Document:

Unassociated Document

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”), dated as of April 20, 2007, is
      entered into by and among Handheld Entertainment, Inc., a Delaware corporation
      (the “Corporation”), and Kieran O’Neill (the “Stockholder”).

     

    RECITALS

     

    A. In
      connection with the acquisition (the “Acquisition”) of Holylemon.com and all of
      the assets related thereto (collectively, the “Assets”) and as more fully
      described in that Certain Asset Purchase Agreement, of even date herewith,
      by
      and between the Stockholder and Dorks LLC, a Washington limited liability
      company and a wholly owned subsidiary of the Corporation, by Dorks LLC the
      Stockholder has agreed to receive shares of the Corporation’s Common Stock as
      partial consideration for the Assets; provided that, among other things, certain
      securities registration rights are granted to the Stockholder.

     

    B. The
      Corporation deems it desirable to grant the securities registration rights
      set
      forth below to the Stockholder in order to induce the Stockholder to consummate
      the Acquisition.

     

    AGREEMENTS

     

    In
      consideration of the promises and the mutual covenants herein contained and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto hereby agree as follows:

     

    1.  Definitions.
      In
      addition to the capitalized terms defined elsewhere in this Agreement, the
      following capitalized terms shall have the following meanings when used in
      this
      Agreement:

     

    “Acquisition”
has
      the
      meaning ascribed to it in the Recitals hereto.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the Common Stock, par value $0.0001 per share, of the Corporation.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any successor federal
      statute, and the rules and regulations of the Commission promulgated thereunder,
      all as the same shall be in effect from time to time.

     

    “Holders”
means
      the Stockholder or the Stockholder’s successors or assigns or subsequent holders
      of the Registrable Shares contemplated by Section
      11.

     

    “Person”
means
      a
      natural person, a partnership, a corporation, a limited liability company,
      an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization or other entity, or a governmental entity or any department, agency
      or political subdivision thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Piggyback
      Registration”
has
      the
      meaning ascribed to it in Section
      2(a).

     

    “Registrable
      Shares”
means
      any shares of Common Stock issued as consideration for the Assets; provided,
      however,
      that
      Registrable Shares shall not include any shares of Common Stock (i) the sale
      of
      which has been registered pursuant to the Securities Act, (ii) that have been
      sold to the public pursuant to Rule 144 promulgated by the Commission under
      the
      Securities Act or (iii) which may then be sold pursuant to subsection (k) of
      said Rule 144.

     

    “Registration”
means
      a
      Piggyback Registration.

     

    “Registration
      Expenses”
has
      the
      meaning ascribed to it in Section
      5.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended. 

     

    2.  Piggyback
      Registrations.

     

    (a)  Right
      to Piggyback.
      If the
      Corporation proposes to register shares of Common Stock under the Securities
      Act
      (other than pursuant to a registration statement on Form S-4 or Form S-8 or
      any
      successor or similar forms) and the registration form to be used may be used
      for
      the registration of Registrable Shares (a “Piggyback Registration”), the
      Corporation will give prompt written notice to all Holders of Registrable Shares
      of its intention to effect such a registration and will include in such
      registration, subject to the provisions of Section
      2(b),
      all
      Registrable Shares with respect to which the Corporation has received written
      requests for inclusion therein within 21 days after the Corporation’s notice has
      been given.

     

    (b)  Priority
      on Piggyback Registrations.
      If a
      Piggyback Registration is an underwritten registration on behalf of the
      Corporation, and the managing underwriters advise the Corporation in writing
      that in their opinion the aggregate number of securities requested to be
      included in such registration pursuant to Section
      2(a)
      (the
“Requested Piggyback Shares”), together with the other shares being registered
      by the Corporation, would exceed the maximum number of shares of Common Stock
      that can be marketed without adversely affecting the offering, including a
      substantial risk that the price per share of Common Stock will be reduced,
      the
      Corporation will include in such registration (i) first,
      any
      securities the Corporation proposes to sell, (ii) second,
      the
      Requested Piggyback Shares, with any reductions in the number of Registrable
      Shares actually included in such registration to be allocated on a pro rata
      basis
      among all Holders of Requested Piggyback Shares in accordance with the number
      of
      Registrable Shares such Holders have requested to be included therein, and
      (iii)
third,
      to the
      extent available, among any other selling security holders.

     

    (c) Control
      by the Corporation.
      The
      Corporation may withdraw any registration statement and abandon any proposed
      offering initiated by the Corporation without the consent of any Holder of
      Registrable Shares, notwithstanding the request of any such Holder to
      participate therein in accordance with Section 2(a), if the Board of Directors
      of the Corporation determines in its sole discretion that such action is in
      the
      best interest of the Corporation.

    

    3.  Information.The
      Corporation may require the Holders to furnish to the Corporation such
      information in writing regarding themselves and the distribution of Registrable
      Shares as the Corporation may from time to time reasonably request in writing
      in
      order to comply with the Securities Act. The Holders agree to supply the
      Corporation as promptly as practicable with such information and to notify
      the
      Corporation as promptly as practicable of any inaccuracy or change in
      information they have previously furnished to the Corporation.

     

    
      
         

      

      
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    4.  Registration
      Procedures.
      Whenever
      the Holders of Registrable Shares have requested that any Registrable Shares
      be
      registered pursuant to the terms of this Agreement, the Corporation will use
      its
      reasonable best efforts to effect the registration and the sale of such
      Registrable Shares in accordance with the intended method of disposition
      thereof, and pursuant thereto the Corporation will:

     

    (a)  prepare
      and file with the Commission a registration statement on the appropriate form
      with respect to such Registrable Shares and use its best efforts to cause such
      registration statement to become effective as soon as practicable after such
      filing and to remain effective until the earlier of (i) the time that all of
      the
      Registrable Shares covered by such registration statement have been sold in
      accordance with the intended methods of disposition of the seller or sellers
      set
      forth in such registration statement or (ii) one year after such registration
      statement has been declared effective;

     

    (b)  prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective for the period specified
      in clause (a) and to comply with the provisions of the Securities Act with
      respect to the disposition of all securities covered by such registration
      statement; 

     

    (c)  furnish
      to each seller of such Registrable Shares and the underwriters of the securities
      being registered such number of copies of such registration statement, each
      amendment and supplement thereto, the prospectus included in such registration
      statement (including each preliminary prospectus) and such other documents
      as
      such seller or underwriters may reasonably request in order to facilitate the
      disposition of the Registrable Shares owned by such seller or the sale of such
      securities by such underwriters;

     

    (d)  notify
      each seller of such Registrable Shares, promptly after it shall receive notice
      thereof, of the time when such registration statement has become effective
      or a
      supplement to any prospectus forming a part of such registration statement
      has
      been filed;

     

    (e)  notify
      each seller of such Registrable Shares of any request by the Commission for
      the
      amending or supplementing of such registration statement or prospectus or for
      additional information;

     

    (f)  prepare
      and file with the Commission, promptly upon the request of any seller of such
      Registrable Shares, any amendments or supplements to such registration statement
      or prospectus which, in the opinion of counsel selected by the Holders of a
      majority of the Registrable Shares being registered, is required under the
      Securities Act or the rules and regulations thereunder in connection with the
      distribution of Registrable Shares by such seller;

     

    (g)  prepare
      and promptly file with the Commission and promptly notify each seller of such
      Registrable Shares of the filing of such amendment or supplement to such
      registration statement or prospectus as may be necessary to correct any
      statements or omissions if, at the time when a prospectus relating to such
      securities is required to be delivered under the Securities Act, any event
      shall
      have occurred as the result of which any such prospectus or any other prospectus
      as then in effect would include an untrue statement of a material fact or omit
      to state any material fact necessary to make the statements therein, in light
      of
      the circumstances in which they were made, not misleading;

     

    
      
         

      

      
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    (h)    advise
      each seller of such Registrable Shares, promptly after it shall receive notice
      or obtain knowledge thereof, of the issuance of any stop order by the Commission
      suspending the effectiveness of such registration statement or the initiation
      or
      threatening of any proceeding for such purpose and promptly use its best efforts
      to prevent the issuance of any stop order or to obtain its withdrawal if such
      stop order should be issued; and

     

    (i)    refrain
      from filing any such registration statement, prospectus, amendment or supplement
      to which counsel selected by the Holders of at least a majority of the
      Registrable Shares being registered shall have reasonably objected on the
      grounds that such amendment or supplement does not comply in all material
      respects with the requirements of the Securities Act or the rules and
      regulations thereunder, after having been furnished with a copy thereof at
      least
      3 business days prior to the filing thereof, unless, in the case of an amendment
      or supplement, in the opinion of counsel for the Corporation the filing of
      such
      amendment or supplement is reasonably necessary to protect the Corporation
      from
      any liabilities under any applicable federal or state law and such filing will
      not violate applicable laws.

     

    5.  Registration
      Expenses.
      All
      expenses incident to the Corporation’s performance of or compliance with this
      Agreement, including, but not limited to, all registration and filing fees,
      fees
      and expenses of compliance with federal, state and foreign securities laws,
      printing expenses, messenger and delivery expenses, and fees and disbursements
      of counsel for the Corporation and its independent certified public accountants,
      underwriters (excluding discounts and commissions attributable to the
      Registrable Shares included in such registration) and other Persons retained
      by
      the Corporation (all such expenses being herein called “Registration Expenses”),
      will be borne by the Corporation. In addition, the Corporation will pay its
      internal expenses (including, but not limited to, all salaries and expenses
      of
      its officers and employees performing legal or accounting duties), and the
      expense of any annual audit or quarterly review.

     

    6.  Indemnification.

     

    (a)    In
      connection with a registration of Registrable Shares pursuant to this Agreement,
      the Corporation agrees to indemnify, to the fullest extent permitted by law,
      each seller of Registrable Shares, its officers, directors and employees and
      each Person who controls any such person (within the meaning of the Securities
      Act or the Exchange Act) against all losses, claims, damages, liabilities and
      expenses (including, but not limited to, reasonable attorneys’ fees except as
      limited by Section 6(c)) to which such indemnified party may become subject
      insofar as they are caused by, arise out of, or are based upon any untrue or
      alleged untrue statement of a material fact contained in any registration
      statement, any prospectus or preliminary prospectus or any amendment thereof
      or
      supplement thereto, or any omission or alleged omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein in light of the circumstances in which they were made not misleading,
      except insofar as the same are (i) caused by or contained in any written
      information furnished to the Corporation by such seller expressly for use
      therein, (ii) caused by such seller’s failure to deliver a copy of the
      registration statement or prospectus or any amendment or supplement thereto
      as
      required by the Securities Act or (iii) caused by the use of a prospectus or
      preliminary prospectus or any amendment or supplement thereto after receipt
      of
      notice from the Corporation that it should no longer be used. In connection
      with
      an underwritten offering, the Corporation will indemnify such underwriters,
      their officers and directors and each Person who controls such underwriters
      (within the meaning of the Securities Act or the Exchange Act) to the same
      extent as provided above with respect to the indemnification of the sellers
      of
      Registrable Shares. 

     

    
      
         

      

      
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    (b)    In
      connection with any registration statement in which a seller of Registrable
      Shares is participating, each such seller will furnish to the Corporation in
      writing such information and affidavits as the Corporation reasonably requests
      for use in connection with any such registration statement or prospectus and,
      to
      the fullest extent permitted by law, will indemnify the Corporation, its
      directors, officers and employees, each underwriter (if any) and each Person
      who
      controls the Corporation or such underwriter (within the meaning of the
      Securities Act or the Exchange Act) against any losses, claims, damages,
      liabilities and expenses (including, but not limited to, attorneys’ fees except
      as limited by Section 6(c)) to which such indemnified party may become subject
      insofar as they are caused by, arise out of, or are based upon any untrue or
      alleged untrue statement of a material fact contained in the registration
      statement, prospectus or preliminary prospectus or any amendment thereof or
      supplement thereto, or any omission or alleged omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein in light of the circumstances in which they were made not misleading,
      but only to the extent that such untrue statement or omission is contained
      in
      any written information or affidavit so furnished in writing by such seller
      expressly for use therein or the failure by such seller to deliver a copy of
      the
      registration statement or prospectus or amendment or supplement thereto as
      required by the Securities Act; provided,
      however,
      that
      the liability of each such seller of Registrable Shares will be limited to
      the
      net amount received by such seller from the sale of Registrable Shares pursuant
      to such registration statement.

    

    (c)    Any
      Person entitled to indemnification hereunder will (i) use reasonable efforts
      to
      give prompt written notice to the indemnifying party of any claim with respect
      to which it seeks indemnification and (ii) unless in such indemnified party’s
      reasonable judgment a conflict of interest between such indemnified and
      indemnifying parties may exist with respect to such claim, permit such
      indemnifying party to assume the defense of such claim with counsel reasonably
      satisfactory to the indemnified party; provided,
      however,
      that
      the failure of any Person entitled to indemnification hereunder to give such
      notice to the indemnifying party shall not constitute a waiver of, or a defense
      of the indemnifying party to, such Person's right to indemnification hereunder
      unless such failure has a material adverse effect upon the indemnifying party's
      ability to defend said action. If such defense is assumed, the indemnifying
      party will not be subject to any liability for any settlement made by the
      indemnified party without its consent (which consent will not be unreasonably
      withheld). An indemnifying party who is not entitled to, or elects not to,
      assume the defense of a claim will not be obligated to pay the fees and expenses
      of more than one counsel for all parties indemnified by such indemnifying party
      with respect to such claim, unless in the reasonable judgment of any indemnified
      party a conflict of interest may exist between such indemnified party and any
      other of such indemnified parties with respect to such claim.

     

    
      
         

      

      
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    (d)    If
      for
      any reason the foregoing indemnity is unavailable, or is insufficient to hold
      harmless an indemnified party, then the indemnifying party shall contribute
      to
      the amount paid or payable by the indemnified party as a result of such losses,
      claims, damages, liabilities or expenses (i) in such proportion as is
      appropriate to reflect the relative benefits received by the indemnifying party
      on the one hand and the indemnified party on the other hand from the
      registration or (ii) if the allocation provided by clause (i) above is not
      permitted by applicable law, or provides a lesser sum to the indemnified party
      than the amount hereinafter calculated, in such proportion as is appropriate
      to
      reflect not only the relative benefits received by the indemnifying party on
      the
      one hand and the indemnified party on the other hand but also the relative
      fault
      of the indemnifying party and the indemnified party as well as any other
      relevant equitable considerations. No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any Person who was not guilty of such
      fraudulent misrepresentation.   

    

    (e)    The
      indemnification provided for under this Agreement will remain in full force
      and
      effect regardless of any investigation made by or on behalf of the indemnified
      party or any officer, director or controlling Person of such indemnified party
      and will survive the transfer of securities. 

    

    8.  Underwritten
      Registrations.
      No
      Person may participate in any registration hereunder which is underwritten
      unless such Person (a) agrees to sell such Person’s securities on the basis
      provided in any underwriting arrangements approved by the Person or Persons
      entitled hereunder to approve such arrangements and (b) completes and executes
      all questionnaires, powers of attorney, indemnities, underwriting agreements
      and
      other documents required under the terms of such underwriting
      arrangements.

    

    9.  “Market
      Stand Off” Agreement.
      Each
      Holder hereby agrees that it will not, without the prior written consent of
      the
      Corporation and the managing underwriter (if a managing or lead underwriter
      is
      appointed), during the period commencing on the date of the final prospectus
      relating to a underwritten public offering of the Corporation’s securities and
      ending on the date specified by the Corporation and the managing underwriter
      (such period not to exceed one hundred eighty (180) calendar days) (i) lend,
      offer, pledge, sell, contract to sell, sell any option or contract to purchase,
      purchase any option or contract to sell, grant any option, right or warrant
      to
      purchase, or otherwise transfer or dispose of, directly or indirectly, any
      securities of the Corporation, including (without limitation) shares of Common
      Stock or any securities convertible into or exercisable or exchangeable for
      Common Stock (whether now owned or hereafter acquired) or (ii) enter into any
      swap or other arrangement that transfers to another, in whole or in part, any
      of
      the economic consequences of ownership of any securities of the Corporation,
      including (without limitation) shares of Common Stock or any securities
      convertible into or exercisable or exchangeable for Common Stock (whether now
      owned or hereafter acquired), whether any such transaction described in clause
      (i) or (ii) above is to be settled by delivery of securities, in cash or
      otherwise. The foregoing covenants shall not apply to the sale of any shares
      by
      a Holder to an underwriter pursuant to an underwriting agreement. Each Holder
      agrees to execute an agreement(s) reflecting (i) and (ii) above as may be
      requested by the managing or lead underwriters at the time of the underwritten
      public offering, and further agrees that the Corporation may impose stop
      transfer instructions with its transfer agent in order to enforce the covenants
      in (i) and (ii) above. The underwriters in connection with the Corporation’s
      underwritten public offering are intended third party beneficiaries of the
      covenants in this Section 9 and shall have the right, power and authority to
      enforce such covenants as though they were a party hereto.

     

    
      
         

      

      
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    10.  Remedies.
      Any
      Person having rights under any provision of this Agreement will be entitled
      to
      enforce such rights specifically, to recover damages caused by reason of any
      breach of any provision of this Agreement and to exercise all other rights
      granted by law.

    

    11.  Amendments
      and Waivers.
      Except
      as otherwise expressly provided herein, the provisions of this Agreement may
      be
      amended or waived at any time only by the written agreement of the Corporation
      and the Holders of at least a majority of the issued and outstanding Registrable
      Shares. Any waiver, permit, consent or approval of any kind or character on
      the
      part of any such Holders of any provision or condition of this Agreement must
      be
      made in writing and shall be effective only to the extent specifically set
      forth
      in writing. Any amendment or waiver effected in accordance with this paragraph
      shall be binding upon each Holder of Registrable Shares and the Corporation.
      Each Holder acknowledges that by operation of this paragraph the Holders of
      at
      least a majority of the Registrable Shares acting in conjunction with the
      Corporation will have the right and power to diminish or eliminate all rights
      pursuant to this Agreement.

    

    12.  Successors
      and Assigns.
      Except
      as otherwise expressly provided herein, all covenants and agreements contained
      in this Agreement by or on behalf of any of the parties hereto will bind and
      inure to the benefit of the respective successors and assigns of the parties
      hereto, whether so expressed or not. In addition and whether or not any express
      assignment has been made, the provisions of this Agreement which are for the
      benefit of purchasers or holders of Registrable Shares are also for the benefit
      of, and enforceable by, any subsequent holder of Registrable Shares who consents
      in writing to be bound by this Agreement.

    

    13.  Final
      Agreement.
      This
      Agreement constitutes the final agreement of the parties concerning the matters
      referred to herein, and supersedes all prior agreements and understandings
      relating to such matters.

    

    14.  Severability.
      Whenever possible, each provision of this Agreement will be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement is held to be prohibited by or invalid under applicable law,
      such provision will be ineffective only to the extent of such prohibition or
      invalidity, without invalidating the remainder of this Agreement.

    

    15.  Descriptive
      Headings.
      The
      descriptive headings of this Agreement are inserted for convenience of reference
      only and do not constitute a part of and shall not be utilized in interpreting
      this Agreement.

    

    16.  Notices.
      Any
      notices required or permitted to be sent hereunder shall be delivered
      personally, sent by United States mail, certified mail, return receipt
      requested, with postage prepaid, or delivered by reputable overnight courier
      service, with all charges prepaid, to the following addresses, or such other
      addresses as shall be given by notice delivered hereunder, and shall be deemed
      to have been given upon delivery, if delivered personally, three business days
      after mailing, if mailed as provided above, or one business day after delivery
      to the courier, if delivered by overnight courier service as provided
      above:

     

    
      
         

      

      
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    if
      to the
      Corporation, to:

     

    Handheld
      Entertainment, Inc.

    539
      Bryant Street

    San
      Francisco, CA 94107

    Attention:
      Jeff Oscodar, Chief Executive Officer

    

    with
      a
      copy to:

    

    Haynes
      and Boone, LLP

    153
      E.
      53rd
      St.,
      Suite 4900

    New
      York,
      NY 10022

    Attention:
      Harvey J. Kesner, Esq.

     

    if
      to the
      Stockholder, as set forth in the records of the Corporation,

    

    with
      a
      copy to: 

    

    James
      S.
      Parkhill, Esq.

    1283
      Arguello Blvd.

    San
      Francisco, CA 94122

    Fax:
      (415) 681-8544

    

    17.  Governing
      Law.
      The
      validity, meaning and effect of this Agreement shall be determined in accordance
      with the laws of the State of California applicable to contracts made and to
      be
      performed in that state, without regard to the principles of conflicts of
      law.

    

    18.  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed and delivered shall be deemed an original, and such counterparts
      together shall constitute one instrument. Transmission by facsimile of an
      executed counterpart of this Agreement shall constitute due and sufficient
      delivery of this Agreement.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

    

    
      
         

      

      
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    IN
      WITNESS WHEREOF, this Registration Rights Agreement has been executed by the
      undersigned as of the date first set forth above.

     

    

     

    HANDHELD
      ENTERTAINMENT, INC.

    

    

    By:
      By:
/s/
      William J.
      Bush              
 

    Name:
      William J. Bush

    Title:
      Chief Financial Officer

    

    

    STOCKHOLDER:

    

     

    KIERAN
      O’NEILL

    

    

    /s/
      Kieran
      O’Neill                               
   

            

    

    
      
         

      

      
        9Unassociated Document

    CONSULTANT
      AGREEMENT

     

    This
      Consultant Agreement (the “Agreement”)
      is made
      and entered into as of April 20, 2007 (the “Effective
      Date”),
      by
      and between Handheld Entertainment, Inc., a Delaware corporation (the
“Company”),
      and
      Kieran O’Neill, an individual having an address at 5 Braeside Close,
      Winchester, Hampshire, United Kingdom SO22 4JL (“Consultant”).

     

    WHEREAS,
      Dorks LLC, a Washington limited liability and a wholly owned subsidiary of
      the
      Company, has entered into an asset purchase agreement, dated even date herewith
      (the “Purchase
      Agreement”),
      to
      acquire the assets and business of Holylemon.com (the “Business”),
      from
      Consultant; and

     

    WHEREAS,
      the Company desires to engage Consultant to assist the Company with the
      transition of the Business and to advise the Company regarding the Business,
      and
      Consultant desires to be engaged by the Company for such purposes. 

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements contained herein and other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the parties hereto
      agree as follows:

     

    1.  Engagement
      of Services.
      The
      Company hereby retains Consultant, and Consultant hereby agrees to be retained
      to render services to the Company, upon the terms and conditions set forth
      herein.

     

    2.  Services.
      During
      the Term (as defined in Section 12 below), Consultant agrees to devote no less
      than forty (40) hours per week (i) advising the Company regarding the transition
      of the Business; and (ii) managing the Business, which will include, among
      other
      things, updating the Holylemon.com website with media content, maintaining
      link
      trades, answering user questions, and, in general, ensuring that the Business
      is
      properly functioning (the “Services”).
      The
      Company and Consultant expect that Consultant will render such services remotely
      (i.e., outside of the United States). However, Consultant agrees to be available
      to render the Services to the Company for a period of no less than one (1)
      week
      per calendar month at the Company’s San Francisco office (the “On-Site
      Services”),
      at
      such times as reasonably requested by the Company. Consultant agrees that in
      performing the Services, he will neither undertake nor cause, nor permit to
      be
      undertaken, any activity which is illegal under any applicable law or would
      have
      the effect of causing the Company to be in violation of any applicable
      laws.

     

    3. Compensation;
      Reimbursement.
      Consultant will be entitled to a consulting fee of $2,000 per calendar month
      for
      each month during the Term (the “Fee”)
      for
      the Services rendered to the Company. The Fee (or pro rata portion thereof
      as
      will have been earned by Consultant at such time) will be payable by the Company
      monthly. The Company will reimburse Consultant for all out-of-pocket business
      expenses reasonably incurred in connection with the performance of the Services
      during the Term within thirty days of submission of evidence of such expenses
      in
      a form satisfactory to the Company. Expenses in excess of $250 in the aggregate,
      incurred in a single month, excluding travel and lodging expenses incurred
      in
      connection with the On-Site Services, will require separate prior written
      approval from the Company. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4. Independent
      Contractor Relationship.
      Consultant will at all times be acting and performing hereunder as an
      independent contractor, and nothing in this Agreement is intended to, or should
      be construed to, create a partnership, agency, joint venture or employment
      relationship. Consultant is not authorized to make any representation, contract
      or commitment on behalf of the Company unless specifically requested or
      authorized in writing to do so by the Company. Consultant will not have any
      authority to bind the Company, nor will the Company be able to bind Consultant
      in any manner nor will either party hereto incur any liability as a result
      of
      the other party’s actions or inactions with respect to any third party.
      Consultant will at all times disclose that he is an independent contractor
      of
      the Company and will not represent to any third party that he is an employee,
      agent, partner, co-venturer or representative of the Company. Consultant will
      not be entitled to any of the benefits which the Company may make available
      to
      its employees, including, but not limited to, group health or life insurance,
      profit-sharing or retirement benefits. The Company will not withhold any funds
      from Consultant for tax or other governmental purposes, and Consultant will
      be
      solely responsible for the payment of same and the filing of all tax returns
      with any U.S. or foreign tax authority. Consultant is solely responsible for
      maintaining adequate records of expenses incurred in the course of performing
      the Services hereunder. 

     

    5. Confidential
      Information; Company Property.
      Consultant recognizes, acknowledges and agrees that secret, proprietary and
      confidential information regarding the Company and its affiliates, including
      without limitation, information relating to or concerning its business,
      products, intellectual property, customers, suppliers, sources of leads,
      financial information, data or condition, market research and development,
      processes, techniques, know-how, business plans and results, strategies,
      pricing, prospects, technology, software and all other business information
      (the
“Confidential
      Information”)
      is a
      valuable, special and unique asset of the Company, and that such Confidential
      Information is received by Consultant in confidence as a fiduciary. Accordingly,
      Consultant will not, at any time, during or after the Term, use or disclose
      to
      any person or entity, and will keep confidential, any and all Confidential
      Information. Consultant agrees upon termination or expiration of this Agreement
      for any reason, to immediately return to the Company all property of the
      Company, in Consultant’s possession, including, but not limited to, all books,
      records, papers, computer disks, thumb drives, equipment, customer lists, sales
      figures and forecasts, designs relating to the business of the Company and
      its
      affiliates. All references to the Company in Sections 5 through 9 hereof will
      include the Company and its subsidiaries, and any future, direct or indirect,
      parent of the Company, or successor(s) thereto.

     

    6.  Right
      to Inventions.

     

    6.1  Consultant
      will promptly disclose, grant and assign to the Company for its sole use and
      benefit any and all marks, designs, logos, inventions, improvements, technical
      information and suggestions relating in any way to the business conducted by
      the
      Company, and Holylemon.com, which Consultant may develop or which may be
      acquired by Consultant during the Term, together with all trademarks, patent
      applications, letters, patents, copyrights and reissues thereof that may at
      any
      time be granted for or upon any such mark, design, logo, invention, improvement
      or technical information (collectively, "Inventions").
      In
      connection therewith, Consultant will (at the Company’s sole cost and expense)
      take all actions requested by the Company to assign and/or confirm the
      assignment of any Invention to the Company.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    6.2  To
      the
      extent any of the rights, title and interest in, to and under Inventions cannot
      be assigned by Consultant to the Company, Consultant hereby grants to the
      Company an exclusive, royalty-free, transferable, irrevocable, worldwide license
      (with rights to sublicense through multiple tiers of sublicensees) to practice
      such non-assignable rights, title and interest. To the extent any of the rights,
      title and interest in and to Inventions can neither be assigned nor licensed
      by
      Consultant to the Company, Consultant hereby irrevocably waives and agrees
      never
      to assert such non-assignable and non-licensable rights, title and interest
      against the Company, or any of its affiliates and each of their successors
      in
      interest to such non-assignable and non-licensable rights. Consultant hereby
      grants to the Company or the Company’s designees, a royalty free, irrevocable,
      worldwide license (with rights to sublicense through multiple tiers of
      sublicensees) to practice all applicable patent, copyright, moral right, mask
      work, trade secret and other intellectual property rights relating to any prior
      inventions which Consultant incorporates, or permits to be incorporated, in
      any
      Inventions. Notwithstanding the foregoing, Consultant agrees that he will not
      incorporate, or permit to be incorporated, any prior inventions of Consultant
      in
      any Inventions without the Company’s prior written consent.

     

    7.  Future
      Innovations.
      The
      Consultant recognizes that Inventions relating to his activities during the
      Term
      and conceived, reduced to practice, created, derived, developed, or made by
      Consultant, alone or with others, within six (6) months after termination or
      expiration of the Term may have been conceived, reduced to practice, created,
      derived, developed, or made, as applicable, in significant part while in the
      service of the Company. Accordingly, Consultant agrees that such Inventions
      will
      be presumed to have been conceived, reduced to practice, created, derived,
      developed, or made, as applicable, during the Term and will be promptly assigned
      to the Company.

     

    8.  Cooperation
      in Perfecting Rights to Proprietary Information and Innovations.

     

    8.1  Consultant
      agrees to perform, during and after the Term, all acts deemed necessary or
      desirable by the Company to permit and assist the Company, at the Company’s
      expense, in obtaining and enforcing the full benefits, enjoyment, rights and
      title throughout the world in the Inventions assigned or licensed to, or whose
      rights are irrevocably waived and will not be asserted against, the Company
      under this Agreement. Such acts may include, but are not limited to, execution
      of documents and assistance or cooperation (i) in the filing, prosecution,
      registration, and memorialization of assignment of any applicable patents,
      copyrights, mask work, or other applications, (ii) in the enforcement of any
      applicable patents, copyrights, mask work, moral rights, trade secrets, or
      other
      proprietary rights, and (iii) in other legal proceedings related to the
      Inventions.

     

    8.2  In
      the
      event that the Company is unable (after reasonable efforts) to secure
      Consultant’s signature to any document required to file, prosecute, register, or
      memorialize the assignment of any patent, copyright, mask work or other
      applications or to enforce any patent, copyright, mask work, moral right, trade
      secret or other proprietary right under any Inventions (including derivative
      works, improvements, renewals, extensions, continuations, divisionals,
      continuations in part, continuing patent applications, reissues, and
      reexaminations thereof), Consultant hereby irrevocably designates and appoints
      the Company and the Company’s duly authorized officers and agents as his agents
      and attorneys-in-fact to act for and on his behalf and instead of him, (i)
      to
      execute, file, prosecute, register and memorialize the assignment of any such
      application, (ii) to execute and file any documentation required for such
      enforcement, and (iii) to do all other lawfully permitted acts to further the
      filing, prosecution, registration, memorialization of assignment, issuance,
      and
      enforcement of patents, copyrights, mask works, moral rights, trade secrets
      or
      other rights under Inventions, all with the same legal force and effect as
      if
      executed by Consultant.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    9.  Covenant
      Not To Compete or Solicit.

     

    9.1  The
      Consultant recognizes that the services to be performed by him hereunder are
      special, unique and extraordinary. The parties hereto agree and acknowledge
      that
      it is necessary for the protection of the Company that the Consultant agree,
      and
      accordingly, the Consultant does hereby agree, that he will not, directly or
      indirectly, at any time during the “Restricted Period” within the “Restricted
      Area” (as those terms are defined in Section 9.5 below):

     

    (a)  Engage,
      directly or indirectly, in any line of business in which the Company was engaged
      or plans to engage in during the period of Consultant’s service to the Company,
      including but not limited to the business of owning and operating user-generated
      content entertainment websites, either on his own behalf or as an officer,
      director, stockholder, member, manager, partner, consultant, associate,
      employee, owner, agent, creditor, independent contractor, investor or
      co-venturer of any third party; provided, however, Consultant’s ownership and
      operation, directly or indirectly through other entities, of one or more
      websites to promote online games will not be prohibited by this Section 9;
      or

     

    (b)  solicit
      to employ or engage, for or on behalf of himself or any third party, any
      employee or agent of the Company.

     

    9.2  Consultant
      hereby agrees that he will not, directly or indirectly, for or on behalf of
      himself or any third party, at any time during the Term and during the
      Restricted Period, solicit any customers of the Company.

     

    9.3  If
      any of
      the restrictions contained in this Section 9 are deemed to be unenforceable
      by
      reason of the extent, duration or geographical scope thereof, or otherwise,
      then
      the court making such determination will have the right to reduce such extent,
      duration, geographical scope, or other provisions hereof, and in its reduced
      form this Section 9 will then be enforceable in the manner contemplated
      hereby.

     

    9.4  This
      Section 9 will not be construed to prevent Consultant from owning, directly
      or
      indirectly, in the aggregate, an amount not exceeding one percent (1%) of the
      issued and outstanding voting securities of any class of any corporation whose
      voting capital stock is traded or listed on a national securities exchange
      or
      quoted in the over-the-counter market. 

     

    9.5  The
      term
“Restricted Period,” as used in this Section 9, means the later of the
      expiration of the APA Restricted Period or the Term, plus twelve (12) months
      after the termination or expiration of the Term. The term “Restricted Area” as
      used in this Section 9 means the entire world.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    10.  Observance
      of Company Rules.
      At all
      times while on the Company’s premises, Consultant will observe the Company’s
      rules and regulations with respect to conduct, health and safety and protection
      of persons and property.

     

    11.  No
      Conflict of Interest.
      During
      the Term, Consultant will not accept work, enter into an agreement, or accept
      an
      obligation, inconsistent or incompatible with Consultant’s obligations, or the
      scope of services rendered for Company, under this Agreement. Consultant
      represents and warrants to the Company that there is no understanding,
      arrangement or obligation to which Consultant is a party or bound which
      conflicts with or is inconsistent with Consultant’s obligations under this
      Agreement or which violates the rights of any third party. Consultant agrees
      to
      indemnify and hold harmless the Company and its affiliates from any and all
      loss
      or liability incurred by reason of the alleged breach by Consultant of any
      agreement with any third party.

     

    12.  Term
      and Termination.

     

    12.1  Term.
      This
      Agreement is effective as of the Effective Date set forth above and will
      continue for twenty-four (24) consecutive months thereafter, unless sooner
      terminated pursuant to the provisions of the Agreement (the “Term”).

     

    12.2  Termination.
      Either
      party may terminate this Agreement with or without cause, at any time, for
      whatever reason or no reason, upon 30 days prior written notice delivered to
      Consultant of such termination. 

     

    12.3  Survival.
      Neither
      the termination or expiration of this Agreement, nor of Consultant’s engagement
      hereunder, will terminate or affect in any way, any provision of this Agreement
      that is intended by its terms to survive such termination, including without
      limitation, the provisions of Sections 5 through 9.

     

    13.  General
      Provisions.

     

    13.1  Successors
      and Assigns.
      The
      provisions of this Agreement will be binding upon, and will inure to the benefit
      of the parties hereto and their respective heirs, legal representatives,
      successors and assigns. Notwithstanding the immediately prior sentence,
      Consultant may not subcontract or otherwise delegate his obligations under,
      or
      assign, this Agreement without the Company’s prior written consent.

     

    13.2  Notices.
      Any
      notice required or permitted by this Agreement will be in writing and will
      be
      delivered as follows, with notice deemed given as indicated: (a) by personal
      delivery, on the date of such delivery; (b) by nationally-recognized overnight
      courier, on the next business day after the date sent; (c) by telecopy or
      facsimile transmission, when sent upon receipt of acknowledgment of receipt
      of
      electronic transmission; or (d) by certified or registered mail, return receipt
      requested, on the fifth business day from the date sent. Notice will be sent
      to
      the addresses set forth in the Purchase Agreement or to such other address
      as
      either party may specify in writing.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    13.3  Governing
      Law.
      This
      Agreement will be governed by and construed in accordance with the laws of
      the
      State of California without reference to principles of conflicts of laws. Each
      of the parties irrevocably consents to the exclusive personal jurisdiction
      of
      the federal and state courts located in San Francisco County, California, with
      respect to any claim, controversy, or dispute related to the enforcement or
      interpretation of this Agreement.

     

    13.4  Severability.
      If any
      provision of this Agreement is finally determined by a court of competent
      jurisdiction to be illegal, invalid or unenforceable to any extent, then (i)
      such objectionable provision will be deemed amended to the extent necessary
      so
      as to make it legal, valid, and enforceable, and (ii) the legality, validity
      and
      enforceability of the remaining provisions of this Agreement will not be
      affected or impaired thereby.

     

    13.5  Waiver;
      Amendment; Modification.
      No term
      or provision hereof will be considered waived by Company, and no breach excused
      by Company, unless such waiver or consent is in writing signed by Company.
      The
      waiver by Company of, or consent by Company to, a breach of any provision of
      this Agreement by Consultant, will not operate or be construed as a waiver
      of,
      consent to, or excuse of any other or subsequent breach by Consultant. This
      Agreement may be amended or modified only by mutual consent of the parties
      hereto in writing.

     

    13.6  Injunctive
      Relief.
      Consultant acknowledges that Consultant’s breach or threatened breach of any
      provision, representation, warranty or covenant of this Agreement will result
      in
      irreparable and continuing damage to the Company for which there will be no
      adequate remedy at law, and Consultant agrees that, in the event of such breach,
      or threatened breach, the Company will be entitled, in addition to any other
      rights and remedies the Company may have at law or in equity, without posting
      any bond, to an injunction enjoining and restraining the Consultant from doing
      or continuing to do any act which violates this Agreement.

     

    13.7  Entire
      Agreement.
      This
      Agreement and the Purchase Agreement constitute the entire agreement between
      the
      parties with respect to the subject matter hereof and supersedes all prior
      or
      contemporaneous agreements, understandings or arrangements between the parties
      hereto, whether oral or written, between the parties with respect thereto.
      

     

    13.8  Use
      of
      Counsel.
      Each of
      the parties hereto represents that he or it has consulted with competent counsel
      of his or its own choosing in connection with the negotiation and execution
      of
      this Agreement. 

     

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

     

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

     

    
      	
              “Company”

            	
              “Consultant”

            
	 	 
	
              HANDHELD
                ENTERTAINMENT, INC.

            	
               

            
	 	 
	
              By: /s/
                William J.
                Bush                                               
                

                    
                Name: William J. Bush

                    
                Title: Chief Financial Officer

            	
              /s/
                Kieran
                O’Neill                                                          
                

              KIERAN
                O’NEILL

            

    

    

     

    
      
         

      

      
        6

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