Exhibit
      10.2

     

    SECURITY
      AGREEMENT

     

    This
      Security Agreement (“Agreement”)
      is
      made and entered into as of the 15th day of July, 2008 by and between ZVUE
      CORPORATION (“Debtor”),
      a
      Delaware corporation, in favor of CARL PAGE (“Secured
      Party”).
      The
      parties hereby agree as follows:

     

    1. Definitions.
      All
      capitalized terms used herein shall, unless otherwise defined herein, have
      the
      meanings set forth below or set forth in the Loan Agreement defined
      below.

     

    (a) “Collateral”
means
      all of the following: 

     

    (i) Debtor’s
      inventory of Products (defined below) in all its forms, wherever located,
      whether now owned or hereafter acquired, including, but not limited to, all
      goods, wares, merchandise, parts, supplies, finished products, other tangible
      personal property, including such inventory as is temporarily out of Company’s
      custody or possession and including any returns upon any accounts or other
      proceeds, and all accessions thereto and products thereof and documents therefor
      (any and all such inventory, accessions, products and documents being the
“Product
      Inventory”);

     

    (ii) All
      accounts and other receivables of Debtor arising from the sale of the Products,
      and other receivables, instruments or other forms of obligations and rights
      to
      payment of the Company and all other obligations due or to become due to Debtor
      in connection with the sale of the Products (the “Product
      Receivables”),
      together with the proceeds thereof, all goods represented by such Product
      Receivables and all such goods that may be returned by Debtor’s customers, and
      all proceeds of any insurance thereon, and all guarantees, securities and lines
      which the Company may hold for the payment of such Product Receivables
      including, without limitation, all rights of stoppage in transit, replevin
      and
      reclamation and as an unpaid vendor and/or lienor; and

     

    (iii) All
      proceeds and products of any and all of the foregoing Collateral and, including
      but not limited to, all payments under insurance or in connection with any
      indemnity, warranty or guarantee payable by reason of loss or damage to or
      otherwise with respect to any of the foregoing Collateral.

     

    (b) “Event
      of Default”
means
      an event described in Section 5.

     

    (c) “Obligations”
shall
      have the meaning ascribed to that term in the Loan Agreement.

     

    (d) “Loan
      Agreement”
shall
      mean that certain Loan Agreement entered into between Debtor and Secured Party
      dated as of the date hereof. “Loan
      Documents”
mean
      the Loan Documents defined in the Loan Agreement.

     

    (e) “Lien”
means
      any voluntary or involuntary security interest, mortgage, pledge, claim, charge,
      encumbrance, title retention agreement, or third party interest covering all
      or
      any part of the property of Debtor or any other Person.

     

    (f) “Products”
mean
      the Products defined in the Loan Agreement and specifically identified in
Schedule
      1
      thereof,
      and any other Products that are the subject of an Approved Purchase
      Order.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) “Secured
      Promissory Note”
shall
      have the meaning ascribed to it in the Loan Agreement.

     

    (h) “Person”
means
      any individual or entity.

     

    (i) “Remittance
      Account”
shall
      have the meaning ascribed to it in Section 3, below.

     

    (j) “Senior
      Lender”
means
      YA Global Investments, L.P., its successors and assigns.

     

    2. Grant
      of Security Interest.
      Debtor
      hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to
      Secured Party, and hereby grants to Secured Party a first-priority security
      interest in all of Debtor’s right, title and interest in, to and under the
      Collateral, whether now owned or hereafter acquired, to secure the full, prompt,
      complete and final performance and payment of the Obligations when due (whether
      at stated maturity, by acceleration or otherwise).

     

    3. Remittance
      Account.
      Debtor
      shall instruct Retailer to deposit and Debtor shall deposit all proceeds from
      the sale of the Products to a remittance account (the “Remittance
      Account”)
      identified in writing by Secured Party and controlled by Secured Party. Funds
      deposited into the Remittance Account shall be applied by Secured Party as
      follows:

     

    First,
      to
      Secured Party in an amount sufficient to pay in full Secured Party’s costs and
      professionals’ and advisors’ fees and expenses as described in Section 8.3(a) of
      the Loan Agreement;

     

    Second,
      to
      Secured Party in an amount equal to the then unpaid amount of the Obligations
      (including principal, interest, and the Transaction Fees), in such order and
      priority as Secured Party may choose in its sole discretion; and

     

    Finally,
      after
      the full, final, and indefeasible payment in cash of all of the Obligations,
      to
      Debtor or its representatives or as a court of competent jurisdiction may
      direct.

     

    Secured
      Party shall utilize its commercially reasonable best efforts to distribute
      all
      funds from the Remittance Account that are payable to Debtor within one (1)
      business day after deposit.

     

    4. Representations,
      Warranties and Covenants.
      Debtor
      hereby represents, warrants, covenants and agrees as follows:

     

    (a) Except
      for the security interest granted hereby, Debtor is or will be the only owner
      of
      all of the Collateral free from any adverse lien, security interest or
      encumbrance and Debtor will defend the Collateral against all claims and demands
      of all persons other than Secured Party. Debtor has obtained necessary
      authorization and all consents required to permit granting and perfecting of
      Secured Party’s first-priority security interest in the Collateral. Upon filing
      of the amendment to Senior Lender’s UCC-1 filing referred to in Section 3.6 of
      the Loan Agreement, or upon execution of the intercreditor or subordination
      agreement referred to therein, no effective security agreement, financing
      statement, equivalent security or lien instrument or continuation statement
      covering all or any part of the Collateral shall exist. Debtor shall not,
      directly or indirectly, create, permit or suffer to exist, and shall defend
      the
      Collateral against and take such other action as is necessary to remove, any
      Lien on the Collateral.

     

    
      
        
        

      

      
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    (b) Except
      for the sale of Products by Debtor to Retailer, Debtor, its agents, servants
      or
      employees will not sell, assign, encumber or offer to sell, assign, encumber
      or
      otherwise transfer any Collateral either in whole or in part.

     

    (c) Debtor
      will maintain the Product Inventory in good condition and repair, reasonable
      wear and tear excepted, and will pay and discharge prior to delinquency all
      taxes, levies and other impositions levied on or against the Product Inventory.
      Prior to the transfer of the Product Inventory to Retailer, Secured Party may
      examine and inspect the Product Inventory at any time wherever
      located.

     

    (d) Debtor
      will insure the Collateral against such risks and casualties and in such amounts
      as may be required to satisfy in full all Obligations to Secured Party. Each
      such policy shall name Secured Party as an additional insured. Policies or
      certificates evidencing such insurance shall be furnished to Secured Party.
      

     

    (e) Debtor
      agrees to execute and deliver to Secured Party, at Debtor’s expense, such UCC 1
      Financing Statements and other documents in forms reasonably acceptable to
      Secured Party as Secured Party may from time to time reasonably request or
      as
      are necessary in the opinion of Secured Party to establish and maintain a valid,
      perfected first-priority security interest in the Collateral. Debtor authorizes
      Secured Party to file or record, as the case may be, any such UCC-1 Financing
      Statements or other documents without signature of Debtor.

     

    (f) Debtor
      will at all times keep accurate and complete records of any proceeds received
      from the Collateral and the payment and performance of the respective account
      debtors and all other parties obligated on the Product Receivables.

     

    (g) This
      Security Agreement creates a legal and valid security interest on and in all
      of
      the Collateral in which Debtor now has rights and will create a legal and valid
      security interest in the Collateral in which Debtor later acquires
      rights.

     

    (h) Debtor
      shall not change its jurisdiction of organization, relocate its chief executive
      office, principal place of business or its records without 30 days prior written
      notice to Secured Party.

     

    (i) At
      any
      time and from time to time, upon the written request of Secured Party, and
      at
      the sole expense of Debtor, Debtor shall promptly and duly execute and deliver
      any and all such further instruments and documents and take such further action
      as Secured Party may reasonably deem necessary or desirable to obtain the full
      benefits of this Security Agreement, including, without limitation, (a) using
      its best efforts to secure all consents and approvals necessary or appropriate
      for the grant of a security interest to Secured Party in any item of Collateral
      held by Debtor or in which Debtor has any right or interest, (b) transferring
      the Collateral to Secured Party’s possession (if a security interest in such
      Collateral can be perfected only by possession), (c) at Secured Party’s
      reasonable request, executing and delivering or causing to be delivered written
      notice to insurers of Secured Party’s security interest in, or claim in or
      under, any policy of insurance (including unearned premiums) and (d) at Secured
      Party’s reasonable request, using its best efforts to obtain acknowledgments
      from bailees having possession of any Collateral and waivers of liens from
      landlords and mortgagees of any location where any of the Collateral may from
      time to time be stored or located. If any amount payable under or in connection
      with any of the Collateral is or shall become evidenced by any Instrument,
      such
      Instrument, other than checks and notes received in the ordinary course of
      business and any Instrument in the outstanding or stated amount of less than
      $10,000, shall be duly endorsed in a manner reasonably satisfactory to Secured
      Party and delivered to Secured Party promptly and in any event within five
      (5)
      business days of Debtor’s receipt thereof.

     

    
      
        
        

      

      
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    5. Default.
      Debtor
      shall be in default under this Agreement upon the happening of any of the
      following events or conditions (“Events
      of Default”):

     

    (a) The
      occurrence of any Event of Default defined in the Loan Agreement; 

     

    (b) The
      material breach of any covenant, representation or warranty made by the Debtor
      herein, or the determination by the Secured Party that any representation or
      warranty made by the Debtor herein was incorrect in any material respect when
      given; and

     

    (c) Loss,
      theft, damage or destruction to or of a material portion of the
      Collateral.

     

    6. Rights
      and Remedies Upon Default.
      

     

    (a) Upon
      occurrence and during the continuance of an Event of Default, Secured Party
      may
      at its option accelerate Debtor’s payment obligations under the Secured
      Promissory Note and shall have, in addition to all other rights and remedies
      under the Loan Documents and applicable law, the rights and remedies of a
      secured party under the California Commercial Code, including, without
      limitation, the right to take possession of and/or sell the Collateral. Without
      limiting the generality of the foregoing, Debtor expressly agrees that in any
      such event Secured Party, without demand of performance or other demand,
      advertisement or notice of any kind (except the notice specified below of time
      and place of public or private sale) to or upon Debtor or any other person
      (all
      and each of which demands, advertisements and notices are hereby expressly
      waived to the maximum extent permitted by the UCC and other applicable law),
      may
      (i) reclaim, take possession, recover, store, maintain, finish, repair, prepare
      for sale or lease, shop, advertise for sale or lease and sell or lease (in
      the
      manner provided herein) the Collateral, and in connection with the liquidation
      of the Collateral and collection of the accounts receivable pledged as
      Collateral, use any trademark, copyright, or process used or owned by Debtor
      and
      (ii) forthwith collect, receive, appropriate and realize upon the Collateral,
      or
      any part thereof, and may forthwith sell, lease, assign, give an option or
      options to purchase or sell or otherwise dispose of and deliver said Collateral
      (or contract to do so), or any part thereof, in one or more parcels at public
      or
      private sale or sales, at any exchange or broker’s board or at any of Secured
      Party’s offices or elsewhere at such prices as it may deem best, for cash or on
      credit or for future delivery without assumption of any credit risk. For that
      purpose, Secured Party may, so far as Debtor can give authority therefor, enter
      upon any premises on which the Collateral may be located or situated in and
      remove the same therefrom without liability for rent, storage or other costs.
      Upon request, Debtor shall assemble and make the Collateral available to Secured
      Party at a place to be designated by Secured Party, which is reasonably
      convenient to Secured Party. 

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default, Secured Party
      may
      sell all or any part of the Collateral, at public or private sales, at such
      price or prices as Secured Party may deem commercially reasonable. To the extent
      permitted by law, Debtor specifically waives all rights of redemption and any
      rights of stay or appraisal which it has or may have under any applicable law
      in
      effect from time to time. Any such public or private sales shall be held at
      such
      times and at such place(s) as Secured Party may determine. Secured Party may,
      instead of exercising its power of sale, proceed to enforce its security
      interest in the Collateral by seeking a judgment or decree of a court of
      competent jurisdiction. To the maximum extent permitted by applicable law,
      Debtor waives all claims, damages, and demands against Secured Party arising
      out
      of the repossession, retention or sale of the Collateral. Debtor agrees that
      Secured Party need not give more than ten (10) days’ notice of the time and
      place of any public sale or of the time after which a private sale may take
      place and that such notice is reasonable notification of such matters. Debtor
      shall remain liable for any deficiency if the proceeds of any sale or
      disposition of the Collateral are insufficient to pay all amounts to which
      Secured Party is entitled from Debtor, Debtor also being liable for the attorney
      costs of any attorneys employed by Secured Party to collect such deficiency.
      Debtor agrees that in any sale of any of such Collateral, whether at a
      foreclosure sale or otherwise, Secured Party is hereby authorized to comply
      with
      any limitation or restriction in connection with such sale as it may be advised
      by counsel is necessary in order to avoid any violation of applicable law
      (including compliance with such procedures as may restrict the number of
      prospective bidders and purchasers, require that such prospective bidders and
      purchasers have certain qualifications and restrict such prospective bidders
      and
      purchasers to persons who will represent and agree that they are purchasing
      for
      their own account for investment and not with a view to the distribution or
      resale of such Collateral), or in order to obtain any required approval of
      the
      sale or of the purchaser by any governmental authority, and Debtor further
      agrees that such compliance shall not result in such sale being considered
      or
      deemed not to have been made in a commercially reasonable manner, nor shall
      Secured Party be liable nor accountable to Debtor for any discount allowed
      by
      the reason of the fact that such Collateral is sold in compliance with any
      such
      limitation or restriction.

     

    
      
        
        

      

      
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    (c) In
      addition to the remedies described above, Debtor shall, upon request of Secured
      Party, and Secured Party itself may, in the name of Secured Party or Debtor,
      at
      any time after an Event of Default notify the account debtor or other obligor
      on
      any Product Receivable of Secured Party’s security interest. Secured Party may,
      in its own name or the name of the Debtor, at any time after the occurrence
      and
      during the continuation of an Event of Default hereunder, demand, sue for,
      collect or receive any money or property payable or receivable on any Product
      Receivable and settle, release, compromise, adjust, sue upon, foreclose, realize
      upon or otherwise enforce any Product Receivable as Secured Party may determine.
      

     

    (d) For
      the
      purpose of protecting and preserving the Collateral and Secured Party’s rights
      under this Agreement, Debtor hereby irrevocably appoints Secured Party, with
      full power of substitution, as its attorney-in-fact with full power of
      authority, after the occurrence and during the continuance of any Event of
      Default, to do any act which Debtor is obligated to do hereunder. Debtor hereby
      ratifies all that Secured Party shall lawfully do or cause to be done by virtue
      of this appointment.

     

    (e) Debtor
      also agrees to pay all fees, costs and expenses of Secured Party, including,
      without limitation, attorneys’ fees, incurred in connection with the enforcement
      of any of its rights and remedies hereunder.

     

    (f) Debtor
      hereby waives presentment, demand, protest or any notice (to the maximum extent
      permitted by applicable law) of any kind in connection with this Security
      Agreement or any Collateral.

     

    
      
        
        

      

      
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    (g) The
      proceeds of any sale, disposition or other realization upon all or any part
      of
      the Collateral shall be distributed by Secured Party in the following order
      of
      priorities:

     

    First,
      to
      Secured Party in an amount sufficient to pay in full Secured Party’s costs and
      professionals’ and advisors’ fees and expenses as described in Section 8.3(a) of
      the Loan Agreement;

     

    Second,
      to
      Secured Party in an amount equal to the then unpaid amount of the Obligations
      (including principal, interest, and the Transaction Fees), in such order and
      priority as Secured Party may choose in its sole discretion; and

     

    Finally,
      after
      the full, final, and indefeasible payment in cash of all of the Obligations,
      to
      any creditor holding a junior lien on the Collateral, or to Debtor or its
      representatives or as a court of competent jurisdiction may direct.

     

    (h) Secured
      Party shall be deemed to have acted reasonably in the custody, preservation
      and
      disposition of any of the Collateral if it takes such action as Debtor requests
      in writing except during an Event of Default, but failure of Secured Party
      to
      comply with any such request shall not in itself be deemed a failure to act
      reasonably, and no failure of Secured Party to do any act not so requested
      shall
      be deemed a failure to act reasonably.

     

    7. Indemnity.
      Debtor
      agrees to defend, indemnify and hold harmless Secured Party and its officers,
      employees, and agents against (a) all obligations, demands, claims, and
      liabilities claimed or asserted by any other party in connection with the
      transactions contemplated by this Security Agreement and (b) all losses or
      expenses in any way suffered, incurred, or paid by Secured Party as a result
      of
      or in any way arising out of, following or consequential to transactions between
      Secured Party and Debtor, whether under this Security Agreement or otherwise
      (including without limitation, reasonable attorneys fees and expenses), except
      for losses arising from or out of Secured Party’s gross negligence or willful
      misconduct.

     

    8. Notices.
      Any
      notice to any party hereto shall be given in accordance with the terms of
      Section 8.12 of the Loan Agreement.

     

    9. Governing
      Law.
      This
      Agreement shall be governed and interpreted in accordance with the laws of
      the
      State of California, including without limitation the California Commercial
      Code.

     

    10. Counterparts.
      This
      Agreement may be signed in one or more counterparts, each of which shall be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    11. Binding
      Effect.
      This
      Agreement shall be binding upon Debtor, its successors, representatives and
      assigns, and shall inure to the benefit of Secured Party and its successors
      and
      assigns.

     

    12. Rights
      Cumulative.
      All
      rights and remedies existing under this Agreement are cumulative to, and not
      exclusive of, any other rights and remedies available under contract or
      applicable law.


    
      
        
        

      

      
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    13. Unenforceable
      Provisions.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall be so only as to such jurisdiction and only to the extent
      of
      such prohibition or unenforceability, but all of the remaining provisions of
      this Agreement shall remain valid and enforceable.

     

    14. Termination.
      After
      expiration of the Maturity Date (as defined in the Loan Documents) and upon
      the
      payment in full and satisfaction of all of the Obligations, the security
      interest granted hereby shall terminate and all rights to the Collateral shall
      revert to Debtor. Upon any such termination, Secured Party shall, at Debtor’s
      expense, execute and deliver to Debtor such documents as Debtor shall reasonably
      request to evidence such termination.

     

    15. Non-Waiver.
      Waiver
      of or acquiescence in any default by Debtor, or failure of Secured Party to
      insist upon strict performance by Debtor of any representation, warranty or
      covenant set forth in this Agreement or any of the Loan Documents shall not
      constitute a waiver of any subsequent or other default or failure.

     

    16. Entire
      Agreement.
      This
      Agreement is intended by Debtor and Secured Party as the final expression of
      Debtor’s obligations to Secured Party in connection with the Collateral and
      supersedes all prior understandings and agreements concerning the subject matter
      hereof. This Agreement may be amended only by a writing signed by Debtor and
      Secured Party.

     

    17. Reinstatement.
      This
      Security Agreement shall remain in full force and effect and continue to be
      effective should any petition be filed by or against Debtor for liquidation
      or
      reorganization, should Debtor become insolvent or make an assignment for the
      benefit of creditors or should a receiver or trustee be appointed for all or
      any
      significant part of Debtor’s property and assets, and shall continue to be
      effective or be reinstated, as the case may be, if at any time payment and
      performance of the Obligations, or any part thereof, is, pursuant to applicable
      law, rescinded or reduced in amount, or must otherwise be restored or returned
      by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
      had not been made. In the event that any payment, or any part thereof, is
      rescinded, reduced, restored or returned, the Obligations shall be reinstated
      and deemed reduced only by such amount paid and not so rescinded, reduced,
      restored or returned.

     

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

     

    
      	
              Secured
                Party:

            	 	
              Debtor:

              ZVUE
                CORPORATION

            
	 	 	 
	 	
              By:

            	
              /s/
                Jeff Oscodar 

            
	
              /s/
                Carl Page 

            	
            	 	
              Its:
                President
                & CEO

            
	
              CARL
                PAGE

            	 	 


    

     

    
      
        
        

      

      
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