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EXHIBIT
10.14

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT
(the ‘‘Agreement’’) is dated as of
June 26, 2006 (the ‘‘Effective
Date’’) between Handheld Entertainment, Inc., a
Delaware corporation (the
‘‘Company’’) and William J. Bush
(the
‘‘Executive’’).

RECITALS:

WHEREAS,
the Company is in need of an executive with significant experience in
finance and operations; and

WHEREAS, the Executive has experience
in such fields; and

WHEREAS, the Company wishes to engage the
Executive to serve as its Chief Financial Officer and the Executive is
willing to serve in the employ of the Company in such
capacity.

NOW, THEREFORE, in consideration of the foregoing
recitals and the promises and conditions herein contained, the parties
hereto agree as follows:

1.    Employment.
The Company hereby employs the Executive and the Executive hereby
accepts employment as its Executive Vice President of Finance and
Operations upon the terms and conditions hereinafter set
forth.

2.    Definitions. For purposes of
this
Agreement:

(a)    ‘‘Board’’
shall mean the Board of Directors of the
Company.

(b)    ‘‘Cause’’
shall mean (1) a willful act by the Executive which constitutes
misconduct and results in serious injury to the Company; (2) the
Executive’s conviction of, or plea of
‘‘guilty’’ or ‘‘no
contest’’ to, a felony; (3) any act of persistent
dishonesty or fraud by the Executive; (4) persistent willful breaches
of the material terms of the Agreement by the Executive; or (5)
habitual neglect by the Executive of the duties which he is required to
perform hereunder. No act by the Executive shall be considered
‘‘willful’’ unless committed without good
faith and without a reasonable belief that the act was in the
Company’s best
interest.

(c)    ‘‘Change in
Control’’ shall mean the occurrence of any of the
following events:

(1)    individuals who, on the
Effective Date, constitute the Board (the ‘‘Incumbent
Directors’’) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the Effective Date whose election or nomination
for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board shall be an Incumbent Director;
provided, however, that no individual initially elected or nominated as
a director of the Company as a result of an actual or threatened
election contest with respect to directors or as a result of any other
actual or threatened solicitation of proxies by or on behalf of any
person other than the Board shall be an Incumbent
Director;

(2)    any
‘‘person’’ (as such term is defined
in Section 3(a)(9) of the Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes,
after the Effective Date, a ‘‘beneficial
owner’’ (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the
Company’s then outstanding securities eligible to vote for the
election of the Board (the ‘‘Company Voting
Securities’’); provided, however, that an event as
described in this Paragraph (2) shall not be deemed to be a
Change in Control if any of the following becomes such a beneficial
owner: (A) the Company or any majority-owned subsidiary (provided that
this exclusion applies solely to the ownership levels of the Company or
the majority-owned subsidiary), (B) any tax-qualified, broad-based
employee benefit plan sponsored or maintained by the Company or any
majority-owned subsidiary, (C) any underwriter temporarily holding
securities pursuant to an offering of such securities, (D) any person
pursuant to a Non-Qualifying Transaction (as defined in Paragraph
(3)) or (E) the Executive or any group of persons including the
Executive (or any entity controlled by the Executive or any group of
persons including the Executive);

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(3)    the approval by the
shareholders of the Company of a merger, consolidation, share exchange
or similar form of transaction involving the Company or any of its
subsidiaries, or the sale of all or substantially all of the
Company’s assets (a ‘‘Business
Transaction’’), unless immediately following such
Business Transaction (A) more than fifty-five percent (55%) of
the total voting power of the entity resulting from such Business
Transaction or the entity acquiring the Company’s assets in such
Business Transaction (the ‘‘Surviving
Corporation’’) is beneficially owned, directly or
indirectly, by the Company’s shareholders immediately prior to
any such Business Transaction and (B) no person (other than the persons
set forth in Clauses (A), (B), or (C) of Paragraph
(2) above or any tax-qualified, broad-based employee benefit plan
of the Surviving Corporation or its affiliates) beneficially owns,
directly or indirectly, forty percent (40%) or more of the total
voting power of the Surviving Corporation (a
‘‘Non-Qualifying Transaction’’);

(4)    Board approval of a liquidation or dissolution
of the Company, unless the voting common equity interests of an ongoing
entity (other than a liquidating trust) are beneficially owned,
directly or indirectly, by the Company’s shareholders in
substantially the same proportions as such shareholders owned the
Company’s outstanding voting common equity interests immediately
prior to such liquidation and such ongoing entity assumes all existing
obligations of the Company to the Executive under this Agreement;
or

(5)    Any other transaction or series of related
transactions occur which have substantially the same effect as any of
the transactions described in Paragraphs (1) through (4)
above.

(d)    ‘‘Code’’
shall mean the Internal Revenue Code of 1986, as amended from time to
time, and all regulatory guidance promulgated
thereunder.

(e)    ‘‘Good
Reason’’ shall mean the occurrence of any one of the
following events:

(1)    assignment to the Executive
of any duties inconsistent with the Executive’s positions as
specified in Section 5 hereof, including status, title or
responsibilities as contemplated by Section 5, or any other
action by the Company which results in a material change in such
positions, status, titles or responsibilities, including any material
change in the Executive’s reporting
responsibilities;

(2)    the failure of the Company
to assign this Agreement to a successor to the
Company;

(3)    the failure of the Company to comply
with the provisions of Sections 6, 7, 8 or 9 of this
Agreement;

(4)    the Company’s requiring
the Executive to be based at any office or location more than
twenty-five (25) miles from 1134 Glen Road, Lafayette,
California;

(5)    any reduction in the
Executive’s then current base salary or an adverse change to the
Executive’s prior bonus formula;
or

(6)    the Company adopts any plan of
liquidation.

3.    Term.    This Agreement
shall commence on the Effective Date and shall continue for a term of
two (2) years from the Effective Date and shall automatically be
extended for successive one (1) year terms thereafter unless, at least
sixty (60) days prior to each anniversary of the Effective Date
(commencing with the second such anniversary), either the Executive or
the Company notifies the other in writing that the Executive or the
Company elects to terminate this
Agreement.

4.    Termination of
Employment.

(a)    Termination of Employment by the
Company without Cause (Other Than Due to Disability or Death) or by the
Executive for Good Reason, Other Than after a Change in Control.
If (1) the Company terminates the Executive’s employment without
Cause (other than due to Disability (as defined in Subsection
(b) or death) or (2) the Executive terminates his
employment for Good Reason, and Subsection (c) is not
applicable in either case, the Executive shall receive, on the date
which is six (6) months after the date of such termination (or the
Executive’s estate, as soon as practicable after the
Executive’s death, if earlier) in a lump sum in immediately
available funds an amount equal to the aggregate of the
Executive’s base salary for the then remainder of the Term of
this Agreement at the 

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rate in effect at the time of termination,
plus the Executive’s target bonus or bonuses for the then
remainder of the Term based on the Company’s bonus plan in
effect at the time of termination (‘‘Target
Bonus’’), but in no event less than one year’s
base salary and Target Bonus. Additionally, one hundred percent
(100%) of the unvested portion of any options or restricted
stock held by the Executive on the date of termination shall become
fully vested and exercisable as of such termination
date.

Additionally, the Company shall pay, reimburse, or provide
the Executive and his beneficiaries, if applicable, the amounts and
benefits described in Section 4(d)(1)(A), (B) and (C) at the
date specified in such Section.

For the avoidance of doubt,
subject to any subsequent agreement that may be reached by the parties
with respect to the Executive’s employment subsequent to the
Company’s decision not to extend the term of this Agreement
pursuant to Section 2, in the event of the termination of the
Executive’s employment by the Company other than for Cause (and
other than due to death or Disability), the Executive shall be entitled
to the payment and benefits set forth in this Subsection (a)
(subject to any other applicable terms and conditions of this
Agreement).

(b)    Termination of Employment Due to Death
or Disability.

(1)    The Executive’s
employment shall be deemed terminated by the Company upon the
Executive’s death. The Company may terminate the
Executive’s employment for Disability. In the event of a
termination as a result of Disability or death, the Executive (or his
estate, in the case of death) shall receive, as soon as reasonably
practicable after the date of such termination, in a lump sum in
immediately available funds an amount equal to the sum of one
year’s base salary (at the rate in effect at the time of
termination) and his Target Bonus for such fiscal year. Additionally,
the Company shall pay, reimburse or provide the Executive and his
beneficiaries, if applicable, the amounts and benefits described in
Section 4(d)(1)(A), (B), and (C) at the dates specified in
such Section.

(2)    For purposes of this Agreement,
‘‘Disability’’ shall have the meaning set
forth in Section 409A(a)(2)(C) of the
Code.

(c)    Termination of Employment by the Company
without Cause or by the Executive, after a Change in Control. If
(1) the Company terminates the Executive’s employment without
Cause (other than due to Disability or death) or (2) the Executive
terminates his employment for any reason (other than due to death)
within twelve (12) months after a Change in Control which occurs after
the Effective Date, the Executive shall receive, on the date which is
six (6) months after the date of such termination, in a lump sum in
immediately available funds an amount equal to one and one-half times
the sum of (A) the base salary of the Executive at the rate in effect
at the time of termination and (b) the Executive’s Target Bonus
for the fiscal year. Additionally, one hundred percent (100%) of
the unvested portion of any stock options or restricted stock held by
the Executive on the date of termination shall become fully vested and
exercisable as of such date. The Company shall also pay, reimburse or
provide the Executive and his beneficiaries, if applicable, the amounts
and benefits described in Section 4(d)(1)(A), (B), and (C) at
the dates specified in such Section.

(d)    Other
Termination of Employment.

(1)    Upon
termination of the Executive’s employment with the Company for
any reason other than specified in Section 4(a), (b), or (c)
(the date of such termination shall be referred to herein as the
‘‘Termination Date’’), the Executive
shall earn no further pay or compensation under Sections 6, 8 and
10 with respect to any period after the Termination Date;
provided, however, (A) the Company shall pay any base salary or bonus
earned prior to the Termination Date; (B) the Company shall reimburse
the Executive for reasonable business expenses incurred on or before
the Termination Date, pursuant to Section 7, provided that the
Executive submits a final expense report no later than thirty (30) days
from the Termination Date; and (C) the Executive and his beneficiaries
shall remain entitled to any vested or statutorily mandated benefits
under the Company’s benefit programs pursuant to the terms of
said programs.

(2)    The Company shall have the
right to terminate the Executive’s employment for Cause, and
such termination in and of itself shall not be, nor shall it be deemed
to be, a breach of this 

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Agreement. Cause shall not exist under this
Paragraph (2) unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by at
least three-quarters of the members of the Board who are determined to
be ‘‘independent’’ (as determined by
applying the listing standards of the NASDAQ) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event
less than thirty (30) days) notice to the Executive and an opportunity
for the Executive, together with his counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive was guilty of the conduct set forth in Section 2(b)
and has not cured the purported act or failure to act. This resolution
shall specify the particulars thereof in detail. This
Paragraph (2) shall not prevent the Executive from
challenging in any court of competent jurisdiction the Board’s
determination that Cause exists or that the Executive has failed to
cure any act (or failure to act) that purportedly formed the basis for
the Board’s determination.

(e)    Notwithstanding
anything in this Agreement to the
contrary:

(1)    Upon an event which is described in
Section 4(a) or (c), the cash amounts
described therein shall be distributed to the Executive as soon as
practicable after the date of termination if legal counsel retained by
the Company can reasonably determine that the provisions of Section
409A(a)(2)(B)(i) of the Code or any other provisions of Section 409A of
the Code do not require the six (6) month delay referred to therein.
The Company shall be required to retain counsel, at the
Company’s expense, to make this determination as soon as
practicable after such termination of employment.

(2)    If payment of any amount or other benefit that
is ‘‘deferred compensation’’ subject to
Section 409A of the Code at the time otherwise specified in this
Agreement would subject such compensation to additional tax pursuant to
Section 409A(a)(1) of the Code, the payment thereof shall be postponed
to the earliest commencement date on which such amounts could be paid
without incurring such additional tax. In the event a deferral of
payment should be required, any payments that would have been made
prior to such earliest commencement date but for Section 409A of the
Code shall be accumulated and paid in a single lump sum on such
earliest commencement date.

(3)    If any
compensation, payments, or benefits permitted or required under this
Agreement are otherwise reasonably determined by the Company or the
Executive to be subject for any reason to a material risk of additional
tax pursuant to Section 409A(a)(1) of the Code, the Company and the
Executive agree to negotiate in good faith appropriate provisions to
avoid such risk without materially changing the economic value of this
Agreement to the Executive.

(4)    If any
compensation, payments, or benefits provided under this Agreement
becomes subject to (A) the twenty percent (20%) additional
income tax and/or (B) the sanction for deemed late payment of taxes
under the provisions of Section 409A of the Code (the sum of
such amounts called ‘‘Section 409A
Costs’’), the Company shall pay the Executive an
additional amount (‘‘Section 409A Tax Gross-Up
Payment’’) which, after payment of all income taxes
and other taxes on the Section 409A Tax Gross-Up Payment, provides the
Executive an amount sufficient to pay the Section 409A Costs.

(f)    Additional
Payments.

(1)    Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined that
any payment, award, benefit or distribution (or any acceleration of any
payment, award, benefit or distribution) by the Company or any entity
which effectuates a Change in Control (or other change in ownership) to
or for the benefit of the Executive (the
‘‘Payments’’) would be subject to
the excise tax imposed by Section 4999 of the Code, or any interest or
penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the ‘‘Excise
Tax’’), then the Company shall pay to the Executive
an additional payment (a ‘‘Gross-Up
Payment’’) in an amount such that, after payment by
the Executive of all taxes (including any Excise Tax) imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the sum of (A) the Excise Tax imposed upon the
Payments and (B) the product of any deductions disallowed because of
the inclusion of the Gross-Up Payment in the Executive’s
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applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be
made. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to (X) pay federal income taxes at the
highest marginal rate of federal income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, (Y) pay applicable state and local income taxes at the
highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and
local taxes and (Z) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed
because of the inclusion of the Gross-Up Payment in the
Executive’s adjusted gross
income.

(2)    Subject to the provisions of
Section 4(f)(1), all determinations required to be made under
this Section 4(f), including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determinations, shall be
made by a nationally recognized public accounting firm or a law firm
selected by the Executive (the
‘‘Firm’’), which Firm shall provide
detailed supporting calculations to both the Company and the Executive
within fifteen (15) business days of the receipt of notice from the
Company or the Executive that there has been a Payment, or such earlier
time as is requested by the Company or the Executive (collectively, the
‘‘Determination’’). All fees and
expenses of the Firm shall be borne solely by the Company and the
Company shall enter into any agreement requested by the Firm in
connection with the performance of the services hereunder. The Gross-Up
Payment under this Section 4(f) with respect to any Payments
made to the Executive shall be made no later than thirty (30) days
following such Payment. If the Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written
opinion to such effect, and to the effect that failure to report the
Excise Tax, if any, on the Executive’s applicable federal income
tax return should not result in the imposition of a negligence or
similar penalty.

(3)    As a result of the
uncertainty in the application of Section 4999 of the Code at the time
of the Determination, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
(‘‘Underpayment’’) or Gross-Up Payments are
made by the Company which should not have been made
(‘‘Overpayment’’), consistent with the
calculations required to be made hereunder. In the event that the
Executive thereafter is required to make payment of any Excise Tax or
additional Excise Tax, the Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as
well as any negligence or other penalties, shall be promptly paid by
the Company to or for the benefit of the Executive. In the event the
amount of the Gross-Up Payment exceeds the amount necessary to
reimburse the Executive for his Excise Tax, the Firm shall determine
the amount of the Overpayment that has been made and any such
Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by the Executive (to the
extent he has received a refund if the applicable Excise Tax has been
paid to the Internal Revenue Service) to or for the benefit of the
Company. The Executive shall cooperate, to the extent his expenses
associated with such cooperation are reimbursed by the Company, with
any reasonable requests by the Company in connection with any contest
or disputes with the Internal Revenue Service in connection with the
Excise Tax.

5.    Duties and
Responsibilities.    The Executive shall serve as the Chief
Financial Officer of the Company and shall have the duties,
responsibilities and authority as are customary and appropriate for
such position. The Executive shall devote substantial business time and
efforts to the business of the Company sufficient to allow the
Executive to carry out such duties and responsibilities and shall not
during the term of this Agreement be actively engaged in any other
business or professional activity that would reasonably be deemed to
interfere with his ability to carry out such duties and
responsibilities; provided, however, that it shall not be a violation
of this Agreement for the Executive to serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking
engagements, manage personal investments or carry on other activities
which do not significantly interfere with the performance of the
Executive’s duties in accordance with this
Agreement.

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6.    Base
Salary.    The Company shall pay the Executive a base salary of
not less than $15,000 per month ($180,000 annually), payable in
advance, which base salary may be increased, but not decreased, from
time to time as determined by the
Board.

7.    Expenses.

(a)    The
Executive shall be entitled to timely reimbursement of all reasonable
expenses incurred by him in the performance of his duties, subject to
the presentation of appropriate receipts in accordance with the
Company’s policies. Such reimbursement shall be made no later
than March  1 of the calendar year following the calendar year in
which such expenses are incurred.

(b)    The Company shall
pay, or shall reimburse the Executive for, the legal fees and other
expenses paid or incurred by the Executive in connection with the
negotiation and preparation of this Agreement.

(c)    To the
extent that any amount paid by the Company or reimbursed to the
Executive for expenses actually incurred pursuant to Subsections
(a) and (b) above is reasonably deemed taxable as compensation to
the Executive (the ‘‘Taxable
Portion’’), the Company shall pay to the Executive in
respect of the Taxable Portion an additional amount which, after
reduction for payment of any taxes payable with respect to such
additional amount, is expected to result in a remaining amount
sufficient to pay such taxes; provided, however, that in no event shall
such additional amount be in excess of fifty percent (50%) of
the Taxable Portion. In determining such amounts, assumptions
comparable to those in Section 4(f)(1)(X), (Y) and (Z) shall
be used. Such amounts shall be paid to the Executive no later than
March  1 of the calendar year following the calendar year during
which the Taxable Portion was incurred.

8.    Benefits.    The Executive shall be
entitled to participate in all of the Company’s health,
disability, insurance, 401(k) and other employee benefit programs and
equity programs for which management employees of the Company are
generally eligible. The Executive shall be entitled to three (3) weeks
of paid vacation each calendar year in accordance with the
Company’s policies.

9.    Special
Bonus.    In consideration of the Executive’s employment
with the Company, and the Executive’s agreement to the
provisions of this Agreement, not later than the thirtieth (30) day
following the Effective Date, the Company shall issue to the Executive
fully vested Common Stock with a Fair Market Value of $137,500 based on
the average price of the common stock, as quoted on the exchange upon
which it is traded, of the Company in period between the commencement
of this contract and the grant of the shares. Such Common Stock shall
be subject to any ‘‘lock-up,’’
nontransferability or other similar provisions as the Executive and the
Board jointly deem appropriate. For purposes of this Agreement,
‘‘Fair Market Value’’ shall mean (A) if the
Common Stock is traded on the Nasdaq National Market, the closing price
per share of such Common Stock as reported by the National Association
of Securities Dealers on the Nasdaq National Market or any successor
system, (B) if the Common Stock is listed on any stock exchange, the
closing price per share of Common Stock on such stock exchange
determined by the Board to be the primary market for the Common Stock,
as officially quoted in the composite tape for transactions on such
exchange, or (C) if the Common Stock is neither traded on the Nasdaq
National Market nor listed on any stock exchange, but is publicly
traded, the average of the closing bid and ask prices as reported in
the Wall Street Journal (or, if not so reported, as reported by
another source selected by the Board in good
faith).’’

10.    Bonus
Program.    The Executive shall participate in any bonus program
implemented for executives of the Company and approved by the
Board.

11.    Grant of Restricted
Stock.    On the Effective Date the Company will grant to the
Executive 200,000 restricted shares of Common Stock pursuant to the
terms of its equity incentive plan then in effect (the
‘‘Restricted Shares’’). The terms of
such grant shall include the vesting of 50,000 of such Restricted
Shares on the first anniversary of the Effective Date provided that the
Executive remains in the employ of the Company through such anniversary
date, and the balance of such shares shall vest at such times as shall
be determined by the Board (or a committee thereof) with the approval
of the Executive, consistent with the terms of such
plan.

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12.    Mitigation.    The
Executive shall not be required to mitigate amounts payable under this
Agreement by seeking other employment or otherwise, and there shall be
no offset against amounts due the Executive under this Agreement on
account of subsequent employment. Additionally, amounts owed to the
Executive under this Agreement shall not be offset by any claims the
Company may have against the Executive and the Company’s
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by
any other circumstances, including, without limitation, any
counterclaim, recoupment, defense or other right which the Company may
have against the Executive or
others.

13.    Taxes.    The Company shall
make provision for the reporting and withholding of any federal, state
or local income and payroll taxes that may be required to be withheld
from the amounts or benefits payable pursuant to the terms of this
Agreement and shall pay amounts withheld to the appropriate taxing
authorities.

14.    Non-Solicitation.    The Executive
agrees that he shall not, during the one (1) year period after the
termination of this Agreement, directly or indirectly, (a) hire
any individual who was an employee of the Company on the date of such
termination or at any time within six (6) months prior thereto, or
solicit such individual to leave his or her employment with the
Company, or (b) solicit any customer or client, or any person or
entity known to the Executive to be a prospective customer or client of
the Company, as of the date of such termination to purchase any goods
or services of the type sold by the Company from anyone other than the
Company. The Executive recognizes and acknowledges that the foregoing
covenant not to solicit is necessary to ensure the preservation,
protection and continuity of the business, trade secrets and goodwill
of the Company, and that he is aware of his obligations hereunder and
acknowledges the reasonableness of the length of time and scope of the
covenant.

15.    Indemnification.    The
Company shall promptly indemnify and hold harmless the Executive to the
fullest extent permitted by the Employer’s certificate of
incorporation and by-laws, or (if greater) by the laws of the State of
Delaware, for any liability, loss or expense the Executive may incur by
reason of his employment with the Company or his activities as an
officer or director of the Company or any of its subsidiaries or his
activities on behalf of, or at the request of, any of the foregoing
(which indemnification shall include, without limitation, advancement
of expenses (including attorneys’ fees and other charges of
counsel) promptly upon receipt of any undertaking to repay that is
required by law). The foregoing indemnification shall survive any
termination of the Executive’s employment and shall inure to the
benefit of his heirs, successors and legal representatives. The Company
shall promptly procure, and thereafter maintain, director and officer
liability insurance and umbrella insurance covering the Executive in an
amount no less than $2  million dollars. This provision shall
supersede the Director and Officer Indemnification Agreement, dated as
of February 10, 2006, between the Company and the
Executive.

16.    Nondisparagement.

(a)    The Executive shall not, whether in writing or orally,
publicly criticize, denigrate or disparage the Company or any of the
respective current or former directors, officers, employees,
shareholders, partners, members, agents or representatives of the
Company, with respect to past or present activities, or otherwise
publish (whether in writing or orally) statements that tend to portray
any of the Company in an unfavorable light, provided nothing herein
shall or shall be deemed to prevent or impair the Executive from
testifying truthfully in any legal or administrative proceeding in
which such testimony is compelled or requested (or otherwise complying
with legal requirements).

(b)    The Company shall instruct
or authorize its officers and directors and their agents not to
criticize, denigrate or disparage the Executive publicly, whether in
writing or orally, with respect to any of his past, present, or future
activities, or otherwise publish (whether in writing or orally)
statements that tend to portray him in an unfavorable light, provided
that nothing herein shall, or shall be deemed to, prevent or impair the
Company’s officers and directors from testifying truthfully in
any legal or administrative proceeding in which such testimony is
compelled or requested (or otherwise complying with legal
requirements).

17.    Successors.    Subject
to the provisions of Section 4, the Company may assign
its rights and obligations under this Agreement to a successor of the
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consent of the Executive, so long as such
assignee assumes the Company’s obligations hereunder. This
Agreement shall be binding upon and inure to the benefit of the
Executive and the Executive’s estate and the Company and any
assignee of or successor to the
Company.

18.    Attorneys’
Fees    In the event of any dispute between the parties with
respect to a breach or alleged breach of this Agreement or the
interpretation of this Agreement, the Executive (or his assignees)
shall be entitled to recover reasonable attorneys’ fees and
costs from the
Company.

19.    Severability.    If all or
any part of this Agreement is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity
shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or
invalid.

20.    Amendment and
Waiver.    This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and the
Executive. A waiver of any term, covenant, agreement or condition
contained in this Agreement shall not be deemed a waiver of any other
term, covenant, agreement or condition, and any waiver of any default
in any such term, covenant, agreement or condition shall not be deemed
a waiver of any later default thereof or of any other term, covenant,
agreement or
condition.

21.    Notices.    All notices
and other communications hereunder shall be in writing and delivered by
hand, by first class registered or certified mail, return receipt
requested, postage prepaid, or by a nationally recognized courier
service, addressed as
follows:

				
	If
to the
Company:			Handheld
Entertainment, Inc.
539 Bryant Street Suite 403
San Francisco,
CA 94107
Attention: President
	

			
		If to
the Executive: 	Mr. William J. Bush

1134
Glen Road

Lafayette, Ca, 94549

Either
party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be
effective when actually received by the
addressee.

22.    Counterparts.    This
Agreement may be executed in counterparts, each of which shall be
deemed to be an original but all of which together will constitute one
and the same instrument.

23.    Entire
Agreement.    Except as otherwise specifically noted herein,
this Agreement forms the entire agreement between the parties hereto
with respect to the subject matter contained in the Agreement. This
Agreement shall supersede all prior agreements, promises and
representations regarding the subject matter of this Agreement.
Notwithstanding this Section 23, the Proprietary
Information and Inventions Agreement between the Company and the
Executive shall remain in full force and
effect.

24.    Applicable Law.    The
provisions of this Agreement shall be interpreted and construed in
accordance with the laws of the State of California, without regard to
its choice of law principles.

25.    Survival of
Executive’s Rights.    All of the Executive’s
rights hereunder, including but not limited to his rights to
compensation and benefits, shall survive the termination of the
Executive’s employment and/or the termination of this
Agreement.

8

Table of Contents
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the Effective
Date.

			
		 	Handheld Entertainment,
Inc.

			
		 	By:   /s/ Bill
Keating                                    

			
		 	Bill
Keating

			
		 	Its: Chairman of the Board of
Directors

			
		 	/s/ William J.
Bush                                        

			
		 	William
J. Bush

9WARRANT
AGREEMENT

By and Among

HANDHELD
ENTERTAINMENT, INC.,

NEWBRIDGE SECURITIES,
CORP.

and

PALI CAPITAL,
INC.

Dated as of                 ,
2006

    

	
	
	
	
	

WARRANT
AGREEMENT

WARRANT AGREEMENT, dated as of
                , 2006, by and between HANDHELD
ENTERTAINMENT, INC., a Delaware corporation (the
‘‘Company’’), NEWBRIDGE
SECURITIES, CORP. and PALI CAPITAL, INC. (the
‘‘Underwriters’’).

The
Company proposes to issue to the Underwriters warrants as hereinafter
described (the ‘‘Underwriter
Warrants’’) to purchase up to an aggregate of
[] shares, subject to adjustment as provided in
Section 8 hereof (such shares, as adjusted, being hereinafter referred
to as the ‘‘Shares’’) of the
Company’s common stock, par value $.0001 per share (the
‘‘Common Shares’’), each
Underwriter Warrant entitling the holder thereof to purchase one Common
Share. All capitalized terms used herein and not otherwise defined
herein shall have the same meanings as in that certain underwriting
agreement, of even date herewith, by and between the Company and the
Underwriters (the ‘‘Underwriting
Agreement’’). In this Agreement, the singular
includes the plural and the plural includes the singular.

NOW,
THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and for other good and valuable
consideration, the parties hereto agree as
follows:

1.    Issuance of Warrants; Form of
Warrant. The Company will issue, sell and deliver the Underwriter
Warrants to the Underwriters or their bona fide officers for an
aggregate price of $100.00. The form of the Underwriter Warrants and
the form of election to purchase Shares to be attached thereto shall be
substantially as set forth on Exhibit A attached
hereto. The Underwriter Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any
future Chief Executive Officer, President or any Vice President of the
Company, under its corporate seal, affixed or in facsimile, and
attested by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the
Company.

2.    Registration. The Underwriter
Warrants shall be numbered and shall be registered in an Underwriter
Warrant register (the ‘‘Underwriter Warrant
Register’’). The Company shall be entitled to
treat the registered holder of any Underwriter Warrant on the
Underwriter Warrant Register (the
‘‘Holder’’) as the owner in
fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Underwriter Warrant on
the part of any other person, and shall not be liable for any
registration of transfer of Underwriter Warrants which are registered
or are to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration
of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith. The Underwriter Warrants
shall be registered initially in the name of ‘‘Newbridge
Securities, Corp. and Pali Capital, Inc..’’ in such
denominations as the Underwriters may request in writing to the
Company; provided, however, that the Underwriters may
designate that all or a portion of the Underwriter Warrants be issued
in varying amounts directly to its bona fide officers, and not to the
Underwriters. Such designation will only be made by the Underwriters if
it determines that such issuances would not violate the interpretation
of the Board of Governors of the National Association of Securities
Dealers, Inc. (the ‘‘NASD’’)
relating to the review of corporate financing
arrangements.

3.    Transfer of Warrants. The
Underwriter Warrants will not be sold, transferred, assigned or
hypothecated, in part or in whole the (other than by will or pursuant
to the laws of descent and distribution), for a period of 180 days from
the effective date of the Registration Statement except to officers of
the Underwriters and members of the selling group and their officers
and thereafter only upon delivery thereof duly endorsed by the Holder
or by his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer. In
all cases of transfer by an attorney, the original power of attorney,
duly approved, or an official copy thereof, duly certified, shall be
deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Underwriter
Warrant or Underwriter Warrants to the persons entitled thereto. The
Underwriter Warrants may be exchanged at the option of the Holder
thereof for another Underwriter Warrant, or other Underwriter Warrants,
of different 

1

denominations, of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares
upon surrender to the Company or its duly authorized agent.
Notwithstanding the foregoing, the Company shall have no obligation to
cause Underwriter Warrants to be transferred on its books to any person
if such transfer would violate the Securities Act of 1933, as amended
(the
‘‘Act’’).

4.    Term
of Warrants, Exercise of Warrants. Each Underwriter Warrant
entitles the registered owner thereof to purchase one Share at a
purchase price of $[      ] per Share (the
‘‘Exercise Price’’) at any
time from the first anniversary of the effective date of the
Registration Statement until 5:00 p.m., EST time, on
[            ], 2011) (the
‘‘Warrant Expiration Date’’).
Notwithstanding the foregoing, if at 5:00 p.m. EST time on the Warrant
Expiration Date, any Holder or Holders of the Underwriter Warrants have
not exercised their Underwriter Warrants and the
‘‘current market price’’ (as such term is
defined in Section 8(d) below) for the Common Shares on the Warrant
Expiration Date is greater than the Exercise Price, then each such
unexercised Underwriter Warrant shall automatically be converted into a
number of Common Shares equal to: the number of Common Shares then
issuable upon exercise of an Underwriter Warrant, multiplied by a
fraction, the numerator of which is the difference between (A) the
‘‘current market price’’ for Common Shares
on the Warrant Expiration Date and (B) the Exercise Price, and the
denominator of which is the ‘‘current market
price’’ on the Warrant Expiration Date. Prior to the
Warrant Expiration Date, the Company will not take any action which
would terminate the Underwriter Warrants. The Exercise Price and the
Shares issuable upon exercise of the Underwriter Warrants are subject
to adjustment upon the occurrence of certain events pursuant to the
provisions of Section 8 of this Agreement. Subject to the provisions of
this Agreement, each Holder shall have the right, which may be
exercised as set forth in such Underwriter Warrants, to purchase from
the Company (and the Company shall issue and sell to such Holder) the
number of fully paid and nonassessable Common Shares specified in such
Underwriter Warrants, upon surrender to the Company, or its duly
authorized agent, of such Underwriter Warrants with the form of
election to purchase attached thereto duly completed and signed, with
signatures guaranteed by a member firm of a national securities
exchange, a commercial bank or trust company located in the United
States or a member of the NASD and upon payment to the Company of the
Exercise Price, as adjusted in accordance with the provisions of
Section 8 of this Agreement, for the number of Shares in respect of
which such Underwriter Warrants are then exercised.

Payment of
such Exercise Price may be made at the Holder’s election (i) by
certified or official bank check, (ii) in the event that the Holder
holds Common Shares of the Company and such Common Shares are listed on
a domestic stock exchange or quoted in the domestic over-the-counter
market, by transferring to the Company an amount of such Common Shares
which, when multiplied by, the current market price of the Common
Shares at the time of exercise of such Underwriter Warrant, equals the
aggregate amount of the consideration payable upon such exercise, (iii)
by surrendering to the Company the right to receive a portion of the
number of Shares with respect to which such Underwriter Warrant is then
being exercised equal to the product obtained by multiplying such
number of Shares by a fraction, the numerator of which is the Exercise
Price in effect on the date of such exercise and the denominator of
which is the current market price of the Common Shares in effect on
such date, or (iv) by a combination of the foregoing methods of payment
selected by the Holder. For purposes of this paragraph, the current
market price of the Common Shares shall be calculated either (a) on the
date which the form of election to purchase attached hereto is deemed
to have been sent to the Company pursuant to Section 12 hereof
(‘‘Notice Date’’) or (b) as
the average of the last reported sale price for each of the five
trading days preceding the Notice Date, whichever of (a) or (b) is
greater. In any case where the consideration payable upon such exercise
is being paid in whole or in part pursuant to the provisions of clause
(ii) or clause (iii) of the preceding sentence, such exercise shall be
accompanied by written notice from the Holder specifying the manner of
payment thereof, and in the case of clause (ii), stating the amount of
Common Shares of the Company to be applied to such payment, and in the
case of clause (iii), containing a calculation showing the number of
Shares with respect to which rights are being surrendered thereunder
and the net number of Shares to be issued after giving effect to such
surrender. No adjustment shall be made for any dividends on any Shares
issuable upon exercise of an Underwriter Warrant. Upon each

2

surrender of Underwriter Warrants and payment
of the Exercise Price as aforesaid, the Company shall issue and cause
to be delivered within three business days of such notice to or upon
the written order of the Holder of such Underwriter Warrants and in
such name or names as such Holder may designate a certificate or
certificates for the number of full Shares so purchased upon the
exercise of such Underwriter Warrants, together with cash, as provided
in Section 9 of this Agreement, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder
of record of such Shares as of the date of the surrender of Underwriter
Warrants and payment of the Exercise Price as aforesaid. The rights of
purchase represented by the Underwriter Warrants shall be exercisable,
at the election of the Holders thereof, either in full or from time to
time in part and, in the event that any Underwriter Warrant is
exercised in respect of less than all of the Shares issuable upon such
exercise at any time prior to the Warrant Expiration Date, a new
Underwriter Warrant or Underwriter Warrants will be issued for the
remaining number of Shares specified in the Underwriter Warrant so
surrendered.

5.    Payment of Taxes. The Company
will pay all documentary stamp taxes, if any, attributable to the
issuance of Shares upon the exercise of Underwriter Warrants;
provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for
Shares in a name other than that of the Holder of Underwriter Warrants
in respect of which such Shares are
issued.

6.    Mutilated or Missing Warrants. In case
any of the Underwriter Warrants shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Underwriter Warrant, or in lieu of and substitution for the Underwriter
Warrant lost, stolen or destroyed, a new Underwriter Warrant of like
tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such
mutilation, loss, theft or destruction of such Underwriter Warrant and
indemnity, unless mutilated, also reasonably satisfactory to the
Company. An applicant for such substitute Underwriter Warrants shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company may
prescribe.

7.    Reservation of Shares, etc. There
have been reserved and the Company shall at all times keep reserved,
out of the authorized and unissued Common Shares, a number of Common
Shares sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Underwriter Warrants.
[                    ] transfer agent for the
Common Shares (the ‘‘Transfer
Agent’’), and every subsequent transfer agent,
if any, for the Company’s securities issuable upon the exercise
of the Underwriter Warrants will be irrevocably authorized and directed
at all times until the Warrant Expiration Date to reserve such number
of authorized and unissued Common Shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with
the Transfer Agent and with every subsequent transfer agent of the
Company’s securities issuable upon the exercise of the
Underwriter Warrants. The Company will supply the Transfer Agent or any
subsequent transfer agent with duly executed certificates for such
purpose and will itself provide or otherwise make available any cash
which may be distributable as provided in Section 9 of this Agreement.
All Underwriter Warrants surrendered in the exercise of the rights
thereby evidenced shall be canceled, and such canceled Underwriter
Warrants shall constitute sufficient evidence of the number of Shares
that have been issued upon the exercise of such Underwriter Warrants.
No Common Shares shall be subject to reservation in respect of
unexercised Underwriter Warrants subsequent to the Warrant Expiration
Date.

8.    Adjustments of Exercise Price and Number of
Shares. The Exercise Price and the number and kind of securities
issuable upon exercise of each Underwriter Warrant shall be subject to
adjustment from time to time upon the happening of certain events, as
follows:

(a)    In case the Company shall
(i) declare a dividend on its Common Shares in Common Shares or make a
distribution of Common Shares, (ii) subdivide its outstanding Common
Shares, (iii) combine its outstanding Common Shares into a smaller
number of Common Shares or (iv) issue by reclassification of the Common
Shares other securities of the Company (including any 

3

such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), the number of Shares purchasable upon exercise of each
Underwriter Warrant immediately prior thereto shall be adjusted so that
the Holder of each Underwriter Warrant shall be entitled to receive the
kind and number of Shares or other securities of the Company which he
would have owned or have been entitled to receive after the happening
of any of the events described above, had such Underwriter Warrant been
exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective
date of such event retroactive to immediately after the record date, if
any, for such event.

(b)    In case the
Company shall distribute to all holders of its Common Shares stock
other than Common Shares or evidences of its indebtedness or assets
(excluding cash dividends payable out of consolidated earnings or
retained earnings and dividends or distributions referred to in
paragraph (a) above) or rights, options or warrants or convertible or
exchangeable securities containing the right to subscribe for or
purchase Common Shares (excluding those referred to in paragraph (b)
above), then in each case the number of Shares thereafter issuable upon
the exercise of each Underwriter Warrant shall be determined by
multiplying the number of Shares theretofore issuable upon the exercise
of each Underwriter Warrant, by a fraction, of which the numerator
shall be the current market price per Common Share (as defined in
paragraph (d) below) on the record date mentioned below in this
paragraph (c), and of which the denominator shall be the current market
price per Common Share on such record date, less the then fair value
(as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the shares of
capital stock other than Common Shares or assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable
to one Common Share. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of
distribution retroactive to immediately after the record date for the
determination of shareholders entitled to receive such
distribution.

(c)    For the purpose of any
computation under paragraph (c) of this Section 8, the current market
price per Common Share at any date shall be the greater of (i) the
average of the daily closing prices for five (5) consecutive trading
days commencing ten (10) trading days before the date of such
computation and (ii) the last sale price on the date before the date of
such computation. The closing price for each day shall be the last
reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices
regular way for such day, in either case on the principal national
securities exchange on which the shares are listed or admitted to
trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter
market, the closing sale price of the Common Shares or, in case no sale
is publicly reported, the average of the representative closing bid and
asked quotations for the Common Shares on the Nasdaq SmallCap Market or
any comparable system, or if the Common Shares are not listed on the
Nasdaq SmallCap Market or a comparable system, the closing sale price
of the Common Shares or, in case no sale is publicly reported, the
average of the closing bid and asked prices as furnished by two members
of the NASD selected from time to time by the Company for that
purpose.

(d)    No adjustment in the number
of Shares purchasable hereunder shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the number of Shares purchasable upon the
exercise of each Underwriter Warrant; provided,
however, that any adjustments which by reason of this
paragraph (d) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment, but not later than
three years after the happening of the specified event or events. All
calculations shall be made to the nearest one thousandth of a share.
Anything in this Section 8 to the contrary notwithstanding, the Company
shall be entitled, but shall not be required, to make such changes in
the number of Shares purchasable upon the exercise of each Underwriter
Warrant, in addition to those required by this Section 8, as it in its
discretion shall determine to be advisable in order that any dividend
or distribution in shares of Common Shares, subdivision,
reclassification or combination of 

4

Common Shares, issuance of rights, warrants or
options to purchase Common Shares, or distribution of shares of capital
stock other than Common Shares, evidences of indebtedness or assets
(other than distributions of cash out of consolidated earnings or
retained earnings) or convertible or exchangeable securities hereafter
made by the Company to the holders of its Common Shares, shall not
result in any tax to the holders of its Common Shares or securities
convertible into Common
Shares.

(e)    Whenever the number of
Shares purchasable upon the exercise of each Underwriter Warrant is
adjusted, as herein provided, the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of
Shares purchasable upon the exercise of each Underwriter Warrant
immediately prior to such adjustment, and of which the denominator
shall be the number of Shares so purchasable immediately
thereafter.

(f)    For the purpose of this
Section 8, the term ‘‘Common Shares’’ shall
mean (i) the class of stock designated as the Common Shares of the
Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from no par value to par
value, or from par value to no par value. In the event that at any
time, as a result of an adjustment made pursuant to paragraph (a)
above, the Holders shall become entitled to purchase any shares of
capital stock of the Company other than Common Shares, thereafter the
number of such other shares so purchasable upon exercise of each
Underwriter Warrant and the Exercise Price of such shares shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Shares contained in paragraphs (a) through (e), inclusive, and
paragraphs (g) through (k), inclusive, of this Section 8, and the
provisions of Sections 4, 5, 7 and 10, with respect to the Shares,
shall apply on like terms to any such other
shares.

(g)    The Company may, at its
option, at any time during the term of the Underwriter Warrants, reduce
the then current Exercise Price to any amount deemed appropriate by the
Board of Directors of the
Company.

(h)    Whenever the number of
Shares issuable upon the exercise of each Underwriter Warrant or the
Exercise Price of such Shares is adjusted, as herein provided, the
Company shall promptly mail by first class mail postage prepaid to each
Holder notice of such adjustment or adjustments. The Company shall
retain a firm of independent public accountants (who may be the regular
accountants employed by the Company) to make any computation required
by this Section 8 and shall cause such accountants to prepare a
certificate setting forth the number of Shares issuable upon the
exercise of each Underwriter Warrant and the Exercise Price of such
Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by
which such adjustment was made. Such certificate shall be conclusive on
the correctness of such adjustment and each Holder shall have the right
to inspect such certificate during reasonable business
hours.

(i)    Except as provided in this
Section 8, no adjustment in respect of any dividends shall be made
during the term of the Underwriter Warrants or upon the exercise of the
Underwriter Warrants.

(j)    In case of any
consolidation of the Company with or merger of, the Company with or
into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have
the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of each
Underwriter Warrant the kind and amount of shares and other securities
and property (including cash) which he would have owned or have been
entitled to receive after the happening of such consolidation, merger,
sale or conveyance had such Underwriter Warrant been exercised

5

immediately prior to such action. The
provisions of this paragraph (1) shall similarly apply to successive
consolidations, mergers, sales or
conveyances.

(k)    Notwithstanding any
adjustment in the Exercise Price or the number or kind of shares
purchasable upon the exercise of the Underwriter Warrants pursuant to
this Agreement, certificates for Underwriter Warrants issued prior or
subsequent to such adjustment may continue to express the same price
and number and kind of Shares as are initially issuable pursuant to
this Agreement.

9.    Fractional Interests. The
Company shall not be required to issue fractions of Shares on the
exercise of Underwriter Warrants. If more than one Underwriter Warrant
shall be presented for exercise in full at the same time by the same
Holder, the number of Shares which shall be issuable upon the exercise
thereof shall be computed on the basis of the number of Shares issuable
on exercise of the Underwriter Warrants so presented. If any fraction
of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of any Underwriter Warrant (or specified
portions thereof), the Company shall purchase such fraction for an
amount in cash equal to the same fraction of the current market price
per Common Share (determined as provided in the second sentence of
Section 8(d) of this Agreement) on the date of
exercise.

10.    Registration
Rights.

(a)    Demand Registration
Rights. The Company covenants and agrees with the Underwriters and
any other or subsequent Holders of the Registrable Securities (as
defined in paragraph (e) of this Section 10) that, upon written request
of the then Holder(s) of at least a majority of the aggregate of the
Registrable Securities which were originally issued on the date hereof
to the Underwriters or its designees, made at any time within the
period commencing one year and ending four years after the effective
date of the Registration Statement, the Company will file as promptly
as practicable and, in any event, within 45 days after receipt of such
written request, at its sole expense, no more than once, registration
statement under the Act, registering or qualifying the Registrable
Securities for sale. Within twenty (20) days after receiving any such
notice, the Company shall give notice to the other Holders of the
Registrable Securities advising that the Company is proceeding with
such registration statement and offering to include therein the
Registrable Securities of such Holders. The Company shall not be
obligated to any such other Holder unless such other Holder shall
accept such offer by notice in writing to the Company within ten (10)
days thereafter. The Company will use its reasonable best efforts,
through its officers, directors, auditors and counsel in all matters
necessary or advisable, to file and cause to become effective such
registration statement as promptly as practicable and maintain its
effectiveness for a period of time until the Holder's are able to
sell their Registrable Securities under Rule 144 under the Act without
restriction. If any registration pursuant to this paragraph (a) is an
underwritten offering, the Holders of a majority of the Registrable
Securities to be included in such registration shall be entitled to
select the underwriter or managing underwriter (in the case of a
syndicated offering) of such
offering.

(b)    Piggyback Registration
Rights. The Company covenants and agrees with the Underwriter and
any other Holders or subsequent Holders of the Registrable Securities
that if, at any time within the period commencing one year and ending
four years after the Effective Date, it proposes to file a Registration
Statement with respect to any class of security (other than in
connection with an offering to the Company’s employees) under
the Act in a primary registration on behalf of the Company and/or in a
secondary registration on behalf of holders of such securities and the
registration form to be used may be used for registration of the
Registrable Securities, the Company will give prompt written notice
(which in the case of a Registration Statement or notification pursuant
to the exercise of demand registration rights other than those provided
in Section 10(a) of this Agreement, shall be within ten (10) business
days after the Company’s receipt of notice of such exercise, in
any event, shall be at least 30 days prior to such filing) to, the
Holders of Registrable Securities (regardless of whether some of the
Holders shall have theretofore availed themselves of the right provided
in Section 10(a) of this Agreement) at the addresses appearing on the
records of the Company of its intention to file a registration

6

statement and will offer to include in such
registration statement, subject to sub-paragraphs (i) and (ii) of this
paragraph (b), such number of Registrable Securities with respect to
which the Company has received written requests for inclusion therein
within ten (10) days after the giving of notice by the Company. All
registrations requested pursuant to this Section 10(b) are referred to
herein as ‘‘Piggyback Registrations,’’ All
Piggyback Registrations pursuant to this Section 10(b) will be made
solely at the Company’s expense. This paragraph is not
applicable to a Registration Statement filed by the Company with the
Commission on Forms S-4 or S-8 or any successor
forms.

(i)    Priority on Primary
Registrations. If a Piggyback Registration includes an
underwritten primary registration on behalf of the Company and the
underwriter(s) for the offering being registered by the Company shall
determine in good faith and advise the Company in writing that in
its/their opinion the number of Registrable Securities requested to be
included in such registration exceeds the number that can be sold in
such offering without materially adversely affecting the distribution
of such securities by the Company, the Company will include in such
registration (A) first, the securities that the Company proposes to
sell and (B) second, such other securities apportioned pro rata among
the Holders of Registrable Securities and securities of the holders of
other securities requesting
registration.

(ii)    Priority on
Secondary Registrations. If a Piggyback Registration consists only
of an underwritten secondary registration on behalf of holders of
securities of the Company (other than pursuant to Section 10(a)), and
the underwriter(s) for the offering being registered by the Company
advise the Company in writing that in its/their opinion the number of
Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without
materially adversely affecting the distribution of such securities by
the Company, the Company will include in such registration the
securities requested to be included therein by the holders requesting
such registration, other securities requested to be included in such
registration and the Registrable Securities requested to be included in
such registration above, pro rata, among all such holders on the basis
of the number of shares requested to be included by each such
holder.

Notwithstanding the foregoing, the Company shall not be
required to file a registration statement to include Shares pursuant to
this Section 10(b) if an opinion of independent counsel, reasonably
satisfactory to counsel for the Company and counsel for Underwriters,
that the Shares proposed to be disposed of may be transferred pursuant
to the provisions of Rule 144 under the Act, shall have been delivered
to counsel for the
Company.

(c)    Action to be Taken by
the Company. In connection with the registration of Registrable
Securities in accordance with paragraphs (a) or (b) of this Section 10,
the Company agrees to:

(i)    Bear the
expenses of any registration or qualification under paragraphs (a) or
(b) of this Section 10, including, but not limited to, legal
accounting, and printing fees; provided, however,
that in no event shall the Company be obligated to pay (A) any fees and
disbursements of more than one special counsel for Holders of
Registrable Securities, or (B) any underwriters’ discount or
commission in respect of such Registrable
Securities;

(ii)    Use its best efforts to
register or qualify the Registrable Securities for offer or sale under
state securities or Blue Sky laws of such jurisdictions as Underwriter
shall reasonably request and to do any and all other acts and things
which may be necessary or advisable to enable the holders to consummate
the proposed sale, transfer or other disposition of such securities in
any jurisdiction except that the Company shall not for any purpose be
required to execute a general consent to service of process to qualify
to do business in any jurisdiction where it is not so qualified;
and

(iii)    Enter into a cross-indemnity
agreement, in customary form, with each underwriter, if any, and each
holder of securities included in such registration
statement,

(c)    For purposes of this
Section 10, (i) the term ‘‘Holder’’ shall
include holders of Shares, and (ii) the term
‘‘Registrable Securities’’ shall mean the
Shares, issued upon exercise of the Underwriter
Warrants.

7

11.    Notices to
Holders.

(a)    Nothing
contained in this Agreement or in any of the Underwriter Warrants shall
be construed as conferring upon the Holders thereof the right to vote
or to receive dividends or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election
of directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company; provided,
however, that in the event that a meeting of shareholders
shall be called to consider and take action on a proposal for the
voluntary dissolution of the Company, other than in connection with a
consolidation, merger or sale of all, or substantially all, or its
property, assets, business and good will as an entirety. then and in
that event the Company shall cause a notice thereof to be sent at least
twenty (20) days prior to the date filed as a record date or the date
of closing, the transfer books in relation to such meeting, to each
registered Holder of Underwriter Warrants at such Holder’s
address appearing in the Underwriter Warrant Register; but failure to
mail or to receive such notice or any defect therein or in the mailing
thereof shall not affect the validity of any action taken in connection
with such voluntary dissolution. If such notice shall have been so
given and if such a voluntary dissolution shall be authorized at such
meeting or any adjournment thereof, then from and after the date on
which such voluntary dissolution shall have been duly authorized by the
shareholders, the purchase rights represented by the Underwriter
Warrants and all other rights with respect thereto shall cease and
terminate.

(b)    In the event the
Company intends to make any distribution on its Common Shares (or other
securities which may be issuable in lieu thereof upon the exercise of
Underwriter Warrants), including, without limitation, any such
distribution to be made in connection with a consolidation or merger in
which the Company is the continuing corporation, or to issue
subscription rights or warrants to holders of its Common Shares, the
Company shall cause a notice of its intention to make such distribution
to be sent by first-class mail, postage prepaid, at least twenty (20)
days prior to the date fixed as a record date or the date of closing
the transfer books in relation to such distribution, to each registered
Holder of Underwriter Warrants at such Holder’s address
appearing, on the Underwriter Warrant Register, but failure to mail or
to receive such notice or any defect therein or in the mailing thereof
shall not affect the validity of any action taken in correction with
such distribution.

12.    Notices. Any
notice pursuant to this Agreement to be given or made by the Holder of
any Underwriter Warrant and/or the holder of any Share to or on the
Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed as follows or to such other address as
the Company may designate by notice given in accordance with this
Section 12, to the Holders of Underwriter Warrants and/or the holders
of Shares:

		Handheld Entertainment, Inc.
539
Bryant Street, Suite 403
San Francisco, California
94107
Attention:

Notices or demands authorized by
this Agreement to be given or made by the Company to or on the Holder
of any Underwriter Warrant and/or the holder of any Share shall be
sufficiently given or made (except as otherwise provided in this
Agreement) if sent by first-class mail, postage prepaid, addressed to
such Holder or such holder of Shares at the address of such Holder or
such holder of Shares as shown on the Underwriter Warrant Register or
the books of the Company, as the case may
be.

13.    Governing Law. THIS AGREEMENT
AND EACH UNDERWRITER WARRANT ISSUED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The Company
hereby agrees to accept service of process by notice given to it
pursuant to the provisions of Section
12.

14.    Counterparts. This Agreement may
be executed in any number of counterparts, each of which so executed
shall be deemed to be an original; but such counterparts together shall
constitute but one and the same agreement.

8

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the day,
month and year first above written.

(Corporate
Seal)

							
	Attest:			 			HANDHELD
ENTERTAINMENT,
INC.
	 			By:			 
	 			 			Jeff
Oscodar
	

Secretary

							
	Attest:			 			NEWBRIDGE
SECURITIES, CORP.
on Behalf of Itself and PALI CAPITAL,
INC.
	 			By:			 
	 			 			Name:
Title:
	

9

EXHIBIT
A

	No.                    	140,000
Warrants

VOID AFTER 5:00 P.M. EST TIME

ON
[], 2011

HANDHELD
ENTERTAINMENT, INC.

Warrant Certificate

THIS
CERTIFIES THAT for value received Newbridge Securities, Corp. and Pali
Capital, Inc. or registered assigns, is the owner of the number of
warrants set forth above, each of which entities the owner thereof to
purchase at any time from [            ], 2011, until
5:00 p.m., EST time on [            ], 2006 (the
‘‘Warrant Expiration
Date’’), one fully paid and nonassessable Common
Share, without par value (the ‘‘Common
Shares’’), of Handheld Entertainment, Inc., a
Delaware corporation (the
‘‘Company’’), at the purchase
price of $[    ] per share (the
‘‘Exercise Price’’) upon
presentation and surrender of this Warrant Certificate with the Form of
Election to Purchase duly executed, The number of Warrants evidenced by
this Warrant Certificate (and the number of shares which may be
purchased upon exercise thereto set forth above, and the Exercise Price
per share set forth above, are the number and Exercise Price as of the
date of original issuance of the Warrants, based on the Common Shares
of the Company as constituted at such date. As provided in the Warrant
Agreement referred to below, the Exercise Price and the number or kind
of shares which may be purchased upon the exercise of the Warrants
evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.

This
Warrant Certificate is subject to, and entitled to the benefits of, all
of the terms, provisions and conditions of an agreement, dated as of
[                ], 2006 (the
‘‘Warrant Agreement’’),
between the Company and Newbridge Securities, Corp. and Pali Capital,
Inc., which Warrant Agreement is hereby incorporated herein by
reference and made a part hereof and to which Warrant Agreement
reference is hereby made for a full description of the rights,
limitations of rights, duties and immunities hereunder of the Company
and the holders of the Warrant Certificates. Copies of the Warrant
Agreement are on file at the principal office of the
Company.

This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Company,
may be exchanged for another Warrant Certificate or Warrant
Certificates of like tenor and date evidencing Warrants entitling the
holder to purchase a like aggregate number of Common Shares as the
Warrants evidenced by the Warrant Certificate or Warrant Certificates
surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant Certificate
or Warrant Certificates for the number of whole Warrants not
exercised.

No fractional Common Shares will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Warrant
Agreement.

No holder of this Warrant Certificate shall be
entitled to vote or receive dividends or be deemed the holder of Common
Shares, any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything
contained in the Warrant Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or, except as provided in the Warrant
Agreement, to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until the Warrant or Warrants
evidenced by this Warrant Certificate shall have been exercised and the
shares shall have become deliverable as provided in the Warrant
Agreement.

A-1

IN WITNESS WHEREOF, Handheld
Entertainment, Inc. has caused the signature (or facsimile signature)
of its President and its Secretary to be printed hereon and its
corporate seal (or facsimile) to be printed hereon.

Dated:
                                        ,
2006

							
	 			 			HANDHELD
ENTERTAINMENT,
INC.
	 			By:			 
	 			 			Jeff
Oscodar
Chief Executive Officer
	(Corporate
Seal)			 			 
	Attest:			 			 
	 			 			 
	Secretary			 			 
	

A-2

FORM OF ELECTION TO
PURCHASE

(To be executed if holder desires to
exercise the Warrant
Certificate.)

TO:   __________________________________

The
undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase the Common Shares issuable upon
the exercise of such Warrants and requests that certificates for such
shares be issued in the name of:

(Please insert social
security or other identifying
number)

	
				
	

	
				
	

	
				
	

		(Please
print name and address)

If such number of Warrants shall
not be all the Warrants evidenced by this Warrant Certificate, a new
Warrant Certificate for the balance remaining of such Warrants shall be
registered in the name of and delivered to:

Please insert
social security number or other identifying
number

	
				
	

	
				
	

	
				
	

		(Please
print name and
address)

							
	Dated:			 			 
	 			 			 
	 			 			Signature
	 			 			(signature
must conform in all respects to name of holder as specified on the face
of this Warrant Certificate)
	

Signature
Guaranteed:

	
		
	

A-3

FORM
OF

ASSIGNMENT

(To be executed by the
registered holder if such holder desires to transfer the Warrant
Certificates.)

FOR VALUE RECEIVED,
                                                    
hereby sells, assigns and transfers unto
                                                                                            
this Warrant Certificate, together with all right, title and interest
herein, and does hereby irrevocably constitute and appoint
                                        ,
to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.

										
	Dated:			 			 			 
	 			 			Signature:			 
	 			 			 			 
	

Signature
Guaranteed:

	
		
	

NOTICE

The
signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change
whatsoever.

A-4

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