SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of April 18, 2006, by
and among M Power Entertainment, Inc., Inc., a Delaware corporation and all of
its subsidiaries ("Company"), and the secured parties signatory hereto and
their respective endorsees, transferees and assigns (collectively, the
"Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Party (the "Purchase Agreement"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 6% Callable Secured
Convertible Notes, due three years from the date of issue (the "Notes"), which
are convertible into shares of Company's Common Stock, par value $.001 per
share (the "Common Stock"). In connection therewith, Company shall issue the
Secured Party certain Common Stock purchase warrants (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the Notes,
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to it a first priority
security interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company's obligations under the
Notes and exercise and discharge in full of Company's obligations under the
Warrants.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "general intangibles" and "proceeds") shall have the respective
meanings given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Party
is granted a security interest by this Agreement and which shall include the
following, whether presently owned or existing or hereafter acquired or coming
into existence, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in
connection therewith:
(i) All Goods of the Company, including, without
limitations, all machinery, equipment, computers, motor vehicles, trucks,
tanks, boats, ships, appliances, furniture, special and general tools,
fixtures, test and quality control devices and other equipment of every kind
and nature and wherever situated, together with all documents of title and
documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Company's
businesses and all improvements thereto (collectively, the "Equipment"); and
(ii) All Inventory of the Company; and
(iii) All of the Company's contract rights and general
intangibles, including, without limitation, all partnership interests, stock
or other securities, licenses, distribution and other agreements, computer
software development rights, leases, franchises, customer lists, quality
control procedures, grants and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, copyrights, deposit
accounts, and income tax refunds (collectively, the "General Intangibles");
and
(iv) All Receivables of the Company including all
insurance proceeds, and rights to refunds or indemnification whatsoever owing,
together with all instruments, all documents of title representing any of the
foregoing, all rights in any merchandising, goods, equipment, motor vehicles
and trucks which any of the same may represent, and all right, title, security
and guaranties with respect to each Receivable, including any right of
stoppage in transit; and
(v) All of the Company's documents, instruments and
chattel paper, files, records, books of account, business papers, computer
programs and the products and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(iv) above.
(b) "Company" shall mean, collectively, Company and all of the
subsidiaries of Company, a list of which is contained in Schedule A, attached
hereto.
(c) "Obligations" means all of the Company's obligations under
this Agreement and the Notes, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and later
decreased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to time.
(d) "UCC" means the Uniform Commercial Code, as currently in
effect in the State of New York.
2. Grant of Security Interest. As an inducement for the Secured
Party to purchase the Notes and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing security interest
in, a continuing first lien upon, an unqualified right to possession and
disposition of and a right of set-off against, in each case to the fullest
extent permitted by law, all of the Company's right, title and interest of
whatsoever kind and nature in and to the Collateral, subject to any current
UCC-1 on file for the assets on the Company's subsidiary (the "Security
Interest").
3. Representations, Warranties, Covenants and Agreements of the
Company. The Company represents and warrants to, and covenants and agrees
with, the Secured Party as follows:
(a) The Company has the requisite corporate power and authority
to enter into this Agreement and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by the Company of this
Agreement and the filings contemplated therein have been duly authorized by
all necessary action on the part of the Company and no further action is
required by the Company. This Agreement constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally.
(b) The Company represents and warrants that it has no place of
business or offices where its respective books of account and records are kept
(other than temporarily at the offices of its attorneys or accountants) or
places where Collateral is stored or located, except as set forth on Schedule
A attached hereto;
(c) The Company is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Company in the ordinary course of
business), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security Interest in
and to pledge the Collateral, except as set forth on Schedule C. There is not
on file in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement, license or
transfer or any notice of any of the foregoing (other than those that have
been filed in favor of the Secured Party pursuant to this Agreement) covering
or affecting any of the Collateral, except as set forth on Schedule C. So
long as this Agreement shall be in effect, the Company shall not execute and
shall not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent
filed or recorded in favor of the Secured Party pursuant to the terms of this
Agreement), except as set forth on Schedule C.
(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or the
Company's use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company's claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Company's
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of
the Company, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) The Company shall at all times maintain its books of
account and records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth on Schedule A attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Party at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements and other necessary documents have been filed
and recorded and other steps have been taken to perfect the Security Interest
to create in favor of the Secured Party valid, perfected and continuing first
priority liens in the Collateral.
(f) This Agreement creates in favor of the Secured Party a
valid security interest in the Collateral securing the payment and performance
of the Obligations and, upon making the filings described in the immediately
following sentence, a perfected first priority security interest in such
Collateral. Except for the filing of financing statements on Form-1 under the
UCC with the jurisdictions indicated on Schedule B, attached hereto, no
authorization or approval of or filing with or notice to any governmental
authority or regulatory body is required either i) for the grant by the
Company of, or the effectiveness of, the Security Interest granted hereby or
for the execution, delivery and performance of this Agreement by the Company
or ii) for the perfection of or exercise by the Secured Party of its rights
and remedies hereunder.
(g) On the date of execution of this Agreement, the Company
will deliver to the Secured Party one or more executed UCC financing
statements on Form-1 with respect to the Security Interest for filing with
the jurisdictions indicated on Schedule B, attached hereto and in such other
jurisdictions as may be requested by the Secured Party.
(h) Except as set forth on Schedule C, the execution, delivery
and performance of this Agreement does not conflict with or cause a breach or
default, or an event that with or without the passage of time or notice, shall
constitute a breach or default, under any agreement to which the Company is a
party or by which the Company is bound. No consent (including, without
limitation, from stock holders or creditors of the Company) is required for
the Company to enter into and perform its obligations hereunder.
(i) The Company shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first priority
liens and security interests in the Collateral in favor of the Secured Party
until this Agreement and the Security Interest hereunder shall terminate
pursuant to Section 11. The Company hereby agrees to defend the same against
any and all persons. The Company shall safeguard and protect all Collateral
for the account of the Secured Party. At the request of the Secured Party,
the Company will sign and deliver to the Secured Party at any time or from
time to time one or more financing statements pursuant to the UCC (or any
other applicable statute) in form reasonably satisfactory to the Secured Party
and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Secured Party to be, necessary or desirable to effect
the rights and obligations provided for herein. Without limiting the
generality of the foregoing, the Company shall pay all fees, taxes and other
amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Company shall obtain and furnish to the Secured Party from
time to time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security Interest
hereunder.
(j) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted and sales made by
the Company in the ordinary course of business), sell or otherwise dispose of
any of the Collateral without the prior written consent of the Secured Party.
(k) The Company shall keep and preserve its Equipment,
Inventory and other tangible Collateral in good condition, repair and order
and shall not operate or locate any such Collateral (or cause to be operated
or located) in any area excluded from insurance coverage.
(l) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient detail, of
any substantial change in the Collateral, and of the occurrence of any event
which would have a material adverse effect on the value of the Collateral or
on the Secured Party's security interest therein.
(m) The Company shall promptly execute and deliver to the
Secured Party such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Party may from time to
time request and may in its sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including, without
limitation, the execution and delivery of a separate security agreement with
respect to the Company's intellectual property ("Intellectual Property
Security Agreement") in which the Secured Party has been granted a security
interest hereunder, substantially in a form acceptable to the Secured Party,
which Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions hereof.
(n) The Company shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time, and to make
copies of records pertaining to the Collateral as may be requested by the
Secured Party from time to time.
(o) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.
(p) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any
other information received by the Company that may materially affect the value
of the Collateral, the Security Interest or the rights and remedies of the
Secured Party hereunder.
(q) All information heretofore, herein or hereafter supplied to
the Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as of the date
furnished.
(r) Schedule A attached hereto contains a list of all of the
subsidiaries of Company.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Notes) under the Notes;
(b) Any representation or warranty of the Company in this
Agreement or in the Intellectual Property Security Agreement shall prove to
have been incorrect in any material respect when made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Intellectual Property Security Agreement for
ten (10) days after receipt by the Company of notice of such failure from the
Secured Party; and
(d) Any breach of, or default under, the Warrants.
5. Duty To Hold In Trust. Upon the occurrence of any Event of
Default and at any time thereafter, the Company shall, upon receipt by it of
any revenue, income or other sums subject to the Security Interest, whether
payable pursuant to the Notes or otherwise, or of any check, draft, note,
trade acceptance or other instrument evidencing an obligation to pay any such
sum, hold the same in trust for the Secured Party and shall forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Notes, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Party shall have the following rights and powers:
(a) The Secured Party shall have the right to take possession
of the Collateral and, for that purpose, enter, with the aid and assistance of
any person, any premises where the Collateral, or any part thereof, is or may
be placed and remove the same, and the Company shall assemble the Collateral
and make it available to the Secured Party at places which the Secured Party
shall reasonably select, whether at the Company's premises or elsewhere, and
make available to the Secured Party, without rent, all of the Company's
respective premises and facilities for the purpose of the Secured Party taking
possession of, removing or putting the Collateral in saleable or disposable
form.
(b) The Secured Party shall have the right to operate the
business of the Company using the Collateral and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such
place or places, and upon such terms and conditions as the Secured Party may
deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or
notice to the Company or right of redemption of the Company, which are hereby
expressly waived. Upon each such sale, lease, assignment or other transfer of
Collateral, the Secured Party may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and equities of
the Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Collateral, to the
reasonable attorneys' fees and expenses incurred by the Secured Party in
enforcing its rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations, and
to the payment of any other amounts required by applicable law, after which
the Secured Party shall pay to the Company any surplus proceeds. If, upon the
sale, license or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Party is legally
entitled, the Company will be liable for the deficiency, together with
interest thereon, at the rate of 15% per annum (the "Default Rate"), and the
reasonable fees of any attorneys employed by the Secured Party to collect such
deficiency. To the extent permitted by applicable law, the Company waives all
claims, damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Collateral, unless due to the
gross negligence or willful misconduct of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket
fees, costs and expenses incurred in connection with any filing required
hereunder, including without limitation, any financing statements,
continuation statements, partial releases and/or termination statements
related thereto or any expenses of any searches reasonably required by the
Secured Party. The Company shall also pay all other claims and charges which
in the reasonable opinion of the Secured Party might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein. The Company
will also, upon demand, pay to the Secured Party the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, which the Secured Party may incur in connection
with i) the enforcement of this Agreement, ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, or iii) the exercise or enforcement of any of the rights of the
Secured Party under the Notes. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Notes and shall bear interest at
the Default Rate.
9. Responsibility for Collateral. The Company assumes all
liabilities and responsibility in connection with all Collateral, and the
obligations of the Company hereunder or under the Notes and the Warrants shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party and
all Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: i) any lack of validity or enforceability of this Agreement,
the Notes, the Warrants or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; ii) any change in the time,
manner or place of payment or performance of, or in any other term of, all or
any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Notes, the Warrants or any other agreement entered into
in connection with the foregoing; iii) any exchange, release or nonperfection
of any of the Collateral, or any release or amendment or waiver of or consent
to departure from any other collateral for, or any guaranty, or any other
security, for all or any of the Obligations; iv) any action by the Secured
Party to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral;
or v) any other circumstance which might otherwise constitute any legal or
equitable defense available to the Company, or a discharge of all or any part
of the Security Interest granted hereby. Until the Obligations shall have
been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. The
Company expressly waives presentment, protest, notice of protest, demand,
notice of nonpayment and demand for performance. In the event that at any
time any transfer of any Collateral or any payment received by the Secured
Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to
be otherwise due to any party other than the Secured Party, then, in any such
event, the Company's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment
thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof. The Company waives all right to require the Secured Party to proceed
against any other person or to apply any Collateral which the Secured Party
may hold at any time, or to marshal assets, or to pursue any other remedy.
The Company waives any defense arising by reason of the application of the
statute of limitations to any obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest
shall terminate on the date on which all payments under the Notes have been
made in full and all other Obligations have been paid or discharged. Upon
such termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby
make, constitute and appoint it, and its respective officers, agents,
successors or assigns with full power of substitution, as the Company's true
and lawful attorney-in-fact, with power, in its own name or in the name of the
Company, to, after the occurrence and during the continuance of an Event of
Default, i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into
possession of the Secured Party; ii) to sign and endorse any UCC financing
statement or any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Collateral; iii) to pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against the
Collateral; iv) to demand, collect, receipt for, compromise, settle and ▇▇▇
for monies due in respect of the Collateral; and v) generally, to do, at the
option of the Secured Party, and at the Company's expense, at any time, or
from time to time, all acts and things which the Secured Party deems necessary
to protect, preserve and realize upon the Collateral and the Security Interest
granted therein in order to effect the intent of this Agreement, the Notes and
the Warrants, all as fully and effectually as the Company might or could do;
and the Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper
filing and recording places in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule B, attached hereto, all
such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured Party, to
perfect the Security Interest granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to the
Secured Party the grant or perfection of a security interest in all the
Collateral.
(c) The Company hereby irrevocably appoints the Secured Party
as the Company's attorney-in-fact, with full authority in the place and stead
of the Company and in the name of the Company, from time to time in the
Secured Party's discretion, to take any action and to execute any instrument
which the Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including the filing, in its sole discretion, of
one or more financing or continuation statements and amendments thereto,
relative to any of the Collateral without the signature of the Company where
permitted by law.
13. Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto,
and shall be deemed to have been duly given when i) if delivered by hand, upon
receipt, ii) if sent by facsimile, upon receipt of proof of sending thereof,
iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or iv) if mailed by first-class registered
or certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following
addresses:
If to the Company: M Power Entertainment, Inc.
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Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other
entity, then the Secured Party shall have the right, in its sole discretion,
to pursue, relinquish, subordinate, modify or take any other action with
respect thereto, without in any way modifying or affecting any of the Secured
Party's rights and remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured
Party, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Party, any right, power or privilege hereunder or under the
Notes shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) All of the rights and remedies of the Secured Party with
respect to the Collateral, whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be cumulative
and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement
specifically referring to this Agreement and signed by the parties hereto.
(d) In the event that any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision
of this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement
shall be considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the
laws of the State of New York, except to the extent the validity, perfection
or enforcement of a security interest hereunder in respect of any particular
Collateral which are governed by a jurisdiction other than the State of New
York in which case such law shall govern. Each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any New York State or
United States Federal court sitting in Manhattan county over any action or
proceeding arising out of or relating to this Agreement, and the parties
hereto hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal
court. The parties hereto agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. The parties
hereto further waive any objection to venue in the State of New York and any
objection to an action or proceeding in the State of New York on the basis of
forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT
AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY
AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION.
THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
M POWER ENTERTAINMENT, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
SCHEDULE A
Principal Place of Business of the Company:
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Locations Where Collateral is Located or Stored:
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
List of Subsidiaries of the Company:
-----------------------------------
Tropical Printing LLC, Florida
CoraZong Records The Netherlands
▇▇▇▇ ▇▇▇▇▇▇▇ Inc. California
M Power Futures Inc. Delaware
SCHEDULE B
Jurisdictions:
-------------
▇▇▇▇▇▇ County
Texas, USA
SCHEDULE C
None
----
