,
      that
      Handheld shall provide the Escrow Agent with a specific amount), (iii)
      provisions in the Purchase Agreement on which the claim is based, (iv) that
      such
      request for payment is being made in good faith, and (v) that notice of
      Handheld’s request for indemnification has been provided to Zeus in accordance
      with Article VII of the Purchase Agreement (a “Claim
      Notice”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) If
      the
      Escrow Agent has not received written objection to a Claim Notice given by
      Handheld in accordance with the preceding Section 4(a) from Zeus within twenty
      (20) days after receipt by the Escrow Agent of the Claim Notice of such claim
      from Handheld, the Escrow Agent shall promptly thereafter pay to Handheld,
      in
      the manner specified in the Claim Notice, from the Escrow Account the amount
      of
      such claim to the extent of the funds in the Escrow Account, plus any interest
      accrued on such amount through the date of payment. 

     

    (c) If
      within
      said twenty (20) days the Escrow Agent shall have received from Zeus an
      objection to the claim by Handheld, certifying the nature of and grounds for
      such objection and that such objection is being made in good faith (a copy
      of
      which shall in each case be sent to Handheld by Zeus in accordance with the
      provisions of Section 13 below), then such claim shall be deemed to be an
“Open
      Claim”
and
      the
      Escrow Agent shall reserve within the Escrow Account an amount equal to the
      amount of the Open Claim (which amount for each Open Claim is referred to herein
      as the “Claim
      Reserve”).

     

    (d) The
      amount constituting the Claim Reserve for each Open Claim shall be paid by
      the
      Escrow Agent from the Escrow Account to Handheld only either (i) in accordance
      with a joint written instruction by Handheld and Zeus or (ii) if and to the
      extent consistent with either (A) a certified copy of a final order, decree
      or
      judgment from a court of competent jurisdiction pertaining to the Open Claim
      or
      (B) a certified copy of a final result, determination, finding, judgment and/or
      award from an arbitrator pertaining to the Open Claim, sent to the Escrow Agent
      by Handheld (a “Final
      Determination”),
      and
      any portion of the Claim Reserve for such Open Claim not so required to be
      paid
      to Handheld shall be paid by the Escrow Agent to Zeus in accordance with Section
      3(c) or Section 3(d) above and such Claim Reserve shall be reduced to zero;
      provided, however that if the date set forth in Section 3(c) has not yet passed,
      such portion of the Claim Reserve shall simply cease to be a reserved portion
      of
      the Escrow Account.

     

    5. Termination.
      

     

    (a) This
      Agreement shall terminate on the earliest to occur of:

     

    (i) the
      date
      on which the Escrow Agent shall have been notified in writing by Handheld and
      Zeus that this Agreement shall be terminated; or

     

    (ii) the
      date
      on which the Escrow Agent shall have delivered the entire Escrow Account to
      Handheld or Zeus in accordance with the provisions of Sections 3(c), 3(d) or
      4.

     

    (b) Upon
      termination of this Agreement as set forth in this Section 5, the Escrow Agent
      shall be discharged from all further obligations or responsibilities
      hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6. Duties
      of Escrow Agent.
      

     

    (a) The
      instructions of the parties set forth herein are irrevocable, and the Escrow
      Agent shall act only in accordance with such instructions and in any amendment
      or amendments executed by all parties hereto and not in accordance with any
      contrary instructions from any third person. The duties and obligations of
      the
      Escrow Agent shall be determined solely by the express provisions of this
      Agreement, and the Escrow Agent shall not be liable except for the performance
      of its duties and obligations as are specifically set forth herein.

     

    (b) The
      Escrow Agent shall provide to Zeus and Handheld monthly statements reflecting
      the balance of the Escrow Account and the interest earned thereon. In addition,
      the Escrow Agent shall forward all account records or statements related to
      the
      Escrow Account to Handheld and Zeus promptly upon receipt of the same. The
      Escrow Agent shall deliver to Handheld and Zeus, upon final disbursement, a
      complete accounting of all transactions relating to this Agreement.

     

    7. Liability
      of Escrow Agent.
      In
      order to induce the Escrow Agent to act as escrow agent hereunder, the parties
      hereto agree that: 

     

    (a) The
      Escrow Agent shall not be responsible for or be required to enforce any of
      the
      terms or conditions of the Purchase Agreement or any other agreement between
       
      Handheld, Member and Zeus.

     

    (b) The
      Escrow Agent shall not be responsible or liable in any manner whatsoever for
      the
      performance of or by Handheld, Zeus and Member of their respective obligations
      under this Agreement nor shall the Escrow Agent be responsible or liable in
      any
      manner whatsoever for the failure of the other parties to this Escrow Agreement
      or of any third party to honor any of the provisions of this Escrow
      Agreement.

     

    (c) The
      parties hereto represent to the Escrow Agent that they are authorized to enter
      into the Escrow Agreement by their duly authorized representatives and that
      the
      Escrow Agent is entitled to rely on this representation without the need to
      confirm the authority of the representatives.

     

    (d) The
      duties and obligations of the Escrow Agent shall be limited to and determined
      solely by the express provisions of this Escrow Agreement and no implied duties
      or obligations shall be read into this Escrow Agreement against the Escrow
      Agent.

     

    (e) The
      Escrow Agent is not bound by and is under no duty to inquire into the terms
      or
      validity of any other agreements or documents, including any agreements or
      documents which may be related to, referred to in or deposited with the Escrow
      Agent in connection with this Escrow Agreement.

     

    (f) The
      Escrow Agent shall not be liable for any act which the Escrow Agent may do
      or
      omit to do hereunder while acting in good faith, unless caused by or arising
      from its own gross negligence, willful misconduct or failure to act in good
      faith. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) It
      is
      understood that all checks received by the Escrow Agent hereunder are subject
      to
      clearance time and the funds represented thereby cannot be drawn upon or
      disbursed until such time as the same constitute good and collected funds.
      If
      any checks are returned to the Escrow Agent as uncollectible, the Escrow Agent
      shall notify the party on whose account the check was drawn and redeposit such
      check for collection upon the verbal instructions of such party. Notwithstanding
      the foregoing, if for any reason any check or instrument entered for collection
      by the Escrow Agent hereunder is uncollectible after payment of the funds
      represented thereby has been made pursuant to the terms hereof, the party on
      whose account the check was drawn shall immediately reimburse of the Escrow
      Agent and the Escrow Agent shall deliver the returned check or instrument to
      such party.

     

    (h) Neither
      this Escrow Agreement, nor any other agreement between Handheld, Zeus, Member
      and the Escrow Agent shall be deemed to create a joint venture between the
      Escrow Agent and Handheld, Zeus or Member. Nor shall the Escrow Agent be
      considered the alter ego of Handheld, Zeus or Member by virtue of this
      Agreement, or any other agreement.

     

    (i) the
      Escrow Agent shall not in any way be bound or affected by any amendment or
      modification of this Agreement, unless the same shall have been agreed to in
      writing by the Escrow Agent;

     

    (j) the
      Escrow Agent shall not be under any duty to give the property held hereunder
      any
      greater degree of care than it gives its own similar property;

     

    (k) the
      Escrow Agent may act in reliance upon and shall incur no liability for or in
      respect of any action taken or omitted to be taken or anything suffered by
      it in
      reliance upon, any notice, direction, consent, certificate, affidavit, statement
      or other paper or document reasonably believed by the Escrow Agent to be genuine
      and to have been presented or signed by the proper party or
      parties;

     

    (l) the
      Escrow Agent shall not at any time be under any duty or responsibility to make
      a
      determination of any facts contained in any certificate delivered pursuant
      hereto or to make any independent verification of the statements or signatures
      in such certificate or amounts delivered thereby. The Escrow Agent shall not
      be
      responsible for any failure by Handheld, Zeus or Member to comply with any
      of
      their respective covenants contained in this Agreement, the Purchase Agreement
      or any other agreement;

     

    (m) the
      Escrow Agent shall be under no duty or obligation to take any legal action
      in
      connection with this Agreement or to enforce, through the institution of legal
      proceedings or otherwise, any of its rights as Escrow Agent hereunder or any
      rights of any other party hereto pursuant to this Escrow Agreement or any other
      agreement, nor shall it be required to defend any action or legal proceeding
      which, in its opinion, would or might involve the Escrow Agent in any cost,
      expense, loss or liability;

     

    (n) the
      Escrow Agent may engage or be interested in any financial or other transaction
      with the parties hereunder as freely as if it were not the Escrow Agent
      hereunder;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (o) the
      Escrow Agent shall be entitled to rely upon advice of counsel (the cost of
      which
      shall be borne by Handheld and Zeus) of its choosing in reference to any matter
      connected herewith, and shall have full and complete authorization and
      protection for any action taken or suffered by it hereunder in good faith and
      in
      accordance with the opinion of such counsel and shall not be liable for any
      mistake of fact or error of judgment, or for any acts or omissions of any kind
      unless caused by its willful misconduct, gross negligence or failure to act
      in
      good faith;

     

    (p) notwithstanding
      anything to the contrary contained herein, if the Escrow Agent shall be
      uncertain as to its duties or rights hereunder, shall receive any notice,
      advice, direction, or other document from any other party with respect to this
      Agreement which, in its opinion, is in conflict with any of the provisions
      of
      this Agreement, or should be advised that a dispute has arisen with respect
      to
      the payment, ownership, or right of possession of or to the Escrow Account
      or
      any interest on the Escrow Account or any part thereof (or as to the delivery,
      non-delivery, or content of any notice, advice, direction or other document),
      the Escrow Agent shall be entitled (but not obligated), without liability to
      anyone, to refrain from taking any action other than to use its best efforts
      to
      keep safely the Escrow Account until the Escrow Agent shall be directed
      otherwise in writing by the other parties hereto or by an order, decree or
      judgment of a court of competent jurisdiction which has been finally affirmed
      on
      appeal or which by lapse of time or otherwise is no longer subject to appeal,
      but the Escrow Agent shall be under no duty to institute or to defend any
      proceeding, although it may institute or defend such proceedings;

     

    (q) Handheld
      and Zeus hereby authorize the Escrow Agent, if the Escrow Agent is threatened
      with litigation or is sued, to interplead all interested parties in any court
      of
      competent jurisdiction and to deposit the Escrow Account with the clerk of
      that
      court; and

     

    (r) this
      Agreement sets forth exclusively the duties of the Escrow Agent with respect
      to
      any and all matters pertinent hereto and no implied duties or obligations shall
      be read into this Agreement against the Escrow Agent.

     

    8. Indemnification.
      

     

    (a) Handheld
      and Zeus each covenant and agree to indemnify and hold harmless the Escrow
      Agent
      against any costs or expenses (including attorneys’ fees and expenses),
      judgments, fines, losses, claims, damages, liabilities and amounts paid in
      settlement in connection with any claim, action, suit, proceeding or
      investigation arising out of or pertaining to this Agreement, and in the event
      of any such claim, action, suit, proceeding or investigation: (i) Handheld
      and
      Zeus shall each pay the reasonable fees and expenses of counsel selected by
      the
      Escrow Agent, promptly as statements therefor are received; and (ii) Handheld
      and Zeus will cooperate in the defense of any such matter; except that Handheld
      and Zeus shall not have any obligation to indemnify the Escrow Agent against
      any
      cost, expense, judgment, fine, loss, claim, damage, liability or settlement
      amount arising out of or pertaining to this Agreement arising from the Escrow
      Agent’s own gross negligence, willful misconduct or failure to act in good
      faith. The obligations of Handheld and Zeus under this paragraph shall survive:
      (i) the delivery of the Escrow Account or any interest on the Escrow Account
      pursuant to this Agreement; (ii) the termination of this Agreement; and (iii)
      the resignation or removal of the Escrow Agent. In the event Handheld or Zeus
      makes any payment pursuant to this Section 8, the party making the payment
      shall
      have the right to seek contribution from the other party in the amount of 50%
      of
      the amount so paid.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Handheld
      and Zeus jointly and severally agree to assume any and all obligations imposed
      now or hereafter by any applicable tax law with respect to the payment of the
      Escrow Account under this Agreement, and to indemnify and hold the Escrow Agent
      harmless from and against any taxes, additions for late payment, interest,
      penalties and other expenses that may be assessed against the Escrow Agent
      on
      any such payment or other activities under this Agreement. Handheld and Zeus
      undertake to instruct the Escrow Agent in writing with respect to the Escrow
      Agent’s responsibility for withholding and other taxes, assessments or other
      governmental charges, certifications and governmental reporting in connection
      with its acting as Escrow Agent under this Agreement. Handheld and Zeus, jointly
      and severally, agree to indemnify and hold the Escrow Agent harmless from any
      liability on account of taxes, assessments or other governmental charges,
      including without limitation the withholding or deduction or the failure to
      obtain proper certifications or to properly report to governmental authorities,
      to which the Escrow Agent may be or become subject in connection with or which
      arises out of this Agreement, including costs and expenses (including reasonable
      legal fees), interest and penalties. 

     

    9. Resignation.
      The
      Escrow Agent may at any time resign as Escrow Agent by mailing written notice
      to
      Handheld and Zeus of such intention on its part, specifying the date on which
      its desired resignation shall become effective, with such resignation being
      effective upon Escrow Agent’s delivery of the Escrow Account to any successor
      Escrow Agent designated by Handheld and Zeus in writing or by any court of
      competent jurisdiction as provided below. Upon receiving such notice of
      resignation, Handheld and Zeus shall promptly appoint a successor escrow agent
      by written instrument signed on behalf of Handheld and Zeus, one copy of which
      shall be delivered to each of the resigning Escrow Agent and the successor
      escrow agent. If Handheld and Zeus shall fail to make such appointment within
      a
      period of thirty (30) days after they have been notified in writing of such
      resignation by the resigning Escrow Agent, then the resigning Escrow Agent
      may
      apply to any court of competent jurisdiction in the State of California for
      the
      appointment of a successor escrow agent. Such resignation shall become effective
      upon the acceptance of the appointment by the successor escrow agent as provided
      in this Section ‎9.
      Upon
      resignation, the Escrow Agent shall be entitled to payment by Handheld and
      Zeus
      of any amounts then due it hereunder. Any successor escrow agent shall have
      all
      the rights, obligations and immunities of the Escrow Agent set forth
      herein.

     

    10. Assignment.
      This
      Agreement and all of the provisions hereof shall be binding upon and inure
      to
      the benefit of the parties hereto and their respective successors and permitted
      assigns, but except as set forth in Section ‎9,
      neither this Agreement nor any of the rights, interests or obligations hereunder
      shall be assigned by any of the parties hereto without the prior written consent
      of the other parties, nor is this Agreement intended to confer upon any other
      person except the parties hereto any rights or remedies hereunder.

     

    11. Banking
      Days.
      If any
      date on which the Escrow Agent is required to make a delivery pursuant to the
      provisions hereof is not a banking day, then the Escrow Agent shall make such
      delivery on the next succeeding banking day.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12. Escrow
      Costs.
      The
      fees, costs and expenses payable to the Escrow Agent hereunder shall be borne
      by
      Handheld. The Escrow Agent shall not collect any fee from the Escrow Account.
      In
      consideration for services rendered in connection with this Agreement, the
      Escrow Agent shall be compensated in accordance with the hourly billing rate
      which is customarily paid for Escrow Agent’s legal services. Handheld hereby
      agrees that it is Handheld’s obligation to compensate Escrow Agent in accordance
      with this Section 12 for services rendered in connection with this
      Agreement.

     

    13. Miscellaneous.

     

    (a) Notices.
      All notices, demands or other communications to be given or delivered under
      or
      by reason of the provisions of this Agreement shall be in writing and shall
      be
      deemed to have been given (i) when delivered personally to the recipient, (ii)
      when sent to the recipient by telecopy (receipt electronically confirmed by
      sender’s telecopy machine) if during normal business hours of the recipient,
      otherwise on the next Business Day, (iii) one Business Day after the date when
      sent to the recipient by reputable express courier service (charges prepaid),
      or
      (iv) seven Business Days after the date when mailed to the recipient by
      certified or registered mail, return receipt requested and postage prepaid.
      Such
      notices, demands and other communications shall be sent to Handheld, Member,
      or
      the Escrow Agent at the addresses indicated below:

     

    
      	
              If
                to Handheld:

            	
              Handheld
                Entertainment, Inc.

              Attn:
                Jeff Oscodar, President

              539
                Bryant Street, Suite 403

              San
                Francisco, CA 94107

              Fax:
                (415) 358-4865

               

            
	
              With
                a copy to: 

              (which
                shall not constitute notice)

            	
              Niesar
                Curls Bartling & Whyte LLP

              90
                New Montgomery Street, 9th
                Floor

              San
                Francisco, CA 94105

              Attn:
                Gerald V. Niesar, Esq.

              Fax:
                (415) 882-5400

            
	 	 
	
              If
                to Zeus:

            	
              Zeus
                Promotions, LLC

              ATTN:

              4714-54th
                Avenue South

              Seattle,
                WA 98118

              Fax:

               

            
	
              With
                a copy to: 

              (which
                shall not constitute notice)

               

            	
              Helsell
                Fetterman, LLP

              1001
                Fourth Avenue, Suite 4200

              Seattle,
                WA 98154

              ATTN:
                Mark Rising, Esq.

              Fax:
                (206) 340-0902

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to Member:

            	
              John
                Kowal

              4714-54th
                Avenue South

              Seattle,
                WA 98118

               

              Fax:

               

            
	
              With
                a copy to:

              (which
                shall not constitute notice)

               

            	
              Helsell
                Fetterman, LLP

              1001
                Fourth Avenue, Suite 4200

              Seattle,
                WA 98154

              ATTN:
                Mark Rising, Esq.

               

              Fax:
                (206) 340-0902

               

            
	
              If
                to the Escrow Agent:

            	
              Niesar
                Curls Bartling & Whyte LLP

              90
                New Montgomery Street, 9th
                Floor

              San
                Francisco, CA 94105

              Attn:
                Gerald V. Niesar, Esq.

               

              Fax:
                (415) 882-5400

            

    

    

    or
      to
      such other address as either party hereto may, from time to time, designate
      in
      writing delivered pursuant to the terms of this Section.

    

     

    (b) Amendment
      and Modification. This Agreement may be amended, modified or supplemented only
      by written agreement of each of the parties hereto.

     

    (c) Conflict
      with Purchase Agreement. If any conflict should arise between this Agreement
      and
      the Purchase Agreement, the terms of the Purchase Agreement shall control.
      

     

    (d) Governing
      Law. This Agreement shall be governed by the laws of the State of California
      (regardless of the laws that might otherwise govern under applicable California
      principles of conflicts of law) as to all matters, including but not limited
      to
      matters of validity, construction, effect, performance and remedies, and such
      operating circulars of any Federal Reserve Bank, federal laws and regulations,
      funds transfer system rules and general commercial bank practices applicable
      to
      funds transfer and related activities.

     

    (e) Counterparts.
      This Agreement may be executed in two or more counterparts, each of which shall
      be deemed to be an original, but all of which together shall constitute one
      and
      the same instrument.

     

    (f) Interpretation.
      The section headings contained in this Agreement are solely for the purpose
      of
      reference, are not part of this Agreement and shall not in any way effect the
      meaning or interpretation of this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) Entire
      Agreement. This Agreement, including the exhibit attached hereto, together
      with
      the Purchase Agreement embody the entire agreement and understanding of the
      parties hereto in respect of the subject matter hereof. There are no
      restrictions, promises, representations, warranties, covenants or undertakings,
      other than those expressly set forth or referred to herein or
      therein.

     

    [SIGNATURES
      ON FOLLOWING PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Escrow Agreement as of
      the
      Effective Date.

     

    

     

    
      	
               

              HANDHELD
                ENTERTAINMENT, INC.

               

              /s/
                Jeff
                Oscodar                                           
                

              Signature

              Name:
                Jeff Oscodar

              Title:
                President & CEO

            	
               

              ZEUS
                PROMOTIONS, LLC

               

              /s/
                John
                Kowal                                         
                

              Signature

              Name:
                John Kowal

              Title:
                VP Business Development

            
	
               

               

              MEMBER
                - JOHN KOWAL

               

              /s/
                John
                Kowal                                              

              Signature

               

            	
               

               

              ESCROW
                AGENT - 

               

              /s/
                Niesar Curls Bartling & Whyte LLP

              by
                Gerald V.
                Niesar                                  
                

              Signature

              Name:
                Gerald V. Niesar

              Title:
                Partner

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