Document:

World of Tea Inc.: Exhibit 10.9 - Prepared by TNT Filings Inc.

  

 

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of September 12, 2007 (this "Agreement"), is between BroadWebAsia Inc., corporation incorporated under the laws of the British Virgin Islands (the "Company" or the "Debtor"), Lakewood Group, LLC (the "Secured Party"), the holder of the Company's Senior Secured Note, issued on September 12, 2007 in the original principal amount of $750,000 (the "Note"), and its endorsees, transferees and assigns.

WITNESSETH:

WHEREAS, pursuant to the Note, the Secured Party has agreed to extend the loans to the Company evidenced by the Note;

WHEREAS, in order to induce the Secured Party to extend the loans evidenced by the Note, the Debtor has agreed to execute and deliver to the Secured Party this Agreement and to grant the Secured Party a security interest in certain property of the Debtor to secure the prompt payment, performance and discharge in full of all of the Company's obligations under the Note.

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 (including the terms "account", "chattel paper", "commercial tort claim", "deposit account", "document", "equipment", "fixtures", "general intangibles", "goods", "instruments", "inventory", "investment property", "letter-of-credit rights", "proceeds", "securities" and "supporting obligations") 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 personal property of the Debtor, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, 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, and all dividends, • interest, cash, notes, securities, equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities (as defined below):

(i) All goods, including, without limitation, (A) 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 Debtor's businesses and all improvements thereto; and (B) all inventory, including all materials, work in process and finished goods;

 

(ii) All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution and other agreements, computer software (whether "off-the-shelf, licensed from any third party or developed by the Debtor), 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, and income tax refunds;

(iii) All accounts, 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 account, including any right of stoppage in transit;

(iv) All documents, letter-of-credit rights, instruments and chattel paper;

(v)  All commercial tort claims;

(vi) All deposit accounts and all cash (whether or not deposited in such deposit accounts);

(vii)     All investment property; 

(viii)   All supporting obligations;

(ix) All files, records, books of account, business papers, and computer programs; and

(x) the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

Without limiting the generality of the foregoing, the "Collateral" shall include all investment property and general intangibles respecting ownership and/or other equity interests in each subsidiary, including, without limitation, the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of the Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash.

 

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

(b) "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names. corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.

(c) "Necessary Endorsement" means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other instruments or documents as the Secured Party may reasonably request.

(d) "Obligations" means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, of the Debtor to the Secured Party under this Agreement, the Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, 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 increased, 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. Without limiting the generality of the foregoing, the term "Obligations" shall include, without limitation: (i) principal of, and interest on, the Note and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time to time under or in connection with this Agreement, the Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Debtor.

 

(e) "Organizational Documents" means, with respect to the Debtor, the documents by which the Debtor was organized (such as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of the Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

(f) "Pledged Securities" shall have the meaning ascribed to such term in Section 4(i).

(g) "UCC" means the Uniform Commercial Code of the State of New York and/or any other applicable law of any state or states which have jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term "Collateral" will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated herein, and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.

2. Grant of Security Interest in Collateral.  
As an inducement for the Secured Party to extend the loans as evidenced by the Note and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Party a security interest in and to, a lien upon, and a right of set-off against, all of its right, title and interest of whatsoever kind and nature in and to the Collateral (a "Security Interest" and collectively, the "Security Interests").

 

3.  Delivery of Certain Collateral.

(a) Contemporaneously with or prior to the execution of this Agreement, the Debtor shall deliver or cause to be delivered to the Secured Party (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary Endorsements. The Debtor is, contemporaneously with the execution hereof, delivering to the Secured Party, or has previously delivered to the Secured Party, a true and correct copy of each Organizational Document governing any of the Pledged Securities.

(b) Within 30 days of the date hereof, the Debtor shall deliver or caused to be delivered to the Secured Party an original certificate of registration of charge issued by the Register of Corporate Affairs in the British Virgin Islands (the "BNI Registrar") pursuant to Section 163 of the BVI Business Companies Act, 2004, together with a copy of its register of charges stamped as filed by the BNI Registrar.

4. Representations, Warranties, Covenants and Agreements of the Debtor.

Except as set forth under the corresponding section of the disclosure schedules delivered to the Secured Party concurrently herewith (the "Disclosure Schedules"), which Disclosure Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the Secured Party as follows:

(a) The Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this Agreement and the filings contemplated therein have been duly authorized by all necessary action on the part of the Debtor and no further action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes the legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles of equity.

(b) The Debtor has no place of business or offices where its books of account and records are kept (other than temporarily at the offices of their attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto. The Debtor owns of record, subject only to Permitted Liens (as defined in the Note), the real property where such Collateral is located, as identified on Schedule A. Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

(c) Except for Permitted Liens (as defined in the Note) and except as set forth on Schedule B attached hereto, the Debtor is the sole owner of the Collateral, free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except with respect to Permitted Liens (as defined in the Note) and except as set forth on Schedule B attached hereto, 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 will be filed in favor of the Secured Party pursuant to this Agreement) covering or affecting any of the Collateral. Except with respect to Permitted Liens (as defined in the Note), except as set forth on Schedule B attached hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtor shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing statement or other similar document or instrument (except to the extent filed or recorded in favor of the Secured Party pursuant to the terms of this Agreement).

 

(d) No written claim has been received by the Debtor that any Collateral or Debtor's use of any Collateral violates the rights of any third party. There has been no adverse decision to the Debtor's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Debtor'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 Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority.

(e) The Debtor shall at all times maintain its books of account and records relating to the Collateral at its registered office (except when temporarily kept at the offices of its attorneys or accountants) 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 under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor of the Secured Party, subject to Permitted Liens (as defined in the Note), a valid, perfected and continuing perfected first priority lien in the Collateral.

(f) This Agreement creates in favor of the Secured Party a valid security interest in the Collateral, subject only to Permitted Liens (as defined in the Note), securing the payment and performance of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing UCC financing statements shall have been duly perfected. Except for the filing of the UCC financing statements referred to in the immediately following paragraph, the recordation of the Intellectual Property Security Agreement (as defined below) (if any) with respect to copyrights and copyright applications in the United States Copyright Office referred to in paragraph (p), and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests created hereunder, Without limiting the generality of the foregoing, except for the filing of said financing statements and the recordation of said Intellectual Property Security Agreement, no consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement of the rights of the Secured Party hereunder.

 

(g) The Debtor hereby authorizes the Secured Party to file one or more financing statements under the UCC with respect to the Security Interests with the proper filing and recording agencies in any jurisdiction deemed proper by it, which UCC financing statement may describe the collateral as "All assets", or otherwise perfect the security interest granted herein (including filing and/or recording in the appropriate office in the British Virgin Islands). The Debtor covenants and agrees to enter into any agreement requested by the Secured Party to evidence the security interests granted hereunder, which agreement may be necessary or desirable to grant and/or perfect such security interests under the laws of the British Virgin Islands.

(h) The execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule or regulation applicable to the Debtor or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, of give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Debtor's debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.

(i) The capital stock and other equity interests listed on Schedule H hereto (the "Pledged Securities") represent all of the capital stock and other equity interests in the subsidiaries of the Company, and represent all capital stock and other equity interests owned, directly or indirectly, by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company is the legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests created by this Agreement and other Permitted Liens (as defined in the Note). The Debtor shall cause the pledge and security interest of the Secured Party to be duly noted in its corporate books and records.

(j) The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the "Pledged Interests") by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held in a securities account or by any financial intermediary.

(k) Except for Permitted Liens (as defined in the Note), the Debtor shall at all times maintain the liens and Security Interests 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 Interests hereunder shall be terminated pursuant to Section 14 hereof. The Debtor hereby agrees to defend the same against the claims of any and all persons and entities and to safeguard and protect all Collateral for the account of the Secured Party. At the reasonable request of the Secured Party, the Debtor 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 in form reasonably satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing is necessary to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interests hereunder, and the Debtor 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 in accordance with this Agreement the priority of the Security Interests hereunder.

 

(1) Except for Permitted Liens (as defined in the Note), the Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive licenses granted by the Debtor in its ordinary course of business and sales of inventory by the Debtor in its ordinary course of business) without the prior written consent of the Secured Party.

(m) The Debtor 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.

(n) The Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost thereof.

(o) The Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Party promptly, in sufficient detail, of any material adverse 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.

(p) The Debtor 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 reasonably request as necessary to perfect, protect or enforce the Secured Party's security interest in the Collateral including, without limitation, if applicable and requested in writing by the Secured Party, the execution and delivery of a separate security agreement with respect to the Debtor's Intellectual Property ("Intellectual Property Security Agreement") in which the Secured Party has been granted a security interest hereunder, substantially in a form reasonably 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.

 

(q) The Debtor shall permit the Secured Party and its representatives and agents access to inspect the Collateral during normal business hours, upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Secured Party from time to time.

(r) The Debtor shall 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.

(s) The Debtor 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 Debtor that would have a material adverse effect on the value of the Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.

(t) All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Debtor with respect to the Collateral is accurate and complete in all material respects as of the date furnished.

(u) The Debtor shall at all times preserve and keep in full force and effect its valid existence and good standing and any rights and franchises material to its businesses.

(v) The Debtor will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days' prior written notice to the Secured Party of such change and, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

(w) Except in the ordinary course of business and except for Permitted Liens (as defined in the Note), the Debtor may not consign any of its Inventory or sell any of its Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Secured Party, which shall not be unreasonably withheld.

(x) The Debtor may not relocate its chief executive office to a new location without providing 30 days' prior written notification thereof to the Secured Party and so long as, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

(y)      The Debtor was organized and remains organized solely under the laws of the state or other jurisdiction set forth next to the Debtor's name in Schedule D attached hereto, which Schedule D sets forth the Debtor's organizational identification number or, if the Debtor does not have one, states that one does not exist.

 

(z) (i) The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor has no trade names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated in the preamble hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into the Debtor or been acquired by the Debtor within the past five years except as set forth on  Schedule E.

(aa) At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to the Secured Party.

(bb) The Debtor, in its capacity as issuer, hereby agrees to comply with any and all reasonable orders and instructions of Secured Party regarding the Pledged Interests consistent with the terms of this Agreement without the further consent of the Debtor as contemplated by Section 8-106 (or any successor section) of the UCC. Further, the Debtor agrees that it shall not enter into a similar agreement (or one that would confer "control" within the meaning of Article 8 of the UCC) with any other person or entity.

(cc) The Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Secured Party, or, if such delivery is not commercially reasonable, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be "marked" within the meaning of Section 9-105 of the UCC (or successor section thereto).

(dd) If there is any investment property or deposit account included as Collateral that can be perfected by "control" through an account control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each case reasonably satisfactory to the Secured Party, to be entered into and delivered to the Secured Party.

(ee) To the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall endeavor to cause the issuer of each underlying letter of credit to consent to an assignment of the proceeds thereof to the Secured Party.

(ff) To the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Secured Party in notifying such third party of the Secured Party's security interest in such Collateral and shall endeavor to obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Secured Party.

 

(gg) If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Secured Party in a writing signed by the Debtor of the particulars thereof and grant to the Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Secured Party.

(hh) The Debtor shall promptly provide written notice to the Secured
Party of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the
Security Interests in such accounts and proceeds thereof, shall execute and deliver to the
Secured Party an assignment of claims for such accounts and cooperate with the Secured
Party in taking any other steps required under the Federal Assignment of Claims Act or
any similar foreign, federal, state or local statute or rule to perfect or continue the
perfected status of the Security Interests in such accounts and proceeds thereof.

(ii)      [Reserved]  

(jj)      [Reserved].

(kk) The Debtor shall use commercially reasonable efforts to cause each issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Party on the books of such issuer. Further, except with respect to certificated securities delivered to the Secured Party, the Debtor shall endeavor to deliver to the Secured Party an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered the pledge on its books and records; and (b) at any time directed by the Secured Party during the continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of any designee of the Secured Party, will take such steps as may be necessary to effect the transfer, and will comply with all other reasonable instructions of the Secured Party regarding such Pledged Securities without the further consent of the applicable Debtor.

(l1) In the event that, upon an occurrence of an Event of Default, the Secured Party shall sell all or any of the Pledged Securities to another party or parties (herein called the "Transferee") or shall purchase or retain all or any of the Pledged Securities, the Debtor shall, to the extent applicable: (i) deliver to the Secured Party or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational Documents and records of the Debtor and its direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtor and its direct and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by the Secured Party and allow the Transferee or Secured Party to continue the business of the Debtor and its direct and indirect subsidiaries.

 

(mm) Without limiting the generality of the other obligations of the Debtor hereunder, the Debtor shall promptly (i) cause to be registered at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded at the applicable office, and (iii) give the Secured Party notice whenever it acquires (whether absolutely or by license) or creates any additional material Intellectual Property.

(nn) The Debtor will from time to time, at the sole expense of the Debtor, promptly execute and deliver all such further instruments and documents, and take all such further action as may be necessary or desirable, or as the Secured Party may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

(oo). Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain names owned by the Debtor as of the date hereof. Schedule F lists all material licenses in favor of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtor have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtor have been duly recorded at the United States Copyright Office.

(pp) Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar foreign, federal, state or local statute or rule in respect of such Collateral.

5. Effect of Pledge on Certain Rights.  
If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of the Secured Party's rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which the Debtor is subject or to which the Debtor is party.

6. Defaults.  
The following events shall be "Events of Default":

(a) The occurrence of an Event of Default (as defined in the Note) under the Note;

 

(b) Any representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any material respect when made; or

(c) The failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to the Debtor of notice of such failure by or on behalf of the Secured Party unless such default is capable of cure but cannot be cured within such time frame and the Debtor is using best efforts to cure same in a timely fashion.

(d) If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that it has any liability or obligation purported to be created under this Agreement.

7. Duty To Hold In Trust.

(a) Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Note 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.

(b) If the Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any reorganization of the Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise), the Debtor agrees to (i) accept the same as the agent of the Secured Party; (ii) hold the same in trust on behalf of and for the benefit of the Secured Party; and (iii) deliver any and all certificates or instruments evidencing the same to the Secured Party on or before the close of business on the fifth business day following the receipt thereof by the Debtor, in the exact form received together with the Necessary Endorsements, to be held by the Secured Party subject to the terms of this Agreement as Collateral.

8.  Rights and Remedies Upon Default.

(a) Upon the 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 Note, and the Secured Party shall have all the rights and remedies of a secured party under the UCC. Without limitation, the Secured Party shall have the following rights and powers:

 

(i) The Secured Party shall have the right to take possession of the Collateral and, for that purpose, enter by reasonable means, 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 Debtor shall assemble the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably select, whether at the Debtor's premises or elsewhere, and make reasonably available to the Secured Party, without rent, all of the Debtor's premises and facilities for the purpose of the Secured Party taking possession of, removing or putting the Collateral in saleable or disposable form.

(ii) Upon written notice to the Debtor by the Secured Party, all rights of the Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise and all rights of the Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain, shall cease. Upon such notice, the Secured Party shall have the right to receive any interest, cash dividends or other payments on the Collateral and, at the option of the Secured Party, to exercise in the Secured Party's discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, the Secured Party shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as if it were the sole and absolute owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or the Debtor or any of its direct or indirect subsidiaries.

(iii) The Secured Party shall have the right to operate the business of the Debtor 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 commercially reasonable terms and conditions 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 Debtor, which are hereby waived and released.

(iv) The Secured Party shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make payments directly to the Secured Party, and to enforce the Debtor's rights against such account debtors and obligors.

 

(v) The Secured Party, may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment property to transfer the same to the Secured Party, or its designee.

(vi) The Secured Party may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Party or any designee or any purchaser of any Collateral.

(b) The Secured Party shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. The Secured Party may sell the Collateral without giving any warranties and may specifically disclaim such warranties. If the Secured Party sells any of the Collateral on credit, the Debtor will only be credited with payments actually made by the purchaser. In addition, the Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party's rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.

(c) For the purpose of enabling the Secured Party to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement or applicable law, the Debtor hereby grants to the Secured Party, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, license or sublicense following an Event of Default, any Intellectual Property now owned or hereafter acquired by the Debtor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

9. Applications of Proceeds.  The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy insuring any portion of the Collateral 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 reasonably incurred in connection therewith) of the Collateral, to the reasonable attorneys' fees and expenses incurred by the Secured Party in enforcing the Secured Party's 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 applicable Debtor 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 Debtor will be liable for the deficiency, together with interest thereon, at the default rate set forth in the Note (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 Debtor waives all claims, damages and demands against the Secured Party arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Party as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

10. Securities Law Provision. The Debtor recognizes that the Secured Party may be limited in its ability to effect a sale to the public of all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws (collectively, the "Securities Laws"), and may be compelled to resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof. The Debtor agrees that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the public, and that the Secured Party has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. The Debtor shall cooperate with the Secured Party in its reasonable attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if reasonably requested by the Secured Party) applicable to the sale of the Pledged Securities by the Secured Party.

11. Costs and Expenses.  The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Secured Party. The Debtor shall also pay all other claims and charges which would be reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor 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 Note or other Transaction Documents. Until so paid, any fees payable hereunder shall be added to the principal amount of the Note and shall bear interest at the Default Rate.

12. Responsibility for Collateral. The Debtor assumes all liabilities and responsibility in connection with all Collateral, and the Obligations 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. Without limiting the generality of the foregoing, (a) in no event shall the Secured Party (i) have any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) have any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by the Debtor thereunder. The Secured Party shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Secured Party or to which the Secured Party may be entitled at any time or times.

 

13. Security Interests Absolute. All rights and all obligations of the parties hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) 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 Note or any other agreement entered into in connection with the foregoing; (c) 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 guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel in its reasonable discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Debtor, or a discharge of all or any part of the Security Interests 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 Debtor 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 and to the extent thereof, the Debtor'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 Debtor waives all right to require the Secured Party to proceed against any other person or entity 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 Debtor hereby waives any defense arising by reason of the application of the statute of limitations of the obligations secured hereby.

14. Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Note have been indefeasibly paid in full and all other Obligations have been paid or discharged (other than contingent indemnification obligations).

15. Power of Attorney; Further Assurances.

(a) The Debtor authorizes the Secured Party, and does hereby make, constitute and appoint the Secured Party and its officers, agents, successors or assigns with full power of substitution, as the Debtor's true and lawful attorney-in-fact, with power, in the name of the Secured Party or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, 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 financing statement pursuant to the UCC or any invoice, freight or express bill, bill 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 sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Secured Party, and at the expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Secured Party deems necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Note all as fully and effectually as the Debtor might or could do; and the Debtor 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. The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which the Debtor is subject or to which the Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default, the Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.

 

(b) On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C 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 Interests 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 perfected security interest in all the Collateral under the UCC.

(c) The Debtor hereby irrevocably appoints the Secured Party as the Debtor's attorney-in-fact, with full authority in the place and stead of the Debtor and in the name of the Debtor, 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 Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as "all assets" or "all personal property" or words of like import, and ratifies all such actions taken by the Secured Party. 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.

 

16. Notices. Any demand upon or notice to the Debtor hereunder shall be effective when delivered by hand or when properly deposited in the mails postage prepaid, or sent by telex, answerback received, or electronic facsimile transmission, receipt acknowledged, or delivered to a telegraph company or overnight courier, in each case addressed to the Debtor at the address shown below or such other address as the Debtor may advise the Secured Party in writing. Any notice by the Debtor to the Secured Party shall be given as aforesaid, addressed to the Secured Party at the address shown below or such other address as the Secured Party may advise the Debtor in writing.

Secured Party:              Lakewood Group, LLC

152 West 57th Street, 54th Floor

 New York, NY 10019

  Fax:

Debtor:

         BroadWebAsia, Inc.

    
      9255 Sunset Blvd.

 West Hollywood, California 90069 Fax:

17. 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.

18. Miscellaneous.

(a) No course of dealing between the Debtor 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 Note 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 Note or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

(c) This Agreement, together with the exhibits and schedules hereto, the Note and the related agreements contemplated hereby and thereby contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtor and the Secured Party or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.

 

(d) If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(e) No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

(f) This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Party (other than by merger). The Secured Party may assign any or all of its rights under this Agreement to any Person to whom the Secured Party assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of this Agreement that apply to the "Secured Party."

(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) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. The Debtor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. The Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall be reimbursed by the other party for its reasonable attorney's fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such proceeding.

 

(i) 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.

(j)        [Intentionally omitted].

(k) The Debtor shall indemnify, reimburse and hold harmless the Secured Party and its partners, members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, "Indemnitees") from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in the Note, the Transaction Documents or any other agreement, instrument or other document executed or delivered in connection herewith or therewith.

(1) Nothing in this Agreement shall be construed to subject the Secured Party to liability as a partner in the Debtor or any of its direct or indirect subsidiaries that is a partnership or as a member in any of its direct or indirect subsidiaries that is a limited liability company, nor shall the Secured Party be deemed to have assumed any obligations under any partnership agreement or limited liability company agreement, as applicable, of the Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until the Secured Party exercises its right to be substituted for the Debtor as a partner or member, as applicable, pursuant hereto.

 

(m) To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval or action of any partner or member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or compliance with any provisions of any of the Organizational Documents, the Debtor hereby grants such consent and approval and waives any such noncompliance with the terms of said documents.

[SIGNATURE PAGES FOLLOW]

 

 

 

 

 

IN  WITNESS  WHEREOF, the parties hereto have caused this  Security Agreement to be duly executed on the day and year first above written.

 

 

 

24

 

 

 

25

 

DISCLOSURE SCHEDULES

SECURITY AGREEMENT

 

 

SCHEDULE A

 

9255 Sunset Blvd, Suite 1010 

West Hollywood, CA 90069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE B

 

 

Other Owners or Collateral or Lienholders

None

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE C  

California

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE D 

Legal Names and Organizational Identification Numbers

	

	
  
  NAME

	
  
  STAE OF ORGANIZATION

	
  
  ID#

	

	

	
  
  BroadWebAsia

	
  
  BVI

	
  
  685749

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE E 

 

Names; Mergers and Acquisitions

 

Only those specified on Schedule H

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE F 

 

Intellectual Property

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE G 

 

Account Debtors

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE H 

Pledged Securities

	
  
  Name Of Issuer

	
  
  Type of Securities

	
  
  No. of shares owned

	
  
  Percentage of Issuer owned

	
  
  Stock Certificate No.

	
  
  BBMAO

	
  
  Capital Stock

	
  
  545,536

	
  
  65%

	

	
  
  9E3

	
  
  PRC EJV

	

	
  
  50%

	

In addition, the following to-be-acquired companies have been provided bridge loans which are secured by either a pledge of securities, warrant to purchase shares and/or some other rights to purchase an ownership interest.

	
  
  Name Of Company

	
  
  Amount of Loans

	
  
  MOFILE

	
  
  $1,150,000

	
  
  HUBOTV

	
  
  $378,000

	
  
  ETE

	
  
  $50,000World of Tea Inc.: Exhibit 10.12 - Prepared by TNT Filings Inc.

  

EMPLOYMENT AGREEMENT 

This Agreement is made
effective as of the 31st day of January, 2007 (the "Effective
Date"), by and between BroadWebAsia, Inc., a British Virgin Islands
corporation, with its principal place of business located at 9255 Sunset Blvd,
Suite 1010, West Hollywood, California 90069 (the "Company"), and James
Iacabucci, an individual, residing at 2103 Sunset Plaza Drive, West Hollywood,
California 90069 (the "Employee"). 

WHEREAS,
Company has made an offer of employment to the Employee, and the Employee has
accepted such offer of employment on the terms and conditions set forth herein;
and 

WHEREAS,
the parties hereto each recognize that, in the course of the Employee’s
employment, the Employee has had and will have access to certain information
that is confidential and proprietary to the Company, the disclosure of which
would cause severe detriment to the Company and/or its affiliates; and 

WHEREAS, 
the parties desire to fix their respective rights and responsibilities as set
forth in this Agreement. 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants, terms and conditions
hereinafter set forth, and for other good and valuable consideration receipt of
which is specifically acknowledged, the parties hereto hereby agree as follows:

Section 1.

EMPLOYMENT

The Company hereby employs the Employee, and the Employee
hereby accepts employment, as Chief Operating Officer of the Company. 

Section 2. 

THE
EMPLOYEE’S DUTIES 

a.

The Employee hereby agrees to perform his duties on behalf of the Company
faithfully and honestly and to use his reasonable good faith efforts and ability
on behalf of the Company to perform the duties of the Employee’s position and
perform such duties and services as shall be specified and designated from time
to time by the Chief Executive Officer. In performance of his duties, Employee
shall report to the Chief Executive Officer. 

b.

The Employee’s duties shall include, without limitation, those customarily
associated with the position of chief operating officer of an internet
investment and operating company. 

c.

The Employee agrees that he shall, during the term of this Agreement, faithfully
serve the Company as a full-time employee and devote his business time,
attention and ability to his duties and responsibilities hereunder; provided,
however, that nothing contained herein shall be construed to prohibit or
restrict the Employee from serving in various capacities in community, civic,
religious or charitable organizations or trade associations or leagues; or
attending to passive personal business or investment matters; provided that no
such service or activity permitted in this Section 2(c) shall individually or in
the aggregate, either materially interfere with the performance by the Employee
of his duties hereunder or give rise to any conflict of interest or the
appearance of a conflict of interest with either the Company or any of its
affiliates. 

d.

The Employee agrees to enter into the Employee Confidentiality and Inventions
Agreement, a copy of which is attached as Exhibit A (the "Confidentiality
and Inventions Agreement"). 

e.

The Employee agrees to observe and comply with all lawful rules, regulations,
policies and practices adopted by the Company and made generally applicable to
all of the Company’s employees (or applicable to similarly situated employees),
either orally or in writing, both as they now exist and as they may be duly
adopted or modified from time to time, provided that in the event of a conflict
between this Agreement or its attachments and such rules, regulations, policies,
or practices, this Agreement shall govern and supercede the same. 

2

Section 3.

COMPENSATION
AND BENEFITS 

In
consideration for all services rendered by the Employee to the Company and as
consideration for the restrictive covenants referred to in Section 7 hereof,
Company hereby agrees to pay compensation to the Employee as follows: 

a.

During the term of this Agreement, commencing on the Effective Date, the Company
shall pay to the Employee, in accordance with the normal payroll practices of
the Company, but no less frequently than twice each month, a base salary ("Base
Salary") of Ninety Six Thousand Dollars ($96,000) per annum. The Company
shall make deductions and withholding from the amount payable to Employee as may
be required by federal, state or local law. The Company will endeavor to
effectuate direct deposit of Employee’s net pay. The Base Salary will be
increased to One Hundred and Fifty Thousand Dollars ($150,000) per annum upon
the closing of a round of financing of Five Million Dollars ($5,000,000) or
more. 

b.

During the term of this Agreement, commencing on the Effective Date, the
Employee shall receive three (3) weeks (fifteen (15) business days) of paid
vacation each year or such greater vacation, and such sick leave, life
insurance, major medical and hospitalization insurance and such other benefits,
if any, as may, from time to time, be provided by the Company to its officers,
in accordance with the Company’s plans, programs and policies, which the Company
may from time to time adopt and/or amend or modify, in each case, to the extent
that the Employee is eligible under the terms of such plans, programs and/or
policies. Employee acknowledges that he has been advised that the Company’s
policy does not provide for carryover of sick days and limits the maximum number
of vacation days that may accrue and be carried over to subsequent years. 

c.

In
addition to the foregoing, promptly following the Effective Date of this
Agreement, Employee will be issued three hundred forty five thousand (345,000)
shares of the Company’s capital stock (the "Shares"), which will be equal
to three percent (3%) of the issued and outstanding shares of the Company’s
capital stock immediately following the issuance of such Shares. Such Shares
will be subject to a restricted stock agreement substantially in the form of 
Exhibit B attached hereto, which provides for the vesting of such Shares and
gives the Company the right to repurchase unvested Shares for nominal
consideration upon the occurrence of certain events. 

3

d.

Within 30 days following the Effective Date of this Agreement, the Company and
Employee will negotiate in good faith and establish bonus amounts and the goals
or triggers (which may included, a successful capital raise by the Company and
both Company and individual performance based objectives) that must be achieved
in order to earn such amounts. 

Section 4.

EXPENSES

a.

The Company shall reimburse the Employee for reasonable and necessary expenses
incurred (i) in the ordinary course of conducting Company’s business and (ii) in
accordance with policies established, from time to time, by the Company. 

b.

The Employee shall submit expense reports accompanied by receipts or other
appropriate substantiation for all items of business expenses for which
reimbursement is sought. Expenses for which Employee is entitled to
reimbursement as provided herein shall be reimbursed within two (2) weeks of the
Employee’s submission as provided above. 

Section 5.

DURATION AND
TERMINATION 

a.

Unless terminated earlier pursuant to Section 5(b) hereof, the Employee’s
initial term of employment under this Agreement shall commence on the Effective
Date and shall continue until the first anniversary of the Effective Date (the "Initial
Term"). Employee’s employment under this Agreement shall thereafter
automatically renew for successive one quarter periods unless and until either
party shall have given the other party written notice of its election not to
renew the this Agreement at least thirty (30) days prior to any such anniversary
date. 

b. 

Notwithstanding
the provisions of Section 5(a) above, the Employee’s employment hereunder shall
terminate on the earliest of the following dates: 

(1) 

The date of death
of the Employee; 

(2)

Ten (10) days after the date on which the Company shall have given the Employee
written notice of the termination of his employment by reason of his physical or
mental incapacity or disability on a permanent basis. For purposes of the
Agreement the Employee shall be deemed to be physically or mentally
incapacitated or disabled on a permanent basis if he is unable to materially
and/or substantially perform his duties, with or without reasonable
accommodations, hereunder for a period exceeding two (2) consecutive months or
for a period of four (4) months in any twelve (12) consecutive month period;

4

(3)

Immediately upon the date the Company gives the Employee written notice of the
termination of his employment for "Cause". For purposes of the Agreement,
"Cause" shall mean (i) the conviction of the Employee of a crime involving a
sentence of incarceration or of a felony with or without a sentence of
incarceration; (ii) the commission of an act by the Employee constituting fraud,
embezzlement or other material financial dishonesty against the Company, or of
an act of moral turpitude which in the opinion of counsel to the Company would
constitute a crime under the laws of the United States or the state of
California and which, in case of any of the foregoing, in the good faith
judgment of the Company, is likely to cause harm to the business of the Company,
taken as a whole; (iii) the repeated refusal or failure by the Employee to use
his reasonable and diligent efforts to follow the lawful and reasonable
directives (in light of the terms of the Agreement) of the Chief Executive
Officer or Board of Directors with respect to a matter or matters within the
control of the Employee; (iv) Employee’s willful or gross neglect in carrying
out his material duties and responsibilities under the Agreement; or (v)
material breach by the Employee of any of the Restrictive Covenants as provided
in Section 7 hereof; 

(4)

Thirty (30) days after the date on which the Company shall have given the
Employee written notice of the termination of his employment for reasons other
than death, disability or for Cause; and/or 

(5) 

Thirty (30) days
after the date on which the Employee shall have given the Company written notice
of the termination of his employment. 

Section 6.

PAYMENTS AND
OTHER RIGHTS UPON TERMINATION 

a.

Termination of Employment for Cause or by Employee. If the Company
terminates the Employee’s employment for Cause pursuant Section 5(b)(3) or if
the Employee terminates his employment for any reason, the Employee shall be
entitled only to the Base Salary through the date of the Employee’s termination
for "Cause" pursuant to Section 5(b)(3) hereof and accrued vacation and other
employment benefits through the date of termination of his employment and any
other benefits legally required to be paid to the Employee. The Company shall
retain all other rights and remedies provided at law or in equity as a result of
such termination of employment. 

5

c.

Termination of Employment by the Company for Reasons Other Than Cause.
If, during the term of this Agreement, Employee’s employment is terminated due
to death or disability pursuant to Sections 5(b)(1) or (2) hereof, or if the
Company terminates the Employee’s employment pursuant to Section 5(b)(4) above,
Employee (or in the event of death, his estate or beneficiaries) shall be
entitled to receive, and the Company shall pay (a) the Base Salary earned
through the date of the Employee’s termination and accrued vacation and other
employment benefits through the date of termination of employment and (b) at the
times and in accordance with the Company’s normal payroll practices, severance
pay computed on the basis of Employee’s then existing Base Salary, for a period
of six (6) months following such termination (the "Severance Pay Period").
There shall be no severance pay under any other circumstances. In addition,
under such circumstances as severance pay would be payable, during the Severance
Pay Period, Company shall continue for the Employee, at the Company’s expense,
all major medical, hospitalization and health benefits, if any, covering the
Employee immediately prior to his employment termination during the Severance
Pay Period, or if earlier, until the date that the Employee commences other
employment pursuant to which the Employee receives comparable major medical,
hospitalization and health benefits. 

Section 7. 

RESTRICTIVE
COVENANTS 

a.

The Employee agrees to enter into the Confidentiality and Inventions Agreement.
The Employee expressly covenants and agrees that both while employed and for the
six (6) month period following the date of termination of the Agreement (the "Termination
Date"), the Employee shall not in any way, directly or indirectly, on the
Employee’s own behalf or on behalf of any other person, partnership, firm,
company, corporation or other entity, divert, take away, or attempt to take away
or divert from the Company any person, partnership, firm, company, corporation
or other entity (or their business or patronage) that is as of the Termination
Date a customer or business partner of the Company or has been a customer or
business partner of the Company or any affiliated companies within one (1) year
prior to the Termination Date. 

6

b.

The parties hereby agree that, if the scope or enforceability of the covenants
set forth in this Section 7 of the Agreement is in any way disputed at any time,
and a court or other trier of law and/or fact determines that any such covenant
is inequitably broad, or otherwise is unenforceably restrictive, then such court
or other trier of fact shall modify the obligations of Employee under the
restrictive covenant to the broadest restrictive obligations which are
enforceable and shall enforce the covenant to the extent legally permissible
under the circumstances existing at the time rather than eliminating any such
restrictive obligations entirely. Should a court or other trier of law and/or
fact equitably adjust the restrictive obligations contained in the Agreement,
the remainder of the Agreement shall remain in full force and effect. Employee
further acknowledges that in the event his employment with Company terminates
for any reason, he will be able to earn a livelihood without violating the
foregoing restrictions, in part because of the economic benefits he received
under the terms of this Agreement, and that the restrictions herein contained
are a material inducement to the Company to hire Employee and provide him with
the economic benefits hereunder, many of which, including the severance pay, are
not generally available to other employees of the Company. 

c.

Employee acknowledges that Employee’s compliance with this Section 7 of the
Agreement is necessary to protect the business and goodwill of Company and/or
its affiliates (which Employee acknowledges will impact on Company) and that a
breach of any provision of this Section 7 will irreparably and continually
damage the Company, for which money damages may not be adequate. Consequently,
Employee agrees that, in the event that he breaches or threatens to breach any
of these covenants, in addition to other rights and remedies existing in its
favor, including, without limitation, money damages, Company shall be entitled
to injunctive and other equitable relief, including, without limitation,
specific performance, in order to enforce or prevent any violation of the
provisions thereof. 

Section 8.

GOVERNING
LAW, DISPUTE RESOLUTION 

THE PROVISIONS
OF THER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF. Any controversy or dispute between any of
the parties to the Agreement arising out of any of the terms, provisions, or
conditions of the Agreement shall be submitted to arbitration in Los Angeles,
California, or another location agreed to by the parties. The arbitration shall
be heard before a retired Judge of the Los Angeles Superior Court, or from other
judicial jurisdiction agreed to by the parties or an attorney. The arbitration
shall be held before a single arbitrator and shall be binding with no right of
appeal. In the event that either party initiates arbitration pursuant to the
section, each party shall pay one-half of the fees and costs of the arbitration.
The prevailing party shall have the right, at the discretion of the arbitrator,
to recover its share of the arbitration fees and costs. The arbitration shall be
conducted pursuant to the Judicial Arbitration Rules of Court, California Rules
of Court, Rule 1600, et seq. The parties shall agree to the appointment of the
arbitrator within ten business days after the request for arbitration is
received. If the parties are unable to agree, either party may seek the
appointment of an arbitrator from the Los Angeles Superior Court. The parties
shall be entitled to reasonable discovery, including the production of documents
and other items as contemplated by Calif. CCP §1283.05; provided, that the
arbitrator may limit discovery in connection with a dispute as appropriate to
achieve the prompt and efficient disposition of the dispute while giving full
regard to the legitimate needs of the parties for discovery; provided, however,
that in no event shall such discovery process exceed a period of 60 days, unless
the arbitrator extends such period for good cause. The decision of the
arbitrator may be entered for judgment in any appropriate court in Los Angeles
County, California. 

7

Section 9.

ENTIRE
AGREEMENT 

The Agreement
supersedes and cancels any and all prior agreements between the parties hereto,
express or implied, relating to the subject matter hereof. The Agreement sets
forth the entire agreement between the parties hereto. It may not be changed,
altered, modified or amended except in a writing signed by both parties. 

Section 10.

NON-WAIVER

The failure or refusal
of either party to insist upon the strict performance of any provision of the
Agreement or to exercise any right in any one or more instances or circumstances
shall not be construed as a waiver or relinquishment of such provision or right.

Section 11.

ASSIGNMENT/NON-ASSIGNMENT 

Company may
assign the Agreement and any rights hereunder to any parent, subsidiary or
affiliate, whereupon such parent, subsidiary or affiliate shall have all the
rights, duties and obligations of Company hereunder. 

Any other transfer or
assignment of the Agreement and/or rights hereunder shall be subject to
Employee’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. The Employee shall have no right to assign any
of the rights, nor to delegate any of the duties, created by the Agreement, and
any assignment or attempted assignment of the Employee’s rights, and any
delegation or attempted delegation of the Employee’s duties, shall be null and
void. In all other respects, the Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, beneficiaries,
personal representatives, successors, officers and directors. 

8

Section
12. 

SEVERABILITY

If any paragraph, term
or provision of the Agreement shall be held or determined to be unenforceable,
the balance of the Agreement shall nevertheless continue in full force and
effect unaffected by such holding or determination to the fullest extent
permitted by law as though such paragraph, term or provision had been written in
such a manner and to such an extent as to be enforceable under the
circumstances. 

Section 13.

NOTICE

All notices
hereunder shall be in writing. Notices may be delivered personally, or by
certified mail return receipt requested, postage prepaid, to the addresses set
forth on the first page hereof. Either party may designate a new address for
purposes of the Agreement by notice to the other party in accordance with the
paragraph. 

9

IN WITNESS WHEREOF, the parties have
set their signatures hereto as of the Effective Date. 

	 	BROADWEBASIA, INC.
	 	 
	 	 
	 	
    By:/s/
	 	
    Its:
	 	 
	 	 
	 	 
	 	 
	 	
    /s/James Iacabucci
	 	
    JAMES IACABUCCI

10

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