Document:

Unassociated Document

    SUBORDINATION
      AGREEMENT

     

    SUBORDINATION
      AGREEMENT
      (this
“Agreement”)
      dated
      as of October 31st, 2007 among (a) YA Global Investments, L.P., a Cayman Islands
      exempt limited partnership, (“YA
      Global,”
or
      “Senior
      Creditor”),
      (b)
      eBaum’s World, Inc., a New York corporation (“EBW”),
      and
      (c) Handheld Entertainment, Inc., a Delaware corporation (the “Company”).

     

    RECITALS

     

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement, dated as of August
      2,
      2007, YA Global has agreed, upon the terms and subject to the conditions
      contained therein, to purchase (among other things) Convertible Debentures,
      which shall be convertible into the Company’s Common Stock; and

     

     WHEREAS,
      the
      obligations of the Senior Creditor are secured by
      security interests in all of the assets of the Company and of each of the
      Company's subsidiaries as evidenced by the Security Agreements, including a
      pledge of all
      of
      the issued and outstanding capital stock of EBW Acquisition, Inc., a Delaware
      corporation and wholly-owned subsidiary of the Company (“EBW
      Acquisition”);
      and

     

    WHEREAS,
      EBW,
      the Company, and EBW Acquisition entered into that certain Asset Purchase
      Agreement, dated as of August 1, 2007, pursuant to which, among other things,
      EBW sold to EBW Acquisition substantially all of the assets of EBW relating
      to
      the operation of eBaumsworld.com; and

     

    WHEREAS,
      pursuant to the Asset Purchase Agreement the Company is, or may be, obligated
      to
      make certain payments to EBW, either in cash or in Common Stock, or a
      combination of each, including, without limitation, the Protected Payments,
      which may be or become due to EBW; and

     

    WHEREAS,
      in
      order to secure to EBW the payment of the Protected Payments, which may be
      or
      become due to EBW, including all sums reasonably expended by EBW for protection
      of its interests, such as expenses of collection after the occurrence of an
      Event of Default as defined in the Pledge Agreement, the Company has granted
      to
      EBW a pledge of all of the issued and outstanding capital stock of EBW
      Acquisition as specified in the Pledge Agreement; 

     

    WHEREAS,
      the
      Senior Creditor and EBW have entered into a Collateral Agency Agreement with
      LaSalle Bank National Association as collateral agent (the “Collateral
      Agent”),
      of
      even date herewith, to set forth their respective rights in connection with
      the
      security interests granted to them pursuant to the Security Agreements and
      the
      Pledge Agreement; and

     

    WHEREAS,
      it is a
      condition precedent to YA Global’s purchase of Convertible Debentures, and a
      condition precedent to EBW’s obligation to consummate the transactions
      contemplated by the Asset Purchase Agreement, that the Company, YA Global and
      EBW enter into this Agreement, providing, among other things, that the security
      interests granted to YA Global shall be senior to any security interests granted
      to EBW, irrespective of the time or order of attachment or perfection, subject
      to certain limitations and certain rights of EBW as set forth
      herein;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing, the mutual agreements herein contained and
      other
      good and valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the parties hereto, intending to be legally bound, hereby agree
      as
      follows:

     

    1.  Definitions.
      Terms
      not otherwise defined herein have the same respective meanings given to them
      in
      the Securities Purchase Agreement. In addition, the following terms shall have
      the following meanings: 

     

    Asset
      Purchase Agreement.
      Means
      the Asset Purchase Agreement made and entered into as of August 1, 2007, by
      and
      among the Company, EBW Acquisition and EBW (as amended, amended and restated,
      supplemented or otherwise modified and in effect from time to time, including
      any replacement agreement therefor, in each case, pursuant to the terms hereof).
      

     

    Bankruptcy
      Code.
      The
      provisions of Title 11 of the United States Code, as amended from time to time
      and any successor statute and all rules and regulations promulgated thereunder
      or any state insolvency, debtor relief or assignment for the benefit of creditor
      law.

     

    Business
      Day.
      Shall
      mean a day other than Saturday, Sunday or any day on which banks located in
      the
      City of New York, New York are authorized or obligated to close. 

     

    Cash
      Flow Test.
      The
“Cash Flow Test” shall be satisfied as of any applicable date of determination
      if the Company and its subsidiaries, on a consolidated basis, shall have
      generated cash flow from operations for the most recent rolling 12-month period
      for which financial statements are available, equal to or greater than 1.1
      times
      the anticipated benchmarks for cash flow from operations for such period, as
      reflected in Exhibit A.

    

    Common
      Stock.
      Shall
      mean the common stock, par value $0.0001, of the Company and the stock of any
      other class into which such shares may hereafter be changed or
      reclassified.

     

    Convertible
      Debentures.
      Shall
      mean all such “Convertible Debentures” purchased under the Securities Purchase
      Agreement (as amended, amended and restated, supplemented or otherwise modified
      and in effect from time to time, including any replacement agreement
      therefor).

     

    Credit
      Party
      or
Credit
      Parties.
      Collectively, the Company and its subsidiaries, any other guarantor of all
      or
      any portion of the Senior Debt or the Subordinated Debt and any other Person
      granting a security interest in and Lien on such Person’s assets to secure the
      obligations arising under the Senior Debt or the Subordinated Debt.

     

    Discharge
      of all Senior Debt.
      Shall
      mean the payment in full of all Senior Debt.

     

    Lien.
      With
      respect to any asset, any mortgage, lien, pledge, charge, security interest
      or
      encumbrance of any kind, or any other type of preferential arrangement that
      has
      the practical effect of creating a security interest, in respect of such
      asset.

     

    Person.
      Any
      natural person, corporation, general or limited partnership, limited liability
      company, firm, trust, association, government, governmental agency or other
      entity, whether acting in an individual, fiduciary or other
      capacity.

     

    
      
        
        

      

      
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    Pledge
      Agreement.
      The
      pledge agreement made on or about the date hereof by the Company in favor of
      the
      Senior Creditor, EBW and the collateral agent identified therein.

     

    Pledged
      Stock.
      Means
      (i) all of the issued and outstanding capital stock of the Company in EBW
      Acquisition, now or at any time hereafter owned by the Company, including
      without limitation any options, stock appreciation rights, stock splits, shares
      of stock of different par value, class or series issued in substitution,
      replacement or exchange therefore and any other stock rights, (ii) all of the
      right, title and interest of the Company, as a stockholder of EBW Acquisition,
      in and to the profits, losses, income, gains, deductions, credits or similar
      items of EBW Acquisition, and the right to receive dividends or distributions
      of
      cash, assets or other property of EBW Acquisition, whether now existing or
      hereafter arising and (iii) any and all income, interest or earnings thereon
      and
      proceeds in any form thereof.

     

    Proceeding.
      Any
      voluntary or involuntary insolvency, bankruptcy, receivership, custodianship,
      liquidation, dissolution, reorganization, assignment for the benefit of
      creditors, appointment of a custodian, receiver, trustee or other officer with
      similar powers or any other proceeding for the liquidation, dissolution or
      other
      winding up of a Person.

     

    Protected
      Payments.
      Means
      any payments of Par B Shares, Par C Shares, Performance Earn Out Cash Payments,
      and Earn Out Payments (as each of these terms are defined in the Asset Purchase
      Agreement), which may be or become due to EBW provided that (i) such payments
      are made strictly in accordance with the terms of the Asset Purchase Agreement
      and (ii) no conditions to such payments were modified, amended, or waived by
      any
      party in any manner adverse to the rights of any holder of the Senior Debt.
      

     

    Securities
      Purchase Agreement.
      The
      securities purchase agreement dated as of August 1, 2007 (as amended, amended
      and restated, supplemented or otherwise modified and in effect from time to
      time, including any replacement agreement therefor) between the Company and
      YA
      Global.

     

    Security
      Agreements.
      The
      security agreement dated as of the date hereof (as amended, amended and
      restated, supplemented or otherwise modified and in effect from time to time,
      including any replacement agreement therefor) between the Company, each
      subsidiary of the Company, and YA Global, and the patent security agreement
      dated as of the date hereof (as amended, amended and restated, supplemented
      or
      otherwise modified and in effect from time to time, including any replacement
      agreement therefor) between the Company, each subsidiary of the Company, and
      YA
      Global. 

     

    Senior
      Debt.
      All
      principal (up to an original maximum of Twenty-Three Million Dollars,
      $23,000,000, without giving effect to any reborrowings), interest, fees, costs,
      enforcement expenses (including legal fees and disbursements), collateral
      protection expenses and other reimbursement or indemnity obligations created
      or
      evidenced by the Securities Purchase Agreement or the Convertible Debentures
      issued thereunder, or any of the other Senior Debt Documents, less
      the
      principal amount of all conversions of Convertible Debentures and any other
      principal payments and principal redemptions under or with respect to the
      Convertible Debentures. Subject
      to the foregoing, Senior Debt shall expressly include any and all interest
      accruing or out of pocket costs or expenses incurred after the date of any
      filing by or against the Company or any other Credit Party of any petition
      under
      the federal Bankruptcy Code or any other bankruptcy, insolvency or
      reorganization act regardless of whether the Senior Creditor’s claim therefor is
      allowed or allowable in the case or proceeding relating thereto. For the
      avoidance of doubt, nothing contained in this definition shall limit the Senior
      Creditor’s rights under Section 8 hereof. 

     

    
      
        
        

      

      
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    Senior
      Debt Documents.
      Collectively, (i) the Securities Purchase Agreement, (ii) all Convertible
      Debentures issued pursuant to the Securities Purchase Agreement, (iii) the
      Security Agreements, (iv) any and all other documents and instruments evidencing
      or creating the Senior Debt and (v) all guaranties, mortgages, security
      agreements, pledges and other collateral guarantying or securing directly or
      indirectly any Senior Debt, whether now existing or hereafter created, as each
      such agreement, document or instrument may be amended, restated or otherwise
      modified and in effect from time to time.

     

    Subordinated
      Debt.
      All
      obligations created or evidenced by the Asset Purchase Agreement, any of the
      other Subordinated Debt Documents or any related documents, solely to the extent
      related to the Protected Payments, or any subsequent notes, instruments or
      agreements of indebtedness, liabilities or obligations of any type or form
      whatsoever relating thereto in favor of EBW.

     

    Subordinated
      Debt Documents.
      Collectively, (i) the Asset Purchase Agreement, (ii) the Pledge Agreement,
      (iii) any protected payments escrow agreement executed and delivered in
      connection with the Asset Purchase Agreement, by and among EBW, EBW Acquisition
      and LaSalle Bank National Association, as escrow agent, and (iii) any and all
      other documents or instruments evidencing or further guarantying or securing
      directly or indirectly any of the Subordinated Debt, whether now existing or
      hereafter created, as each such agreement, document or instrument may be
      amended, restated or otherwise modified and in effect with the consent of the
      Senior Creditor as provided herein and in effect from time to time.

     

    2.  General. 

     

    (a)  Subordination.
      The
      Subordinated Debt shall be and hereby is subordinated and the payment thereof
      is
      deferred until the Discharge of all Senior Debt, whether now or hereafter
      incurred or owed by the Company or any other Credit Parties. 

     

    (b)  Permitted
      Payments.
      Notwithstanding the terms of Section 2(a) above, the Company shall be permitted
      to pay, and EBW shall be permitted to accept, (i) any and all non-cash Protected
      Payments, including the Par B Shares, the Par C Shares and any portions of
      the
      Earn Out Payments to be paid in Common Stock, and (ii) any Protected Payments
      consisting of cash provided that (x) at the time of such payment no “Payment
      Blockage Period,” as defined in subsection (c) below, is in effect,
      (y) the
      making of such payment shall not cause a Payment Blockage Period to be in effect
      and (z) such payments do not violate the provisions of section 2(g). The Company
      shall provide not less than 15 days prior written notice to the Senior Creditor
      prior to making any Protected Payment to EBW.

     

    
      
        
        

      

      
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    (c)  Payment
      Blockages.
      For
      purposes of this Agreement, a “Payment Blockage Period” shall mean:

     

    (i)  in
      the
      case of any Event of Default (as defined in the Convertible Debentures), or
      any
      event that with the passage of time or giving notice would constitute an Event
      of Default in the payment of principal or interest (whether in cash or in Common
      Stock or through conversion or redemption) with respect to any Senior Debt,
      whether at maturity, at scheduled times for payment or otherwise, that occurs
      and is continuing (a “Payment Default”), the time period from the date that the
      Senior Creditor provides written notice of the Payment Default to EBW until
      the
      earliest of (i) one hundred eighty (180) days after the date of EBW’s receipt of
      such Payment Default notice, (ii) fifteen days after the acceleration of the
      maturity of the Senior Debt, (iii) the date upon which the Senior Debt shall
      be
      paid in full or (iv) the date, if any, on which such Payment Default is cured
      or
      waived in writing pursuant to the Senior Debt Documents; or 

    

    (ii)  in
      the
      case of any Event of Default, or any event that with the passage of time or
      giving notice would constitute an Event of Default with respect to the Senior
      Debt other than a Payment Default, that occurs and is continuing, and that
      permits the Senior Creditor to accelerate the maturity of the Senior Debt (a
      “Non-Payment Default”), the time period from the date that the Senior Creditor
      provides written notice of the Non-Payment Default to EBW until the earliest
      of
      (i) two hundred seventy (270) days after the date of EBW’s receipt of such
      Non-Payment Default notice, (ii) fifteen days after the acceleration of the
      maturity of the Senior Debt, (iii) the date upon which the Senior Debt shall
      be
      paid in full or (iv) the date, if any, on which such Non-Payment Default is
      cured or waived in writing pursuant to the Senior Debt Documents;
      or

    

    (iii)  in
      the
      event that a Payment Blockage Period shall not be in effect under clauses (c)(i)
      or (ii) above, and an event of default under any of the Subordinated Debt
      Documents with respect to the payment or acceleration of any Protected Payment
      shall have occurred and be continuing (a “Protected Payment Default”), the time
      period from the date that EBW provides notice to the Senior Creditor that it
      desires to pursue its rights and remedies under the Subordinated Debt Documents
      with respect to the Protected Payment Default, until the earliest of (i) one
      hundred eighty (180) days after the date of the Senior Creditor’s receipt of
      such Protected Payment Default notice, (ii) fifteen days after the acceleration
      of the maturity of the Senior Debt, (iii) the date upon which the Senior Debt
      shall be paid in full or (iv) the date, if any, on which such Protected Payment
      Default is cured or waived in writing pursuant to the Subordinated Debt
      Documents and any related cross-default is cured or waived in writing pursuant
      to the Senior Debt Documents. 

    

    (d) Limitation
      on Payment Blockages.
      During
      any three hundred and sixty-five (365) day period, no more than two (2)
      Non-Payment Default notices may be used to invoke Payment Blockage Periods.
      EBW
      shall not be prohibited from receiving any Protected Payments for more than
      two
      hundred seventy (270) days in the aggregate during any such three hundred and
      sixty-five (365) day period. No Non-Payment Default that results in any
      Non-Payment Default notice or is otherwise known to Senior Creditor at the
      time
      of issuance of such Non-Payment Default notice, unless the same shall have
      ceased to exist for a period of at least thirty (30) consecutive days, may
      be
      used as a basis for any subsequent Non-Payment Default notice.

     

    
      
        
        

      

      
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    (e) Restrictions
      on Action.
      Subject
      to the terms and conditions set forth below in this subsection (e), EBW shall
      not take any “Action,” as defined in subsection (f) below, until the earliest
      of:

    

    (i)  the
      date
      on which the Senior Debt shall be paid in full; 

    

    (ii)  the
      date
      on which the Company commences a Proceeding; or

    

    (iii)  the
      date
      on which an order for relief is entered against the Company in a
      Proceeding;

    

    provided,
      however,
      that if
      such Action is based exclusively on an Event of Default or event of default
      which in either case was the cause of the commencement of a Payment Blockage
      Period, and such Payment Blockage Period ends without such underlying Event
      of
      Default or event of default having been cured or waived, then if EBW provides
      ten (10) days’ written notice to the Senior Creditor that it intends to pursue
      its rights and remedies under the Subordinated Debt Documents, it shall be
      permitted to proceed with an Action as allowed by the Subordinated Debt
      Documents.

    

    Notwithstanding
      the foregoing, if EBW is permitted hereunder to accelerate the maturity of
      all
      or any portion of the Protected Payments, and does so at a time at which no
      Proceeding is then pending, based upon an acceleration of the Senior Debt and
      such acceleration is rescinded by the Senior Creditor (whether or not any
      existing Payment Default or Non-Payment Default has been cured or waived),
      then
      all Actions taken by EBW shall likewise be rescinded if such Actions were based
      on account of such acceleration of the Senior Debt by the Senior Creditor.
      Additionally, if EBW commences any Action (assuming such Action is permitted
      hereunder) that is against or in connection with any Pledged Stock, it shall
      immediately cease such Action until further notice from the Senior Creditor
      at
      such time as it receives notice that the Senior Creditor has commenced an action
      against or in connection with the Pledged Stock; provided, however, that EBW
      may
      take limited action, such as the giving of notice or placing a bid at a sale,
      but only to the extent reasonably necessary to protect its interest in excess
      proceeds of the Pledged Stock.

    

    (f) Definition
      of Action.
      For
      purposes of this Agreement, “Action” shall mean (i) the exercise of any and all
      remedies permitted by the Subordinated Debt Documents or applicable law upon
      any
      defaults thereunder, including without limitation causing any acceleration
      of
      the maturity of all or any portion of the Protected Payments, (ii) the
      commencement of any other action or proceeding to recover any amounts due or
      to
      become due with respect to the Protected Payments, (iii) joining in, soliciting
      any Person to commence, or causing the commencement of, any Proceeding involving
      the Company (whether direct or indirect), (iv) any judicial levy, foreclosure,
      possession or similar judicial enforcement against all or a portion of the
      Pledged Stock, (v) any non-judicial foreclosure assisted by the Company or
      any
      other Person, including transfers in lieu of foreclosure or voluntary surrender
      of possession of all or any portion of the Pledged Stock, and/or (vi) any
      non-judicial enforcement effort against the Pledged Stock, whether voluntary
      or
      involuntary, including without limitation, any repossession, setoff or turnover
      (including any asset sales received after any notice of default) of all or
      a
      portion of the Pledged Stock.

     

    
      
        
        

      

      
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    (g) Cash
      Flow Requirement. At
      any
      time when the outstanding principal amount of the Senior Debt exceeds eight
      million dollars ($8,000,000), no Earn Out Payment (as defined in the Asset
      Purchase Agreement) may be made in cash unless (i) the Company has met the
      Cash
      Flow Test as of the date of determination for payment of such Earn Out Payment
      and (ii) the Company has complied with the provisions of Section 3(g) of the
      Convertible Debentures. 

    

    (h) Instructions
      to Collateral Agent. Each
      of
      the Senior Creditor and EBW agree that, at any time at the request of the other
      (the “Requesting
      Party”),
      it
      will cooperate fully and promptly in issuing joint written instructions to
      the
      Collateral Agent in order to effectuate any instruction directing the Collateral
      Agent to act, if, pursuant to the terms of this Agreement, such action is
      permitted to be taken pursuant to this Agreement. In the event that either
      the
      Senior Creditor or EBW does not at any time promptly comply with its obligations
      under the immediately preceding sentence, the Requesting Party may issue such
      instructions to the Collateral Agent on a unilateral basis, provided that the
      Requesting Party also provides (i) the Collateral Agent with an opinion of
      counsel reasonably satisfactory to the Collateral Agent to the effect that
      the
      taking of such action is allowed pursuant to this Agreement and (ii) the other
      party with five (5) Business Days prior written notice of such instructions
      and
      legal opinion. 

    

    3.  Enforcement.
      Until
      the Discharge of all Senior Debt, EBW shall not have any right of subrogation,
      reimbursement, restitution, contribution or indemnity whatsoever from any assets
      of the Company or any Credit Party or any provider of collateral security for
      the Senior Debt. EBW further waives any and all rights with respect to
      marshalling.

     

    4.  Payments
      Held in Trust.
      EBW will
      hold in trust and immediately pay over to the Senior Creditor, for the account
      of the Senior Creditor, in the same form of payment received, with appropriate
      endorsements, for application to the Senior Debt, any payment, distribution,
      security or proceeds received by EBW at any time with respect to the
      Subordinated Debt contrary to the terms of this Agreement.
      EBW
      shall not be charged with knowledge of the existence of any facts which would
      prohibit the making of any payment in respect of the Subordinated Debt, unless
      and until EBW shall have received written notice from the Senior Creditor of
      a
      Payment Default or a Non-Payment Default. Prior to its receipt of any such
      written notice, EBW shall be entitled in all respects to assume no such facts
      exist and to receive payments otherwise permitted hereunder without the
      obligation to hold them in trust for the Senior Creditor.

     

    5.  Defense
      to Enforcement.
      If EBW,
      in contravention of the terms of this Agreement, shall commence, prosecute
      or
      participate in any suit, action or proceeding against the Company or any Credit
      Party, then the Company may interpose as a defense or plea the making of this
      Agreement, and the Senior Creditor may intervene and interpose such defense
      or
      plea in its name or in the name of the Company or such Credit Party. If EBW,
      in
      contravention of the terms of this Agreement, shall attempt to collect any
      of
      the Subordinated Debt or enforce any of the Subordinated Debt Documents, then
      the Senior Creditor or the Company may, by virtue of this Agreement, restrain
      the enforcement thereof in the name of the Senior Creditor or in the name of
      the
      Company. If EBW, in contravention of the terms of this Agreement, obtains any
      cash or other assets of the Company or any Credit Party as a result of any
      administrative, legal or equitable actions, or otherwise, EBW agrees forthwith
      to pay, deliver and assign to the Senior Creditor, for the account of the Senior
      Creditor, with appropriate endorsements, any such cash for application to the
      Senior Debt and any such other assets as collateral for the Senior
      Debt.

     

    
      
        
        

      

      
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    6.  Bankruptcy,
      etc.

     

    6.1.  Payments
      Relating to Subordinated Debt.
      At any
      meeting of creditors of the Company or in the event of any case or proceeding,
      voluntary or involuntary, for the distribution, division or application of
      all
      or part of the assets of the Company or the proceeds thereof, whether such
      case
      or proceeding be for the liquidation, dissolution or winding up of the Company
      or its business, a receivership, insolvency or bankruptcy case or proceeding,
      an
      assignment for the benefit of creditors or a proceeding by or against the
      Company for relief under the federal Bankruptcy Code or any other bankruptcy,
      reorganization or insolvency law or any other law relating to the relief of
      debtors, readjustment of indebtedness, reorganization, arrangement, composition
      or extension or marshalling of assets or otherwise, the Senior Creditor is
      hereby irrevocably authorized at any such meeting or in any such proceeding
      to
      receive or collect for the benefit of the Senior Creditor any cash or other
      assets of the Company distributed, divided or applied by way of dividend or
      payment, or any securities issued on account of any Subordinated Debt, and
      apply
      such cash to or to hold such other assets or securities as collateral for the
      Senior Debt, and to apply to the Senior Debt any cash proceeds of any
      realization upon such other assets or securities that the Senior Creditor in its
      discretion elects to effect, until the Discharge of all Senior Debt, rendering
      to EBW any surplus to which EBW is then entitled.

     

    6.2.  Securities
      by Plan of Reorganization or Readjustment.
      Notwithstanding the foregoing provisions of Section
      6.1,
      EBW
      shall be entitled to receive and retain any securities of the Company, EBW
      Acquisition or any other corporation or other entity provided for by a plan
      of
      reorganization or readjustment the payment of which securities is subordinate,
      at least to the extent provided in this Agreement with respect to Subordinated
      Debt, to the payment of all Senior Debt under any such plan of reorganization
      or
      readjustment (“Junior Securities”).

     

    6.3.  Subordinated
      Debt Voting Rights.
      At any
      such meeting of creditors or in the event of any such case or proceeding, EBW
      shall retain the right to vote and otherwise act with respect to the
      Subordinated Debt (including, without limitation, the right to vote to accept
      or
      reject any plan of partial or complete liquidation, reorganization, arrangement,
      composition or extension), provided
      that EBW
      shall not vote with respect to any such plan or take any other action in any
      way
      so as to contest (i) the validity of any Senior Debt or any collateral
      therefor or guaranties thereof, (ii) the relative rights and duties of any
      holders of any Senior Debt established in any instruments or agreements creating
      or evidencing any of the Senior Debt with respect to any of such collateral
      or
      guaranties or (iii) any of EBW’s obligations and agreements set forth in
      this Agreement.

     

    
      
        
        

      

      
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    6.4.  Liquidation,
      Dissolution, Bankruptcy Generally. In
      the
      event of any Proceeding involving any Credit Party:

     

    (a) the
      Senior Creditor is hereby authorized to file an appropriate claim for and on
      behalf of EBW on account of the Subordinated Debt, if EBW does not file, and
      there is not otherwise filed on behalf of EBW, a proper claim or proof of claim
      in the form required in any Proceeding prior to thirty (30) days before the
      expiration of the time to file such claim or claims, and in connection with
      such
      authorization, EBW hereby irrevocably authorizes, empowers, and appoints the
      Senior Creditor as EBW’s agent and attorney-in-fact to execute, verify, deliver
      and file such proofs of claim and to receive and collect any and all dividends,
      payments, or other disbursements made thereon in whatever form the same may
      be
      paid or issued and to apply the same on account of the Senior Debt (other than
      distributions of Junior Securities);

    

    (b) EBW
      agrees not to (a) object to (i) any use of cash collateral by the Company or
      any
      other Credit Party under Section 363 of the Bankruptcy Code (or under a similar
      provision of any applicable insolvency laws of any foreign jurisdiction)
      consented to by the Senior Creditor or any borrowing by the Company or any
      other
      Credit Party from the Senior Creditor, (ii) any grant of a lien or security
      interest by any Person in favor of Senior Creditor, under Section 364 of the
      Bankruptcy Code (or under a similar provision of any applicable insolvency
      laws
      of any foreign jurisdiction); provided,
      however,
      that
      the Lien of the Senior Creditor on the Pledged Stock shall not provide security
      for any indebtedness other than the Senior Debt, (iii) any adequate protection
      sought by Senior Creditor in such Proceeding, or (iv) any debtor-in-possession
      financing that Senior Creditor may seek to provide in such Proceeding; (b)
      assert (or support any Person in asserting) any right it may have to "adequate
      protection" in such Proceeding; or (c) seek, directly or through an affiliate,
      to provide debtor-in-possession financing in such Proceeding without the prior
      written consent of Senior Creditor;

     

    (c)  EBW
      will
      not seek to have the automatic stay lifted or modified with respect to any
      security interest held by it unless the Senior Creditor is also seeking or
      has
      sought to have the automatic stay lifted or modified, and EBW waives any
      objection to the Senior Creditor’s election to lift or modify the automatic stay
      except to the extent an unsecured creditor may object to such
      motion;

     

    (d)  EBW
      shall
      execute and deliver to the Senior Creditor all such agreements, instruments
      and
      other documents confirming the above authorizations, and shall take all such
      other action as may be reasonably requested by the Senior Creditor to enforce
      such claims and carry out the intent of this Section
      6.4;

     

    (e)  the
      Senior Debt shall continue to be treated as Senior Debt and the provisions
      of
      this Agreement shall continue to govern the relative rights and priorities
      of
      the Senior Creditor and EBW even if all or part of the Senior Debt or the Liens
      securing same are subordinated, set aside, avoided, invalidated or disallowed
      in
      connection with any Proceeding;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (f)  To
      the
      extent that the Senior Creditor receives payments (whether in cash, property
      or
      securities) on the Senior Debt or the Pledged Stock which are subsequently
      invalidated, declared to be fraudulent or preferential, set aside and/or
      required to be repaid to a trustee, receiver or any other party under any
      bankruptcy law, state or federal law, common law or equitable cause, then,
      to
      the extent of such payment or proceeds received, the Senior Debt, or part
      thereof, intended to be satisfied shall be revived and continue in full force
      and effect as if such payments or proceeds had not been received by the Senior
      Creditor; and

     

    (g)  Notwithstanding
      any other provision of this Agreement, (i) EBW shall be entitled to file any
      necessary responsive or defensive pleadings in opposition to any motion, claim,
      adversary proceeding or other pleading made by any Person objecting to or
      otherwise seeking the disallowance of the claims of EBW, including without
      limitation any claims secured by the Pledged Stock, if any, (ii) EBW shall
      be
      entitled to file any pleadings, objections, motions or agreements which assert
      rights or interests available to creditors of the Credit Parties arising under
      either the Bankruptcy Code or applicable non-bankruptcy law, and (iii) subject
      to Section
      6.4(a),
      EBW
      shall be entitled to file any proof of claim and other filings and make any
      arguments and motions that are, in each case, in accordance with the terms
      of
      this Agreement and necessary to preserve their rights with respect to the
      Subordinated Debt and the Pledged Stock.

     

    7.  Priority
      of Security Interest.
      All
      security interests in favor of the Senior Creditor (including without
      limitation, the security interests created pursuant to the Security Agreements
      and the security interest in Pledged Stock) shall be senior to any security
      interest in favor of EBW (including, without limitation, the security interest
      in Pledged Stock irrespective of the physical location or custody of the Pledged
      Stock) irrespective of the time of the execution, delivery or issuance thereof
      or the filing or recording for perfection of any security interest therein
      or
      the filing of any financing statement or continuation statement relating
      thereto; provided,
      however,
      that
      such security interests in the Pledged Stock shall not provide security for
      any
      indebtedness other than the Senior Debt.

     

    7.1.  Further
      Assurances.
      EBW
      hereby agrees, upon request of the Senior Creditor at any time and from time
      to
      time, to execute such other documents or instruments as may be requested by
      the
      Senior Creditor further to evidence of public record or otherwise the senior
      priority of the Senior Debt as contemplated hereby.

     

    7.2.  Books
      and Records.
      EBW
      further agrees to maintain on its books and records such notations as the Senior
      Creditor may reasonably request to reflect the subordination contemplated hereby
      and to perfect or preserve the rights of the Senior Creditor hereunder. A copy
      of this Agreement may be filed as a financing statement in any Uniform
      Commercial Code recording office.

     

    8.  YA
      Global’s Freedom of Dealing.
      EBW
      agrees, with respect to the Senior Debt Documents and any and all collateral
      therefor or guaranties thereof, that the Company and the Senior Creditor may
      agree to increase the amount of the debt owed to the Senior Creditor under
      the
      Senior Debt Documents or otherwise modify the terms of any of the Senior Debt
      Documents, and the Senior Creditor may grant extensions of the time of payment
      or performance to and make compromises, including releases of collateral or
      guaranties, and settlements with the Company and all other persons in connection
      with the Senior Debt Documents, in each case without the consent of EBW and
      without affecting the agreements of EBW contained in this Agreement;
      provided,
      however,
      that
      any additional principal amounts of indebtedness incurred by the Company to
      the
      Senior Creditor, including any reborrowings, shall not be deemed “Senior Debt”
hereunder and shall not be entitled to the rights and protections offered to
      the
      Senior Creditor hereunder.
      

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    9.  Modification
      or Sale of the Subordinated Debt Documents.
      EBW will
      not, at any time while this Agreement is in effect, modify any of the terms
      of
      any of the Subordinated Debt or any terms of the Subordinated Debt Documents
      relating to the Subordinated Debt in a manner that would increase the amount
      of
      the Subordinated Debt or accelerate the anticipated payment schedule related
      to
      the Subordinated Debt; nor will EBW sell, transfer, pledge, assign, hypothecate
      or otherwise dispose of any or all of the Subordinated Debt to any Person other
      than a Person who agrees in a writing, satisfactory in form and substance to
      the
      Senior Creditor, to become a party hereto and to succeed to the rights and
      to
      bound by all of the obligations of EBW hereunder. In the case of any such
      disposition by EBW, EBW will notify the Senior Creditor at least 10 days prior
      to the date of any of such intended disposition.
      Neither
      EBW nor the Company may waive, amend, or modify any conditions to EBW’s right to
      receive any Protected Payments under the Asset Purchase Agreement in any manner
      adverse to the rights and benefits of the Senior Creditor
      hereunder.

     

    10.  EBW
      Purchase Option.
      The
      Senior Creditor acknowledges and agrees that EBW shall have the option, subject
      to the terms and conditions hereof (the “Option”),
      to
      purchase from the Senior Creditor at par (i.e., an amount equal to the
      outstanding amount of the Senior Debt as of the date of exercise of the Option)
      (the “Option Price”) the entire outstanding Senior Debt, including any and all
      interest and penalties due and owing thereunder, such Option to become effective
      on the day following EBW’s receipt of written notice from the Senior Creditor of
      its acceleration of the maturity of the Senior Debt. In connection therewith,
      the Senior Creditor acknowledges that it shall provide written notice to EBW
      upon its acceleration of the maturity of the Senior Debt. Any exercise by EBW
      of
      the Option shall be in accordance with the next succeeding paragraph and shall
      be contingent upon such acceleration remaining in effect both at the time of
      the
      exercise thereof and at the time of any closing with respect thereto. Upon
      proper and timely exercise of the Option and payment in full of the Option
      Price, the Senior Creditor shall transfer and assign to EBW all of its right,
      title and interest in and to the Senior Debt Documents, together with all of
      its
      right, title and interest to its security interest in and to the assets of
      the
      Company and each of the Company’s subsidiaries thereunder.

     

    EBW
      may
      exercise the Option in accordance with the following: within 15 days following
      EBW’s receipt of written notice from the Senior Creditor of the acceleration of
      the maturity of all amounts due and owing under the Senior Debt, EBW shall
      provide written notice to the Company and the Senior Creditor of the exercise
      of
      the Option and closing (with payment of the Option Price in cash) shall be
      within 60 days of such notice. Upon any failure of EBW to timely pay the Option
      Price after exercise of the Option, the Option shall terminate and be of no
      further force or effect, the Senior Creditor shall have no right to request
      or
      receive the Option Price and the Senior Creditor shall have the right to
      transfer the Senior Debt and the Senior Debt Documents without regard to the
      Option.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      anything herein or in any other document or agreement to the contrary, until
      EBW
      shall irrevocably pay the Option Price to the Senior Creditor, (a) the Company
      shall have the absolute right to cure (with the Senior Creditor’s consent, where
      so required) any and all defaults or events of default (and any related
      acceleration) under the Senior Debt Documents (in which case all payment and
      Action blockages under Section 2 above shall terminate and the Company shall
      reimburse EBW for all third party expenses reasonably incurred to exercise
      the
      Option prior to the Company’s curing such defaults or events of default) and (b)
      the Senior Creditor may effect any conversion or redemption or amend, waive,
      modify or terminate any term, condition or action under the Senior Debt
      (including without limitation any acceleration of the maturity of the Senior
      Debt) or take any other action consistent with its rights under the Senior
      Debt
      Documents, which amendment, waiver, modification, termination or other action
      shall be binding upon EBW provided that it does not cause the aggregate
      principal amount of the Senior Debt to which the Subordinated Debt is
      subordinated hereunder to exceed the amount specified in the definition of
      Senior Debt herein, but such limitation, and the other terms and conditions
      of
      this Agreement, shall not in any way impair the ability of the Company to incur
      any indebtedness or the Senior Creditor to provide any financing (including
      without limitation under the Securities Purchase Agreement and/or the
      Convertible Debentures) that does not constitute Senior Debt.

    

    11.  Company’s
      Obligations Absolute.
      Nothing
      contained in this Agreement shall impair, as between the Company and EBW, the
      obligation and right of the Company to pay to EBW all amounts payable in respect
      of the Subordinated Debt as and when the same shall become due and payable
      in
      accordance with the terms thereof, or prevent EBW (except as expressly otherwise
      provided in Section
      2,
      Section
      3
      or
Section
      6)
      from
      exercising all rights, powers and remedies otherwise permitted by the
      Subordinated Debt Documents and by applicable law upon a default in the payment
      of the Subordinated Debt or under any Subordinated Debt Document as permitted
      herein.
      To the
      extent that any payment received by EBW with respect to the Subordinated Debt
      must be paid to the Senior Creditor hereunder, as between the Company and EBW
      such payment shall be deemed a payment of Senior Debt and not Subordinated
      Debt.

     

    12.  Termination
      of Subordination.
      This
      Agreement shall continue in full force and effect, and the obligations and
      agreements of EBW and the Company hereunder shall continue to be fully
      operative, until the Discharge of all Senior Debt. To the extent that the
      Company or any guarantor of or provider of collateral for the Senior Debt makes
      any payment on the Senior Debt that is subsequently invalidated, declared to
      be
      fraudulent or preferential or set aside or is required to be repaid to a
      trustee, receiver or any other party under any bankruptcy, insolvency or
      reorganization act, state or federal law, common law or equitable cause (such
      payment being hereinafter referred to as a “Voided
      Payment”),
      then
      to the extent of such Voided Payment, that portion of the Senior Debt that
      had
      been previously satisfied by such Voided Payment shall be revived and continue
      in full force and effect as if such Voided Payment had never been made. In
      the
      event that a Voided Payment is recovered from the Senior Creditor an Event
      of
      Default shall be deemed to have existed and to be continuing under the Senior
      Debt Documents from the date of the Senior Creditor’s initial receipt of such
      Voided Payment until the full amount of such Voided Payment is restored to
      the
      Senior Creditor. During any continuance of any such Event of Default, this
      Agreement shall be in full force and effect with respect to the Subordinated
      Debt. To the extent that EBW has received any payments with respect to the
      Subordinated Debt subsequent to the date of the Senior Creditor’s initial
      receipt of such Voided Payment and such payments have not been invalidated,
      declared to be fraudulent or preferential or set aside, or required to be repaid
      to a trustee, receiver, or any other party under any bankruptcy act, state
      or
      federal law, common law or equitable cause, EBW shall be obligated and hereby
      agrees that any such payment so made or received shall be deemed to have been
      received in trust for the benefit of the Senior Creditor, and EBW hereby agrees
      to pay to the Senior Creditor, upon demand, the full amount so received by
      EBW
      during such period of time to the extent necessary to restore fully to the
      Senior Creditor the amount of such Voided Payment. Upon the Discharge of all
      Senior Debt, which payment shall be final and not avoidable, this Agreement
      will
      automatically terminate without any additional action by any party hereto.
      

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    13.  Notices.
      All
      notices and other communications which are required and may be given pursuant
      to
      the terms of this Agreement shall be in writing and shall be sufficient and
      effective in all respects if given in writing, telecopied, delivered in person,
      deposited with Federal Express or other overnight delivery service for overnight
      delivery, or mailed by registered or certified mail, postage prepaid, as
      follows:

     

    
      	
              If
                to the Senior Creditor:

            	 	
              YA
                Global Investments, L.P.

              101
                Hudson Street

              Suite
                3700

              Jersey
                City, New Jersey 07303

              Attention:
                Mark Angelo

              Facsimile:
                (201) 985-8266

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Troy
                Rillo, Esq.

              101
                Hudson Street

              Suite
                3700

              Jersey
                City, New Jersey 07303

              Facsimile:
                (201) 985-1964

            
	 	 	 
	
              If
                to EBW:

            	 	
              Eric
                Bauman

              2590
                Brighton-Henrietta Townline Road

              Rochester,
                New York 14623-2712

              Facsimile:
                (585) 292-0722

               

              and

               

              Neil
                Bauman

              2590
                Brighton-Henrietta Townline Road

              Rochester,
                New York 14623-2712

              Facsimile:
                (585) 292-0722

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Harris
                Beach PLLC

              99
                Garnsey Road

              Pittsford,
                New York 14534

              Attention:
                Patrick J. Dalton, Esq.

              Facsimile:
                (585) 419-8818

            
	 	 	 
	
              If
                to the Company:

            	 	
              Handheld
                Entertainment, Inc.

              539
                Bryant Street, Suite 403

              San
                Francisco, CA 94107

              Attention:
                President

              Facsimile:
                415-495-7708

            
	 	 	 
	
              With
                a copy to
                (such copy not to constitute notice hereunder):

            	 	
              Haynes
                and Boone, LLP

              153
                East 53rd
                Street, Suite 4900

              New
                York, NY 10022

              Attention:
                Harvey J. Kesner, Esq.

              Facsimile:
                212-884-8233

            

    

     

    or
      such
      other address or addresses as any party hereto shall have designated by written
      notice to the other parties hereto. Notices shall be deemed given and effective
      upon the earlier to occur of (i) the third day following deposit thereof in
      the
      U.S. mail, (ii) the first day following deposit with Federal Express or other
      overnight delivery service for overnight delivery, or (iii) receipt by the
      party
      to whom such notice is directed.

     

    14.  Governing
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK,
      WITHOUT
      GIVING EFFECT TO ANY PROVISION THEREOF WHICH WOULD REQUIRE THE APPLICATION
      OF
      THE LAW OF ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO HEREBY CONSENTS
      AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY
      OF
      NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
      ANY
      CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO PERTAINING TO THIS AGREEMENT
      OR TO
      ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, PROVIDED,
      THAT
      EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE
      COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY,
      AND
      THAT CERTAIN BANKRUPTCY ACTIONS OR PROCEEDINGS MAY REQUIRE ANOTHER JURISDICTION
      OR VENUE. SUBJECT TO THE FOREGOING, EACH OF THE PARTIES HERETO HEREBY EXPRESSLY
      SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
      COMMENCED IN ANY SUCH COURT, AND HEREBY WAIVES ANY OBJECTION THAT SUCH PERSON
      MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS
      AND
      HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
      APPROPRIATE BY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY WAIVES PERSONAL
      SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
      OR
      SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
      MAY
      BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT THE ADDRESS
      SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
      UPON THE EARLIER OF SUCH PERSON’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
      DEPOSIT IN THE UNITED STATES MAIL, REGISTERED OR CERTIFIED, WITH PROPER POSTAGE
      PREPAID.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    15.  Waiver
      of Jury Trial.
      EACH OF
      THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
      ANY
      ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
      ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
      OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE PARTIES HERETO HEREBY
      WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
      REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
      CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR
      ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
      IT
      WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
      AND
      (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
      AMONG
      OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

     

    16.  Miscellaneous.

     

    (a) This
      Agreement may be executed in several counterparts and by each party on a
      separate counterpart, each of which when so executed and delivered shall be
      an
      original, and all of which together shall constitute one instrument. In proving
      this Agreement, it shall not be necessary to produce or account for more than
      one such counterpart signed by the party against which enforcement is sought.
      

     

    (b) This
      Agreement may not be amended except in a writing signed by the parties hereto.
      The Senior Creditor may, in its sole and absolute discretion, without any
      consent or approval of the Subordinated Creditor, waive any provisions of this
      Agreement benefiting the Senior Creditor; provided,
      however,
      that
      such waiver shall be effective only if in writing and signed by the Senior
      Creditor and, if such action affects the Company, if also signed by the Company,
      and shall be limited to the specific provision or provisions expressly so
      waived. 

     

    (c) This
      Agreement shall be binding upon the permitted successors and assigns of the
      parties hereto and shall inure to the benefit of the parties hereto and their
      respective successors and assigns. EBW may assign this Agreement to any Person
      controlling, controlled by or under common control with EBW who or which agrees
      in a writing to become a party hereto and to succeed to the rights and be bound
      by all of the obligations of EBW hereunder and (ii) subject to the Option
      granted to EBW pursuant to Section 10 above (including the time periods
      associated with exercise of the Option), the Senior Creditor may assign this
      Agreement to any Person who or which agrees in a writing to become a party
      hereto and to succeed to the rights and be bound by all of the obligations
      of
      the Senior Creditor hereunder.

     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

    
      	
            	 	 
	  SENIOR
              CREDITOR:	
              YA
                GLOBAL INVESTMENTS, L.P.

            
	 
 	 
 	 
 
	 	By:  	Yorkville
              Advisors, LLC, its Investment Manager

    

     

    
      	 	 	 
	 	By:  	/s/
              Mark Angelo 
	 	
              
                

              

              
                Name:
                  Mark Angelo

                Title:
                  President and Founder

              

            

    

     

    
      	 	 	 
	 EBW:	
              EBAUM’S
                WORLD, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              Eric
              Bauman
	 	
              
                

              

              
                Name:
                  Eric Bauman

                Title:
                  President

              

            

    

     

    
      	 	 	 
	 COMPANY:	
              HANDHELD
                ENTERTAINMENT, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              William J. Bush
	 	
              
                

              

              Name: William J. Bush

              Title: Chief Financial
                Officer

            

    

     

    
      
        
        

      

      
        16REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
      is
      made as of October 31, 2007 by and between HANDHELD ENTERTAINMENT, INC., a
      Delaware corporation (the “Company”),
      and
      EBAUM’S WORLD, INC., a New York corporation (the “Investor”).

    

    RECITALS

     

    A. Pursuant
      to that certain Asset Purchase Agreement, dated as of August 1, 2007, by and
      among the Company, EBW Acquisition, Inc., a Delaware corporation and
      wholly-owned subsidiary of the Company (“Purchaser”),
      and
      the Investor (the “Asset
      Purchase Agreement”),
      the
      Investor may receive shares of Common Stock, par value $.001 per share, of
      the
      Company (“Company
      Common Stock”),
      in
      accordance with the terms and conditions of the Asset Purchase
      Agreement.

     

    B. The
      execution and delivery of this Agreement by the parties hereto is a condition
      precedent to the consummation of the transactions contemplated by the Asset
      Purchase Agreement.

     

    AGREEMENTS

     

    Section
      1. Certain
      Definitions. In
      this
      Agreement, the following terms shall have the following respective
      meanings:

     

    “Affiliate”
shall
      mean, when used with respect to a specified Person, another Person that
      directly, or indirectly through one or more intermediaries, controls or is
      controlled by or is under common control with (within the meaning of Section
      15
      of the Securities Act) the Person specified.

     

    “Commission”
shall
      mean the Securities and Exchange Commission or any other federal agency at
      the
      time administering the Securities Act.

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended (or any successor statute),
      and the rules and regulations of the Commission thereunder from time to time,
      all as the same shall be in effect at the relevant time.

     

    “Earnout
      Shares”
      shall
      mean the shares of Company Common Stock issuable to the Investor pursuant to
      Section 1.09 of the Asset Purchase Agreement.

     

    “First
      Year Par B Shares”
      shall
      mean the Par B Shares issuable in the first eleven installments pursuant to
      Section 1.08(d) of the Asset Purchase Agreement.

     

    “Holder”
shall
      mean, respectively, the Investor and any transferee or assignee of rights to
      cause the Company to register Registrable Shares pursuant to Section 2
      below who holds such rights pursuant to an assignment in accordance with
      Section 3 of this Agreement (a “Permitted
      Investor Transferee”),
      and
“Holders”
      shall
      mean, collectively, the Investor and all Permitted Investor
      Transferees.

     

    “Indemnified
      Party”
shall
      have the meaning ascribed to it in Section 8(c) of this Agreement.

     

    “Indemnifying
      Party”
shall
      have the meaning ascribed to it in Section 8(c) of this Agreement. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Par
      B Shares”
      shall
      have the meaning ascribed to it in the Asset Purchase Agreement. 

     

    “Person”
shall
      mean an individual, corporation, partnership, limited liability company, estate,
      trust, association, private foundation, joint stock company or other
      entity.

     

    The
      terms
“Register,”
      “Registered”
and
      “Registration”
refer
      to a registration effected by preparing and filing a registration statement
      in
      compliance with the Securities Act providing for the sale by the Holders of
      Registrable Shares in accordance with the method or methods of distribution
      designated by the Holders, and the declaration or ordering of the effectiveness
      of such registration statement by the Commission.

     

    “Registrable
      Shares”
shall
      mean the Par B Shares, the Earnout Shares or other securities of the Company
      issued in respect of such shares as a dividend or other distribution unless
      such
      issuance is pursuant to an effective registration statement; provided, however,
      that any such shares of Company Common Stock shall cease to be Registrable
      Shares when (i) a registration statement with respect to the sale of Registrable
      Shares shall have become effective under the Securities Act and such Registrable
      Shares shall have been disposed of in accordance with such registration
      statement; (ii) such Registrable Shares shall have been sold in accordance
      with
      Rule 144; (iii) such Registrable Shares shall have been otherwise transferred
      and new certificates not subject to transfer restrictions under the Securities
      Act and not bearing any legend restricting further transfer shall have been
      delivered by the Company, and no other applicable and legally binding
      restriction on transfer under the Securities Act shall exist; or (iv) the
      holding period and volume restrictions specified in Rule 144 under the
      Securities Act shall have been satisfied.

     

    “Registration
      Expenses”
shall
      mean all out-of-pocket expenses (excluding Selling Expenses) incurred by the
      Company in complying with Section 2 hereof, including, without limitation,
      the
      following: (i) all registration, filing and listing fees; (ii) fees and expenses
      of compliance with federal and state securities laws (including, without
      limitation, reasonable fees and disbursements of counsel in connection with
      state securities qualifications of the Registrable Shares under the laws of
      such
      jurisdictions as the Holders may reasonably designate); (iii) printing
      (including, without limitation, expenses of printing or engraving certificates
      for the Registrable Shares in a form eligible for deposit with The Depository
      Trust Company and otherwise meeting the requirements of any securities exchange
      on which they are listed and of printing registration statements and
      prospectuses), messenger, telephone, shipping and delivery expenses; (iv) fees
      and disbursements of counsel for the Company; (v) fees and disbursements of
      all
      independent public accountants of the Company (including without limitation
      the
      expenses of any annual or special audit and “comfort” letters required by a
      managing underwriter); (vi) Securities Act liability insurance if the Company
      so
      desires; (vii) fees and expenses of other Persons reasonably necessary in
      connection with the registration, including any experts, retained by the
      Company; (viii) fees and expenses incurred in connection with the listing of
      the
      Registrable Shares on each securities exchange on which Company Common Stock
      is
      then listed; and (ix) fees and expenses associated with any filing with the
      National Association of Securities Dealers, Inc. required to be made in
      connection with the registration statement.

     

    “Rule
      144”
shall
      mean Rule 144 (or any successor or similar provision) promulgated by the
      Commission under the Securities Act, as in effect from time to
      time.

     

    “Second
      Year Par B Shares”
      shall
      mean the Par B Shares issuable in the last twelve installments pursuant to
      Section 1.08(d) of the Asset Purchase Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended (or any successor statute), and
      the
      rules and regulations of the Commission thereunder from time to time, all as
      the
      same shall be in effect at the relevant time.

     

    “Selling
      Expenses”
shall
      mean all underwriting discounts, selling commissions and stock transfer taxes
      applicable to any sale of Registrable Shares and any other costs or expenses
      incurred by the Holders in connection with any sale of Registrable
      Shares.

     

    Section
      2. Registration.

     

    (a)
       The
      Company shall cause to be prepared and filed with the Commission, (i) within
      sixty (60) days following the date upon which the Company is required to deliver
      any Earnout Shares to the Holders in accordance with the terms of the Asset
      Purchase Agreement, a registration statement or, in the Company’s discretion, a
      supplement or amendment to a previously filed registration statement, for the
      purpose of effecting a Registration of the sale of such Earnout Shares by the
      Holders thereof, (ii) within sixty (60) days following the date upon which
      the
      Company is required to deliver any of the First Year Par B Shares to the Holders
      in accordance with the terms of the Asset Purchase Agreement, a registration
      statement or, in the Company’s discretion, a supplement or amendment to a
      previously filed registration statement, for the purpose of effecting a
      Registration of the sale of such First Year Par B Shares by the Holders thereof
      and (iii) prior to the date upon which the Company is required to deliver any
      of
      the Second Year Par B Shares to the Holders in accordance with the terms of
      the
      Asset Purchase Agreement, a registration statement or, in the Company’s
      discretion, a supplement or amendment to a previously filed registration
      statement, for the purpose of effecting a Registration of the sale of such
      Second Year Par B Shares by the Holders thereof. The Company shall use its
      reasonable best efforts to cause such Registrations to become effective as
      soon
      as practicable and to keep such Registrations continuously effective until
      the
      date on which all applicable Registrable Shares have been sold pursuant to
      such
      registration statements.

     

    (b) Notwithstanding
      the foregoing, during any period when a registration statement is effective
      with
      respect to the Registrable Shares, the Company shall have the right to cause
      the
      Holders to suspend sales under such registration statement one (1) time for
      up
      to 60 days in any 365 day period by notifying the Holders in writing that the
      board of directors of the Company has determined that the continuation of such
      sales would be “Detrimental,” as defined below, to the Company and its
      stockholders. Each such written notice shall specify the basis for the
      suspension and shall include a copy of the resolution setting forth the relevant
      determination of the Company’s board of directors. “Detrimental”
to
      the
      Company and its stockholders means that
      the
      board of directors of the Company determines in good faith that continued sales
      by the Holders under the registration statement would (A) (1) interfere with
      or
      have a material adverse effect on the negotiation or completion of, or (2)
      require, prior to the signing of a definitive agreement, the Company publicly
      to
      disclose, in each case, any extraordinary transaction that is being contemplated
      by the Company, or (B) would have a material adverse effect on the Company.
      Upon
      the Holders’ receipt of any such written notice from the Company, the Holders
      shall immediately suspend all sales of Registrable Shares under such
      registration statement and shall not recommence such sales until the earlier
      of
      (i) the date upon which Company notifies the Holders in writing that the
      Holders are permitted to do so, or (ii) sixty (60) days following the
      date upon which the Holders received the written notice of
      suspension.

     

    (c) The
      Company shall promptly notify the Holders of the occurrence of the following
      events:

     

    (i) when
      any
      registration statement relating to Registrable Shares or post-effective
      amendment thereto filed with the Commission has become effective;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii) the
      issuance by the Commission of any stop order suspending the effectiveness of
      any
      registration statement relating to the Registrable Shares;

     

    (iii) The
      Company’s receipt of any notification of the suspension of the qualification of
      any Registrable Shares covered by a registration statement for sale in any
      jurisdiction; and

     

    (iv) the
      existence of any event, fact or circumstance during the distribution of
      securities that results in a registration statement or prospectus relating
      to
      Registrable Shares or any document incorporated therein by reference containing
      an untrue statement of material fact or omitting to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading.

     

    (d) The
      Holders shall immediately cease selling Registrable Shares upon their receipt
      of
      a notice described in clauses (ii) or (iv) above and shall immediately cease
      selling Registrable Shares in the relevant jurisdiction upon receipt of a notice
      described in clause (iii) above. The Holders shall not resume such sales of
      Registrable Shares until receiving notice from the Company that such sales
      may
      resume. The Company agrees to use its reasonable efforts to obtain the
      withdrawal of any order suspending the effectiveness of any such registration
      statement or any state qualification as soon as practicable.

     

    (e)
       The
      Company shall provide to the Holders, at no cost to the Holders, a copy of
      the
      registration statement and any amendment thereto used to effect the Registration
      of the Registrable Shares, each prospectus contained in such registration
      statement or post-effective amendment, and any amendment or supplement thereto
      and such other documents as the requesting Holders may reasonably request in
      order to facilitate the disposition of the Registrable Shares covered by such
      registration statement. The Company consents to the use of each such prospectus
      and any supplement thereto by the Holders in connection with the offering and
      sale of the Registrable Shares covered by such registration statement or any
      amendment thereto. 

     

    (f)
       The
      Company agrees to use its reasonable efforts to cause the Registrable Shares
      covered by a registration statement to be registered with or approved by such
      state securities authorities as may be necessary to enable the Holders to
      consummate the disposition of such shares pursuant to the plan of distribution
      set forth in the registration statement.

     

    (g)
       If
      any
      event, fact or circumstance requiring an amendment to a registration statement
      relating to the Registrable Shares or supplement to a prospectus relating to
      the
      Registrable Shares shall exist, promptly upon becoming aware thereof the Company
      agrees to notify the Holders and prepare and furnish to the Holders a
      post-effective amendment to the registration statement or supplement to the
      prospectus or any document incorporated therein by reference or file any other
      required document so that, as thereafter delivered to the purchasers of the
      Registrable Shares, the prospectus will not contain an untrue statement of
      a
      material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading.

     

    (h)
       The
      Company agrees to use its reasonable best efforts (including the payment of
      any
      listing fees) to obtain the listing of all Registrable Shares covered by the
      registration statement on each national securities exchange on which securities
      of the same series are then listed.

     

    (i)
       The
      Company will comply with the Securities Act and the Exchange Act in connection
      with the offer and sale of Registrable Shares pursuant to a registration
      statement, and, as soon as reasonably practicable following the end of any
      fiscal year during which a registration statement effecting a Registration
      of
      the Registrable Shares shall have been effective, make available to its security
      holders an earnings statement satisfying the provisions of Section 11(a) of
      the
      Securities Act.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      3. Assignment
      of Registration Rights.
      The
      rights to cause the Company to register Registrable Shares pursuant to Section
      2
      may be assigned (but only with all related obligations) by any Holder to any
      transferee or assignee of Registrable Shares, if and only if:

     

    (a) the
      Company is, prior to or concurrently with such transfer, furnished with written
      notice of the name and address of such transferee or assignee and the securities
      with respect to which such registration rights are being assigned;
      and

     

    (b) such
      transferee or assignee agrees in writing to be bound by and subject to the
      terms
      and conditions of this Agreement.

     

    Section
      4. Default.
      In
      the
      event that the Company fails, refuses or is unable to (a) file a Registration
      Statement within the time frames set forth in Section 2(a) above with respect
      to
      the Registrable Shares, or (b) effect a Registration of all Registrable
      Shares within one hundred eighty (180) days following the date upon which the
      Company is required to deliver such Registrable Shares to the Holders, then
      from
      and after the one hundred eightieth (180th) day
      following the date upon which the Company is required to deliver such
      Registrable Shares to the Holders, and for so long as such Registrable Shares
      remain unregistered, or in the event that any previously Registered Registrable
      Shares thereafter become unregistered, the amount of the “Protected Payments,”
as that term is defined in Section 1.10 of the Asset Purchase Agreement,
      represented by such Registrable Shares, shall bear interest at the rate of
      1.5%
      per month (up to a maximum of 9 months) or, if lesser, the maximum amount
      permitted by law. Any such interest shall be paid upon demand from the Holders
      either in cash or in additional Registrable Shares at the sole discretion of
      the
      Holders. In the event that (i) such Registrable Shares remain unregistered
      as of
      the three hundred sixty-fifth (365th) day following the date upon which the
      Company is required to deliver such Registrable Shares to the Holders, (ii)
      any
      previously Registered Registrable Shares become unregistered and remain
      unregistered for ninety (90) or more consecutive days, (iii) a bankruptcy
      petition is filed by or against the Company and is not terminated or withdrawn
      within thirty (30) days, the Company makes a general assignment for the benefit
      of creditors, a receiver or similar official is appointed for a substantial
      portion of any business or other property of the Company, or the Company is
      liquidated or dissolved, or (iv) the Company Common Stock is delisted from
      the
      NASDAQ Stock Market and not listed on a recognized national stock exchange,
      similar trading market or over-the-counter market, then
      upon
      written notice to the Company, the Holders may, in their sole discretion,
      require the Company to purchase from the Holders all of the unregistered
      Registrable Shares (or such portion of the unregistered Registrable Shares
      as
      set forth in the written notice to the Company from any Holder) for an amount
      equal to the greater of (A) the price per share for such Registrable Shares
      on
      the date upon which the Company was required to deliver such Registrable Shares
      to the Holders, (B) the highest closing price for the Company Common Stock
      on
      the NASDAQ Stock Market, similar trading market or any other exchange for the
      twenty (20) consecutive trading days immediately preceding the date of the
      Holders’ written notice, and (C) $_______ [the
      closing price of the Company Common Stock on the Closing Date under the Asset
      Purchase Agreement].
      Notwithstanding anything to the contrary contained in this Section 4, to the
      extent that the registration of any or all of the Registrable Shares is
      prohibited (the “Non-Registered
      Shares”)
      under
      Rule 415 in the opinion of the Commission, the interest payment penalties and
      the buy-back provisions described in this Section 4 shall not be applicable
      to
      such Non-Registered Shares.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      5. Expenses
      of Registration. The
      Company shall pay all Registration Expenses incurred in connection with the
      registration, qualification or compliance pursuant to Section 2 hereof. All
      Selling Expenses incurred in connection with the sale of Registrable Shares
      by
      any of the Holders shall be borne by the Holder offering or selling such
      Registrable Shares. Each Holder shall pay the fees and disbursements of its
      own
      counsel, if any.

     

    Section
      6. Information
      to be Furnished by Holders. Each
      Holder shall furnish to the Company such information as the Company may
      reasonably request in connection with the Registration and related proceedings
      referred to in Section 2 hereof.

     

    Section
      7. Rule
      144 Sales.

     

    (a) The
      Company will use its reasonable best efforts to file the reports required to
      be
      filed by the Company under the Exchange Act so as to enable any Holder to sell
      Registrable Shares pursuant to Rule 144 under the Securities Act.

     

    (b) In
      connection with any sale, transfer or other disposition by any Holder of any
      Registrable Shares pursuant to Rule 144 under the Securities Act, the Company
      shall cooperate with such Holder to facilitate the timely preparation and
      delivery of certificates representing Registrable Shares to be sold and not
      bearing any Securities Act legend, if deemed appropriate, and enable
      certificates for such Registrable Shares to be issued for such number of shares
      and registered in such names as the selling Holder may reasonably request at
      least five (5) business days prior to any sale of Registrable
      Shares.

     

    Section
      8. Indemnification.

     

    (a)
       The
      Company will indemnify each Holder, each Holder’s officers and directors, and
      each person controlling such Holder within the meaning of Section 15 of the
      Securities Act, against all expenses, claims, losses, damages and liabilities
      (including reasonable legal fees and expenses), arising out of or based on
      any
      untrue statement (or alleged untrue statement) of a material fact contained
      in
      any registration statement or prospectus relating to the Registrable Shares,
      or
      any amendment or supplement thereto, or based on any omission (or alleged
      omission) to state therein a material fact required to be stated therein or
      necessary to make the statements therein not misleading, provided,
      however, that
      the
      Company will not be liable in any such case to the extent that any such expense,
      claim, loss, damage, liability or expense arises solely out of or is based
      on
      any untrue statement or omission or alleged untrue statement or omission made
      in
      reliance upon and in conformity with information furnished in writing to the
      Company by any Holder for inclusion therein.

     

    (b)
       Each
      Holder will indemnify the Company, its officers and directors, and each person
      who controls the Company within the meaning of Section 15 of the Securities
      Act,
      against all expenses, claims, losses, damages and liabilities (including
      reasonable legal fees and expenses) arising out of or based on any untrue
      statement (or alleged untrue statement) of a material fact contained in any
      registration statement or prospectus relating to the Registrable Shares, or
      any
      amendment or supplement thereto, or based on any omission (or alleged omission)
      to state therein a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading, in each case to the extent, but
      only
      to the extent, that such untrue statement (or alleged untrue statement) or
      omission (or alleged omission) is made in such registration statement or
      prospectus in reliance upon and in conformity with information furnished in
      writing to the Company by such Holder for inclusion therein.

     

    (c)
       Each
      party entitled to indemnification under this Section 8 (the “Indemnified
      Party”)
      shall
      give notice to the party required to provide indemnification (the “Indemnifying
      Party”)
      promptly after such Indemnified Party has actual knowledge of any claim as
      to
      which indemnity may be sought, but the omission to so notify the Indemnifying
      Party shall not relieve such Indemnifying Party from any liability which it
      may
      have to the Indemnified Party pursuant to the provisions of this Section 8
      except to the extent of the actual damages suffered by such delay in
      notification. The Indemnifying Party shall assume the defense of such action,
      including the employment of counsel to be chosen by the Indemnifying Party,
      and
      reasonably satisfactory to the Indemnified Party, and payment of expenses.
      The
      Indemnified Party shall have the right to employ its own counsel in any such
      case, but the legal fees and expenses of such counsel shall be at the expense
      of
      the Indemnified Party unless the employment of such counsel shall have been
      authorized in writing by the Indemnifying Party in connection with the defense
      of such action, the Indemnifying Party shall not have employed counsel to take
      charge of the defense of such action, or the Indemnified Party shall have
      reasonably concluded that there may be defenses available to it or them which
      are different from or additional to those available to the Indemnifying Party
      (in which case the Indemnifying Party shall not have the right to direct the
      defense of such action on behalf of the Indemnified Party), in any of which
      events such fees and expenses shall be borne by the Indemnifying Party;
provided,
      however,
      that
      the Indemnifying Party shall in no event be liable for counsel costs for more
      than one counsel to all Holders and one local counsel to Holders in each
      relevant local jurisdiction. No Indemnifying Party, in the defense of any such
      claim or litigation, shall, except with the consent of each Indemnified Party,
      consent to entry of any judgment or enter into any settlement which does not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such Indemnified Party of a release from all liability in respect to such
      claim or litigation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)
       If
      the
      indemnification provided for in this Section 8 is unavailable to a party that
      would have been an Indemnified Party under this Section 8 in respect of any
      expenses, claims, losses, damages and liabilities referred to herein, then
      each
      party that would have been an Indemnifying Party hereunder shall, in lieu of
      indemnifying such Indemnified Party, contribute to the amount paid or payable
      by
      such Indemnified Party as a result of such expenses, claims, losses, damages
      and
      liabilities in such proportion as is appropriate to reflect the relative fault
      of the Indemnifying Party on the one hand and such Indemnified Party on the
      other in connection with the statement or omission which resulted in such
      expenses, claims, losses, damages and liabilities, as well as any other relevant
      equitable considerations. The relative fault shall be determined by reference
      to, among other things, whether the untrue or alleged untrue statement of a
      material fact or the omission or alleged omission to state a material fact
      relates to information supplied by the Indemnifying Party or such Indemnified
      Party and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such statement or omission. The Company and
      each Holder agrees that it would not be just and equitable if contribution
      pursuant to this Section 8 were determined by pro rata allocation or by any
      other method of allocation which does not take account of the equitable
      considerations referred to above in this Section 8(d).

     

    (e)
       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.

     

    (f)
       In
      no
      event shall any Holder be liable for any expenses, claims, losses, damages
      or
      liabilities pursuant to this Section 8 in excess of the net proceeds to such
      Holder from the sale of Registrable Shares sold by such Holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      9. Miscellaneous.

     

    (a)
       Governing
      Law.
      This
      Agreement shall be governed in all respects by the laws of the State of New
      York, without giving effect to any provision thereof which would require the
      application of the law of any other jurisdiction. Each party hereto hereby
      waives personal service of any and all process and consents that all such
      service of process be made by registered mail directed to the address described
      in Section 9(c) and service so made shall be deemed to be completed upon actual
      receipt thereof. Each party hereto waives any right to a trial by jury with
      respect to any matter arising under this Agreement and the transactions
      contemplated hereby.

     

    (b) Waiver
      and Amendment.
      This
      Agreement may be amended or modified in whole or in part only by a writing
      that
      makes reference to this Agreement and that is executed by the Company and,
      pursuant to Section 9(i), the Holders. Any amendment so approved will bind
      the
      Company and the Holders. The obligations of any party hereunder may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively) only with the written consent of the party claimed to have given
      the waiver (subject to Section 9(i)); provided, however, that any waiver by
      any
      party of any violation of, breach of, or default under any provision of this
      Agreement or any other agreement provided for herein shall not be construed
      as,
      or constitute, a continuing waiver of such provision, or a waiver of any other
      violation of, breach of or default under any other provision of this
      Agreement.

     

    (c) Notices.
      All
      notices or other communications under this Agreement shall be in writing and
      shall be given (and shall be deemed to have been duly given upon receipt) by
      delivery in person, by telecopy (with confirmation of receipt), or by registered
      or certified mail, postage prepaid, return receipt requested, addressed to
      the
      address provided pursuant to the Asset Purchase Agreement or to such
      other
      address as any party may have furnished to the other parties in writing in
      accordance with this paragraph.

     

    (d) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which may
      be
      executed by fewer than all of the parties hereto (provided
      that
      each
      party executes one or more counterparts), each of which shall be enforceable
      against the parties actually executing such counterparts, and all of which
      together shall constitute one instrument. Execution copies may be exchanged
      by
      facsimile transmission and such copies shall be fully enforceable by any
      party.

     

    (e) Severability.
      In the
      event that any provision of this Agreement becomes or is declared by a court
      of
      competent jurisdiction to be illegal, unenforceable or void, this Agreement
      shall continue in full force and effect without said provision.

     

    (f) Section
      Titles.
      Section
      titles are for descriptive purposes only and shall not control or alter the
      meaning of this Agreement as set forth in the text.

     

    (g) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and permitted assigns; provided, however, that
      neither the Investor nor any other Holder to which any Shares or any Registrable
      Shares are transferred may assign any rights or obligations under this Agreement
      without the prior written consent of the Company. Any attempted assignment
      in
      violation hereof shall be null and void ab initio and of no force or effect.
      Nothing in this Agreement, express or implied, is intended to confer upon any
      party other than the parties hereto or their respective successors and permitted
      assigns any rights, remedies, obligations, or liabilities under or by reason
      of
      this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h) Specific
      Performance.
      The
      parties hereto agree that upon a breach of any provisions of this Agreement
      a
      remedy at law would not be adequate, and that the parties hereto are entitled
      to
      injunctive relief and specific performance, and any other legal or equitable
      remedies, as remedies for the enforcement of this Agreement.

    

    (i) Action
      of the Holders.
      Wherever
      this Agreement requires or otherwise provides for the approval, consent, waiver
      or other action of the Holders, the written approval, consent, waiver or other
      action of the Holders holding a majority of the votes attributable to the
      Registrable Shares then collectively held by the Holders shall constitute the
      approval, consent, waiver or other action of the Holders.

     

    (j) Entire
      Agreement.
      This
      Agreement embodies the entire agreement among the parties in relation to its
      subject matter, and no representations, warranties, covenants, understandings
      or
      agreements or otherwise, in relation thereto, exist between any of the parties
      related to the subject matter hereof. This Agreement supersedes all prior
      agreements and understandings relating to the subject matter
      hereof.

     

    [Signatures
      on the following page]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    
      	 	 	 
	 	
              HANDHELD
                ENTERTAINMENT, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              William J. Bush
	 	
              

              Name:
                William J. Bush

              Title:
                Chief Financial Officer

            

    

     

    
      	 	 	 
	 	
              EBAUM’S
                WORLD, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Eric
              Bauman
	 	
              

              Name:
                Eric Bauman

              Title:
                President

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