Document:

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EXHIBIT
10.16

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 Jeffrey Oscodar
(the
‘‘Executive’’).

RECITALS:

WHEREAS,
the Company’s predecessor in interest and the Executive are
parties to an Employment Agreement dated as of September 1,
2004, setting forth certain of the terms and conditions pursuant to
which the Executive is employed by the Company as its President and
Chief Executive Officer (the ‘‘Prior
Agreement’’);

WHEREAS, the Company desires to
continue to employ the Executive and the Executive is willing to
continue to serve in the employ of the Company as its President and
Chief Executive Officer; and

WHEREAS, the parties desire that
this Agreement supersede the Prior Agreement and that such employment
continue upon the terms and conditions set forth in this
Agreement.

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 President and Chief Executive Officer 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 a felony; or (3) any act of personal
dishonesty by the Executive in connection with his responsibilities to
the Company which is intended to result in substantial personal
enrichment of the Executive. 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 

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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);

(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 331 San
Rafael Avenue, Belvedere, 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 

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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 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, and
in consideration of the Executive waiving the payment of $135,000
currently now due and owing to him from the Company under his current
employment contract, 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 two (2) 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) 

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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 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 

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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 adjusted gross income and the highest 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 President
and Chief Executive Officer of the Company and shall have the duties,
responsibilities and authority as are customary and appropriate for
such positions. The Executive shall devote substantial business time
and efforts to the 

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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. The
Executive shall serve on the Board at all times during the term of this
Agreement, and the Company shall cause the election of the Executive to
the Board.

6.    Base Salary.    The
Company shall pay the Executive a base salary of not less than $25,000
per month ($300,000 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, one-half (1/2)
of 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 termination of the Prior
Agreement (pursuant to which the Executive was entitled, among other
things, to terminate his employment and receive a severance payment and
may have become entitled to a grant of certain options), and the
Executive’s agreement to the provisions of this Agreement, on
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 $400,000. 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.

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11.    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.

12.    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.

13.    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.

14.    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 $ two million dollars. This provision shall
supersede the Director and Officer Indemnification Agreement, dated as
of February 10, 2006, between the Company and the
Executive.

15.    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).

16.    Successors.   
Subject to the provisions ofSection 4, the Company may
assign its rights and obligations under this Agreement to a successor
of the Company’s business, without the prior written

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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.

17.    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.

18.    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.

19.    Prior
Agreement; Amendment and Waiver.    This Agreement supersedes
all of the terms and provisions of the Prior Agreement which shall be
of no further force or effect. 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.

20.    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
San Francisco, CA
94107
Attention: Chief Financial
Officer
	If to the
Executive:			Mr.  Jeffrey  Oscodar
331 San Rafael
Avenue
 Belvedere, CA 94920
	

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.

21.    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.

22.    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 22, the Proprietary
Information and Inventions Agreement between the Company and the
Executive shall remain in full force and
effect.

23.    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.

24.    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/ Jeffrey
Oscodar                                        
Jeffrey
Oscodar

9EXHIBIT 10.1

                    AMENDMENT TO THE FINLAY ENTERPRISES, INC.

                          1997 LONG TERM INCENTIVE PLAN

     Effective on and after May 8, 2006, subject to approval of the stockholders
of Finlay Enterprises, Inc. (the "Corporation") as provided under any applicable
law, regulation or stock exchange rule, the 1997 Long Term Incentive Plan, as
amended (the "1997 Plan"), of the Corporation is further amended pursuant to
Section 9.5 thereof in the following respect:

     1. The first sentence of Section 5.1 of the 1997 Plan is hereby deleted and
the following sentence is hereby substituted therefor:

     "Subject to adjustment as provided in Section 8 hereof, the total number of
shares of Common Stock reserved for delivery to participants in connection with
Awards under the Plan shall be 2,125,000".

     2. Except as amended hereby, the 1997 Plan shall remain in full force and
effect, without change or modification.

                                       BY ORDER OF THE BOARD OF DIRECTORS
                                       OF FINLAY ENTERPRISES, INC.

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