8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 1, 2010

ZOO ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	333-124829	71-1033391
(State or Other Jurisdiction	(Commission File Number)	(I.R.S. Employer
of Incorporation)		Identification No.)

3805 Edwards Road, Suite 400

Cincinnati, OH  45209

 (Address of principal executive

offices including zip code)

(513) 824-8297

 (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Amendment to Factoring Agreement

On October 1, 2010, Zoo Publishing, Inc. (“Zoo Publishing”), a wholly-owned subsidiary of Zoo Games, Inc. (“Zoo Games”), a wholly-owned subsidiary of Zoo Entertainment, Inc. (the “Company”), entered into a Second Amendment to Factoring and Security Agreement (the “WCS Amendment”) with Working Capital Solutions, Inc. (“WCS”).  The WCS Amendment amended that certain Factoring and Security Agreement (the “Factoring Agreement”), dated September 9, 2009 and effective as of September 29, 2009, as amended on April 1, 2010, pursuant to which WCS agreed to utilize existing Zoo Publishing accounts receivable in order to provide working capital to fund all aspects of Zoo Publishing’s business operations, as previously disclosed in those Current Reports on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on October 2, 2009 and on April 7, 2010, which is incorporated herein by reference.  Pursuant to the WCS Amendment, the parties amended the Factoring Agreement to, among other things: (i) increase the maximum amount of funds available pursuant to the facility to $8,000,000;  and (ii) extend its term to a period initially ending on September 30, 2012, subject to automatic renewal for successive one year periods unless Zoo Publishing terminates the Factoring Agreement with written notice 90 days prior to the next anniversary of the date of the Factoring Agreement, or  unless  Zoo Publishing terminates the Factoring Agreement on a date other than an anniversary date with 30 days prior written notice. The foregoing description of the WCS Amendment does not purport to be complete and is qualified in its entirety by reference to the WCS Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Amendments to Fee Letters

On October 1, 2010, the Company entered into an Amended and Restated Letter Agreement with each of Mark Seremet, the President, Chief Executive Officer and a director of the Company, and David Rosenbaum, President of Zoo Publishing, Inc. (the “Fee Letters”), which amended and restated each of those letter agreements, dated as of May 12, 2009, as amended on each of August 31, 2009 and November 20, 2009, pursuant to which, in consideration of each of Messrs. Seremet and Rosenbaum entering into guarantees with each of: (i) Wells Fargo Bank, National Association in connection with the Company’s purchase order financing; (ii) Solutions 2 Go, Inc. to guaranty the payment of all indebtedness of the Company and its affiliates in connection with that certain Advance Agreement with Solutions 2 Go, Inc. and Solutions 2 Go, LLC; and (iii) WCS in connection with the Company’s accounts receivable financing,  the Company agreed to provide certain compensation to Messrs. Seremet and Rosenbaum, as previously disclosed in those Current Reports on Form 8-K filed with the Commission  on May 18, 2009 and September 4, 2009 and November 27, 2009.  

Pursuant to the Fee Letters, the Company agreed to compensate each of Messrs. Seremet and Rosenbaum $10,000 per month and $7,000 per month, respectively, in consideration for each of their guarantees under the Company’s purchase order financing with Wells Fargo Bank, National Association, for so long as such guarantees and loan remain in full force and effect.  In addition, the Fee Letters provide that the Company shall compensate each of Messrs. Seremet and Rosenbaum in consideration for each of their guarantees of the increased indebtedness incurred by the Company under the WCS Factoring Agreement, for so long as such guarantees and loan remain in full force and effect, $25,000 on each of: October 1, 2010, January 1, 2011, April 1, 2011 and July 1, 2011.  The foregoing description of the Fee Letters does not purport to be complete and is qualified in its entirety by reference to the Fee Letters, copies of which are attached hereto as Exhibits 10.2 and 10.3 and which are incorporated herein by reference.

ITEM 5.02.  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

(e) The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference and made a part hereof.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Number	Description
10.1	Second Amendment to Factoring and Security Agreement, by and between Zoo Publishing, Inc. and Working Capital Solutions, Inc., dated October 1, 2010.
10.2	Amended and Restated Letter Agreement, by and between Zoo Entertainment, Inc. and Mark Seremet, dated October 1, 2010.
10.3	Amended and Restated Letter Agreement, by and between Zoo Entertainment, Inc. and David Rosenbaum, dated October 1, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 7, 2010

ZOO ENTERTAINMENT, INC.
By:	/s/ David Fremed
Name:	David Fremed
Title:	Chief Financial Officer

EX-10.1

SECOND AMENDMENT TO FACTORING AND SECURITY AGREEMENT

This SECOND AMENDMENT TO FACTORING AND SECURITY AGREEMENT (this "Second Amendment") is made and entered into this 1st  day of October, 2010, among Zoo Games, Inc., a Delaware corporation, Zoo Entertainment, Inc., a Delaware corporation, and Zoo Publishing, Inc., a New Jersey corporation (jointly, severally, and collectively "Seller"), and Working Capital Solutions, Inc., a Delaware corporation ("Purchaser").

RECITALS:

WHEREAS, Seller and Purchaser are party to that certain Factoring and Security Agreement dated as of September 9, 2009, as amended by that certain First Amendment dated April 1, 2010 (as amended, restated, supplemented, or otherwise modified, the "Factoring Agreement"); and

WHEREAS, Purchaser and Seller desire to amend the terms of the Factoring Agreement as set forth herein.

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

1.           DEFINITIONS.  In addition to the defined terms appearing above, capitalized terms used in this Second Amendment shall have the meanings provided therefor in the Factoring Agreement.

2.           JOINDER.  Each of Zoo Games, Inc. and Zoo Entertainment, Inc. is hereby made a party to the Factoring Agreement, and from and after the date of this Second Amendment, each reference to the “Seller” in the Factoring Agreement shall be deemed to refer to Zoo Games, Inc., Zoo Entertainment, Inc., and Zoo Publishing, Inc., jointly, severally, and collectively.

3.           AMENDMENT TO SECTION 1 OF FACTORING AGREEMENT.  Section 1 of the Factoring Agreement is hereby amended as follows:

3.1.       By deleting the definition of “Maximum Amount” in its entirety and substituting in its stead the following new definition therefor:

“ “Maximum Amount” – $8,000,000; provided that Seller acknowledges that up to $6,000,000 of such Maximum Amount will be provided by one or more participants of Purchaser, and Seller further agrees that Purchaser has no obligation to fund any amount in excess of $2,000,000 if any participant fails to fund its portion of such Maximum Amount.”

3.2.        By amending the definition of “Monthly Minimum Volume” by deleting the figure “$600,000” contained therein and substituting the figure “$2,000,000” in its place.

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3.3.        By amending the definition of “Minimum Monthly Fee” by deleting the figure “$10,800” contained therein and substituting the figure “$20,000” in its place.

3.4.        By adding the following new definition in appropriate alphabetical order:

“Second Amendment Effective Date” October 1, 2010.”

4.           AMENDMENT TO SECTION 20 OF FACTORING AGREEMENT.  Section 20 of the Factoring Agreement is hereby amended by deleting the first paragraph of Section 20 in its entirety and substituting in its stead the following new paragraph:

“This Agreement will be effective for two (2) years from the Second Amendment Effective Date (the “Initial Term”), and shall be automatically extended for successive one (1) year periods (each, a “Renewal Term”) subject to Purchaser approval unless Seller shall provide written notice to Purchaser of its intention to terminate at least ninety (90) days prior to the next anniversary date hereof.  If Seller wants to terminate on a date other than an anniversary date (the “Early Termination Date”), Seller shall provide written notice to Purchaser at least thirty (30) days prior, whereupon this Agreement shall terminate on the Early Termination Date.”

5. AMENDMENT TO SECTION 26 OF FACTORING AGREEMENT.  Section 26 of the Factoring Agreement is hereby amended by inserting the following provisions at the end of Section 26:

The Seller shall indemnify, defend, and holder the Purchaser harmless of and from any threat, loss, liability, or claim which may be asserted against the Purchaser on account of, in respect to, or arising out of, the Purchaser’s relationship with the Seller, for any and all reasons, whether based in contract, intentional wrongdoing, or otherwise.

6. CONDITIONS PRECEDENT.  This Second Amendment shall not be effective until each of the following conditions precedent has been fulfilled to the satisfaction of Purchaser:

6.1.         This Second Amendment shall have been duly executed and delivered by the parties hereto.  Purchaser shall have received a fully executed copy hereof and of each other document required hereunder.

6.2.         No Event of Default shall have occurred and be continuing.

6.3.        Without limiting any of the provisions of Section 6 of the Factoring Agreement, Seller shall pay all out-of-pocket expenses (including, without limitation, all reasonable attorneys’ fees) incurred by Purchaser in connection with this Second Amendment and the documents and agreements executed in connection herewith.

6.4.         Seller shall have provided such additional instruments and documents to Purchaser as Purchaser and its counsel may have reasonably requested.

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7.           RATIFICATION OF FACTORING AGREEMENT, ETC.

7.1.        Except as provided herein, all terms and conditions of the Factoring Agreement and all other documents, instruments and agreements executed in connection therewith (collectively, the “Factoring Agreement Documents”) remain in full force and effect.  Seller, on behalf of itself and its affiliates, hereby ratifies, confirms, and re-affirms all terms and provisions of the Factoring Agreement Documents.  Without limiting the generality of the foregoing, Seller, on behalf of itself and its affiliates, hereby acknowledges, confirms and agrees that all Collateral shall continue to secure the Obligations.

7.2.        Seller, on behalf of itself and its affiliates, represents and warrants to Purchaser that, as of the Second Amendment Effective Date, no Event of Default exists or, solely with the passage of time or notice, would exist under the Factoring Agreement Documents.

7.3.        Seller, on behalf of itself and its affiliates, acknowledges and agrees that, to its actual knowledge: (i) there is no basis nor set of facts on which any amount (or any portion thereof) owed by any of Seller or its affiliates under any Factoring Agreement Document could be reduced, offset, waived, or forgiven, by rescission or otherwise; (ii) nor is there any claim, counterclaim, off set, or defense (or other right, remedy, or basis having a similar effect) available to any of Seller or its affiliates with regard thereto; (iii) nor is there any basis on which the terms and conditions of any of the Obligations could be claimed to be other than as stated on the written instruments which evidence such Obligations.

8.           RELEASE OF CLAIMS.  Seller, on behalf of itself and its affiliates, acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims against Purchaser or its parents, affiliates, predecessors, successors, or assigns, or its officers, directors, employees, attorneys, or representatives (the foregoing, collectively, the “Purchaser Parties”), with respect to the Obligations, or otherwise, and that if any of Seller or its affiliates now has, or ever did have, any offsets, defenses, claims, or counterclaims against such Purchaser Parties, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Second Amendment, all of them are hereby expressly WAIVED, and each of Seller and its affiliates hereby RELEASES such Purchaser Parties from any liability therefor.

9.           MISCELLANEOUS.

9.1.        IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING HEREUNDER, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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9.2.         This Second Amendment and all transactions contemplated hereunder and/or evidenced hereby shall be governed by, construed under, and enforced in accordance with the internal laws of the Chosen State.

9.3.         In the event any one or more of the provisions contained in this Second Amendment is held to be invalid, illegal or unenforceable in any respect, then such provision shall be ineffective only to the extent of such prohibition or invalidity, and the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

9.4.         This Second Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were upon the same instrument.  Delivery of an executed counterpart of the signature page to this Second Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Second Amendment, and any party delivering such an executed counterpart of the signature page to this Second Amendment by facsimile or other electronic transmission to any other party shall thereafter also promptly deliver a manually executed counterpart of this Second Amendment to such other party, provided that the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Second Amendment.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have duly executed this Second Amendment on the date above first written.

SELLER:	ZOO GAMES, INC.
	By:	/s/ Mark Seremet
	Name:	Mark Seremet
	Title:	Chief Executive Officer
SELLER:	ZOO ENTERTAINMENT, INC.
	By:	/s/ Mark Seremet
	Name:	Mark Seremet
	Title:	Chief Executive Officer
SELLER:	ZOO PUBLISHING, INC.
	By:	/s/ Mark Seremet
	Name:	Mark Seremet
	Title:	Chief Executive Officer
PURCHASER:	WORKING CAPITAL SOLUTIONS, INC.
	By:	/s/ Thomas G. Siska
	Name:	Thomas G. Siska
	Title:	President

Signature Page to Second Amendment to Factoring and Security Agreement

Each of the undersigned guarantors hereby ratifies, confirms and reaffirms, all and singular, each of the terms and conditions contained in his Individual Guaranty dated as of September 9, 2009 (each, an “Individual Guaranty”), and acknowledges, confirms and agrees that such Individual Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Second Amendment.

/s/ Mark E. Seremet

Mark E. Seremet, an individual

/s/ David W. Rosenbaum

David W. Rosenbaum, an individual

The undersigned guarantor hereby ratifies, confirms and reaffirms, all and singular, each of the terms and conditions contained in his Validity Guaranty dated as of September 15, 2009 (the “Validity Guaranty”), and acknowledges, confirms and agrees that such Validity Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Amendment.

/s/ David J. Fremed

David J. Fremed, as CFO of Zoo Publishing, Inc.

Each of the undersigned guarantors hereby ratifies, confirms and reaffirms, all and singular, each of the terms and conditions contained in its respective Continuing Unconditional Guaranty dated as of September 15, 2009 (each, an “Unconditional Guaranty”), and acknowledges, confirms and agrees that such Unconditional Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Second Amendment.

ZOO ENTERTAINMENT, INC.
By:	/s/ Mark Seremet
Name:	Mark Seremet
Title:	Chief Executive Officer
ZOO GAMES, INC.
By:	/s/ Mark Seremet
Name:	Mark Seremet
Title:	Chief Executive Officer

Signature Page to Second Amendment to Factoring and Security Agreement

EX-10.2

ZOO ENTERTAINMENT, INC.

3805 Edwards Road, Suite 400

Cincinnati, OH  45209

October 1, 2010

Mr. Mark Seremet

6550 Stoneham Place

Cincinnati, OH 45236

Dear Mr. Seremet:

This letter agreement (this “Agreement”) hereby amends and restates in its entirety that certain letter agreement, by and between you and Zoo Entertainment, Inc. (the “Company”), dated as of May 12, 2009, as amended on each of August 31, 2009 and November 20, 2009 (the “Original Letter Agreement”), pursuant to which the Company agreed to provide compensation to you in consideration for you entering into certain guarantees for the full and prompt payment and performance by the Company and its subsidiaries of obligations in connection with certain financing arrangements.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we hereby agree to amend and restate the Original Letter Agreement in its entirety as follows:

1.  Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

“Guarantees” means, collectively, (i) the Wells Fargo Guaranty, (ii) the Solutions 2 Go  Guaranty and (iii) the Working Capital Guaranty.

“Loans” means, collectively, (i) the Wells Fargo Loan, (ii) the Solutions 2 Go Loan and (iii) the Working Capital Loan.

“Solutions 2 Go Loan” means the indebtedness incurred pursuant to that certain Advance Agreement, by and among the Company, Solutions 2 Go Inc. and Solutions 2 Go LLC, dated as of August 31, 2009, as amended from time to time.

“Solutions 2 Go Guaranty” means that certain Guaranty, made by you to Solutions 2 Go Inc., dated as of August 31, 2009, pursuant to which you agreed to guaranty the full and prompt performance of the Company’s obligations in connection with the Solutions 2 Go Loan.

“Wells Fargo Loan” means that certain purchase order financing arrangement pursuant to the Amended and Restated Master Purchase Order Assignment Agreement, by and between the Company and Wells Fargo Bank, National Association, dated as of April 6, 2009, as amended from time to time.

“Wells Fargo Guaranty” means that certain Guaranty, made by you to Wells Fargo Bank, National Association, dated as of April 6, 2009, pursuant to which you agreed to guaranty the full and prompt payment and performance of the Company’s obligations in connection with the Wells Fargo Loan.

“Working Capital Loan” means that certain financing arrangement pursuant to the Factoring and Security Agreement, by and between Working Capital Solutions, Inc. and Zoo Publishing, Inc., dated as of September 9, 2009, as amended from time to time.

“Working Capital Guaranty” means that certain Guaranty, made by you to Working Capital Solutions, Inc., dated as of September 9, 2009, pursuant to which you agreed to guaranty the full and prompt payment and performance of the obligations in connection with the Working Capital Loan.

2. Fees.

(a)           The Company hereby agrees to pay you a monthly fee of $10,000 (the “Wells Fargo Monthly Fee”) (commencing on October 1, 2010 and continuing on the same date of each month thereafter), for so long as the Wells Fargo Loan and the Wells Fargo Guaranty remain in full force and effect; provided, however, that if for any three consecutive months no amount of the Wells Fargo Loan is due and owing (but the Wells Fargo Loan has not been terminated) for any one day during such period, the Wells Fargo Monthly Fee shall not be owed for the following month.

(b)            The Company hereby agrees to pay you (i) $25,000 upon the execution and delivery of this Agreement in consideration for your guaranty of the increased indebtedness incurred by the Company under the Working Capital Loan and (ii) $25,000 on each of January 1, 2011, April 1, 2011 and July 1, 2011, for so long as the Working Capital Loan and the Working Capital Guaranty (or any comparable accounts receivable factoring facility and guaranty by you are secured by the Company in lieu thereof) remain in full force and effect.

(c)            You agree that so long as you remain employed by the Company or any of its subsidiaries, you will not withdraw any of the Guarantees during the term of the Loans.In addition, the Company agrees that your employment will not be terminated (except for “Cause” under the terms of your employment agreement with the Company or its subsidiaries) and your status, compensation and benefits with the company that employs you will not be diminished as long as the Guarantees and the Loans are in effect.   The Company agrees that in the event you terminate your employment for any reason, the Company will use its best efforts to have your name removed from the Guarantees as soon as possible thereafter.  If the Wells Fargo Guaranty is not released by the end of the month following termination of employment, the Wells Fargo Monthly Fee shall be doubled to $20,000 for each month thereafter until the Wells Fargo Guaranty is removed.

(d)           The fees set forth in this Section 2 shall be deemed to fully compensate you for guaranteeing up to $20,000,000 of the full and prompt payment and performance by the Company and its subsidiaries of obligations in connection with the Wells Fargo Loan and the Working Capital Loan.

3.  Miscellaenous.

(a)           This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, relating to the subject matter hereof, including, but not limited to, the Original Letter Agreement, which is hereby terminated and of no force or effect.  You acknowledge and agree that you are not entitled to any further fees or other compensation under the Original Letter Agreement and all obligations of the Company under the Original Letter Agreement have been satisfied in full.

(b)           The terms, provisions and conditions of this Agreement are solely for the benefit of the parties hereto and their respective heirs, successors and permitted assigns and no other person or entity shall acquire or have a right by virtue of this Agreement.  This Agreement may not be assigned by any party without prior written consent of the other parties.

(c)           No provision of this Agreement may be waived or amended except in a writing signed by the parties. A waiver or amendment of any term or provision of this Agreement shall not be construed as a waiver or amendment of any other term or provision.

(d)           This Agreement may be executed by facsimile signatures and in multiple counterparts, each of which shall be deemed an original. It shall not be necessary that each party executes each counterpart, or that any one counterpart be executed by more than one party so long as each party executes at least one counterpart.

(e)           This Agreement shall be governed by and constructed under the laws of the State of Delaware without regard to such state’s conflicts of law principles, and may be amended, modified or supplemented only by written instrument executed by parties hereto.

If the foregoing correctly sets forth the entire understanding and agreement between us, please so indicate by executing this Agreement as indicated below and returning an executed copy, whereupon this Agreement shall constitute a binding agreement as of the date first above written.

	Very truly yours,
	COMPANY:
	ZOO ENTERTAINMENT, INC.
	By: /s/ David Fremed
	Name: David Fremed
	Title: Chief Financial Officer
Accepted and agreed as of
the date first written above:
/s/ Mark Seremet
Mark Seremet

EX-10.3

ZOO ENTERTAINMENT, INC.

3805 Edwards Road, Suite 400

Cincinnati, OH  45209

October 1, 2010

Mr. David Rosenbaum

9435 Shawnee Run Road

Cincinnati, OH 45236

Dear Mr. Rosenbaum:

This letter agreement (this “Agreement”) hereby amends and restates in its entirety that certain letter agreement, by and between you and Zoo Entertainment, Inc. (the “Company”), dated as of May 12, 2009, as amended on each of August 31, 2009 and November 20, 2009 (the “Original Letter Agreement”), pursuant to which the Company agreed to provide compensation to you in consideration for you entering into certain guarantees for the full and prompt payment and performance by the Company and its subsidiaries of obligations in connection with certain financing arrangements.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we hereby agree to amend and restate the Original Letter Agreement in its entirety as follows:

1.  Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

“Guarantees” means, collectively, (i) the Wells Fargo Guaranty, (ii) the Solutions 2 Go  Guaranty and (iii) the Working Capital Guaranty.

“Loans” means, collectively, (i) the Wells Fargo Loan, (ii) the Solutions 2 Go Loan and (iii) the Working Capital Loan.

“Solutions 2 Go Loan” means the indebtedness incurred pursuant to that certain Advance Agreement, by and among the Company, Solutions 2 Go Inc. and Solutions 2 Go LLC, dated as of August 31, 2009, as amended from time to time.

“Solutions 2 Go Guaranty” means that certain Guaranty, made by you to Solutions 2 Go Inc., dated as of August 31, 2009, pursuant to which you agreed to guaranty the full and prompt performance of the Company’s obligations in connection with the Solutions 2 Go Loan.

“Wells Fargo Loan” means that certain purchase order financing arrangement pursuant to the Amended and Restated Master Purchase Order Assignment Agreement, by and between the Company and Wells Fargo Bank, National Association, dated as of April 6, 2009, as amended from time to time.

“Wells Fargo Guaranty” means that certain Guaranty, made by you to Wells Fargo Bank, National Association, dated as of April 6, 2009, pursuant to which you agreed to guaranty the full and prompt payment and performance of the Company’s obligations in connection with the Wells Fargo Loan.

“Working Capital Loan” means that certain financing arrangement pursuant to the Factoring and Security Agreement, by and between Working Capital Solutions, Inc. and Zoo Publishing, Inc., dated as of September 9, 2009, as amended from time to time.

“Working Capital Guaranty” means that certain Guaranty, made by you to Working Capital Solutions, Inc., dated as of September 9, 2009, pursuant to which you agreed to guaranty the full and prompt payment and performance of the obligations in connection with the Working Capital Loan.

2. Fees.

(a)           The Company hereby agrees to pay you a monthly fee of $7,000 (the “Wells Fargo Monthly Fee”) (commencing on October 1, 2010 and continuing on the same date of each month thereafter), for so long as the Wells Fargo Loan and the Wells Fargo Guaranty remain in full force and effect; provided, however, that if for any three consecutive months no amount of the Wells Fargo Loan is due and owing (but the Wells Fargo Loan has not been terminated) for any one day during such period, the Wells Fargo Monthly Fee shall not be owed for the following month.

(b)           The Company hereby agrees to pay you (i) $25,000 upon the execution and delivery of this Agreement in consideration for your guaranty of the increased indebtedness incurred by the Company under the Working Capital Loan and (ii) $25,000 on each of January 1, 2011, April 1, 2011 and July 1, 2011, for so long as the Working Capital Loan and the Working Capital Guaranty (or any comparable accounts receivable factoring facility and guaranty by you are secured by the Company in lieu thereof) remain in full force and effect.

(c)           You agree that so long as you remain employed by the Company or any of its subsidiaries, you will not withdraw any of the Guarantees during the term of the Loans.In addition, the Company agrees that your employment will not be terminated (except for “Cause” under the terms of your employment agreement with the Company or its subsidiaries) and your status, compensation and benefits with the company that employs you will not be diminished as long as the Guarantees and the Loans are in effect.   The Company agrees that in the event you terminate your employment for any reason, the Company will use its best efforts to have your name removed from the Guarantees as soon as possible thereafter.  If the Wells Fargo Guaranty is not released by the end of the month following termination of employment, the Wells Fargo Monthly Fee shall be doubled to $14,000 for each month thereafter until the Wells Fargo Guaranty is removed.

(d)           The fees set forth in this Section 2 shall be deemed to fully compensate you for guaranteeing up to $20,000,000 of the full and prompt payment and performance by the Company and its subsidiaries of obligations in connection with the Wells Fargo Loan and the Working Capital Loan.

3.  Miscellaenous.

(a)           This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, relating to the subject matter hereof, including, but not limited to, the Original Letter Agreement, which is hereby terminated and of no force or effect.  You acknowledge and agree that you are not entitled to any further fees or other compensation under the Original Letter Agreement and all obligations of the Company under the Original Letter Agreement have been satisfied in full.

(b)           The terms, provisions and conditions of this Agreement are solely for the benefit of the parties hereto and their respective heirs, successors and permitted assigns and no other person or entity shall acquire or have a right by virtue of this Agreement.  This Agreement may not be assigned by any party without prior written consent of the other parties.

(c)           No provision of this Agreement may be waived or amended except in a writing signed by the parties. A waiver or amendment of any term or provision of this Agreement shall not be construed as a waiver or amendment of any other term or provision.

(d)           This Agreement may be executed by facsimile signatures and in multiple counterparts, each of which shall be deemed an original. It shall not be necessary that each party executes each counterpart, or that any one counterpart be executed by more than one party so long as each party executes at least one counterpart.

(e)           This Agreement shall be governed by and constructed under the laws of the State of Delaware without regard to such state’s conflicts of law principles, and may be amended, modified or supplemented only by written instrument executed by parties hereto.

If the foregoing correctly sets forth the entire understanding and agreement between us, please so indicate by executing this Agreement as indicated below and returning an executed copy, whereupon this Agreement shall constitute a binding agreement as of the date first above written.

	Very truly yours,
	COMPANY:
	ZOO ENTERTAINMENT, INC.
	By: /s/ David Fremed
	Name: David Fremed
	Title: Chief Financial Officer
Accepted and agreed as of
the date first written above:
/s/ David Rosenbaum
David Rosenbaum