Security Agreement

Exhibit 10.5

Exhibit E-1

Security Agreement

I.   Security Interest . For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Syzygy Entertainment, Ltd., a Nevada corporation (“Pledgor”), hereby assigns and grants to Shelter Island Opportunity Fund, LLC (“Secured Party”) a security interest in the Collateral (as hereinafter defined) to secure the payment and the performance of the Obligations (as hereinafter defined).

II.   Collateral . The pledge and security interest described above are granted in respect of the following collateral (the “Collateral”):

A.   Description of Collateral . All of Pledgor’s right, title, and interest, now owned or hereafter acquired, in and to _______ shares of Common Stock, par value $_____ per share (the “Shares”), of Rounders Ltd., a Turks and Caicos company (the “Company”), all certificates, options and rights of any nature whatsoever which may be issued or granted in respect of the Shares while this Agreement is in effect, and all dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledgor’s interest in the Shares.

B.   Proceeds . All additions, substitutes, replacements for and proceeds of the property described in Section II.A (including all income and benefits resulting from any of the above, including, without limitation, dividends or distributions payable or distributable in cash, property, or stock; interest, premium and principal payments; redemption proceeds, and subscription rights; and shares or other proceeds of conversions or splits of any securities in such property). Any securities received by Pledgor which shall constitute such additions, substitutes and replacements for, or proceeds of, the property described in Section II.A., shall, if delivered to Pledgor, be held in trust by Pledgor for the Secured Party and shall be delivered immediately to the Secured Party.  

III.   Obligations . The following obligations (collectively, the “Obligations”) are secured by this Agreement: all costs and expenses of collection incurred by the Secured Party in enforcing any of such Obligations, 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, of the Pledgor to the Secured Party, including, without limitation, all obligations under the Debenture, any Additional Debenture and each other Transaction Document, 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 Debentures and any Additional Debenture and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Pledgor from time to time under or in connection with the Debentures, any Additional Debenture and any other Transaction Documents; 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 Pledgor.

IV.   Pledgor’s Warranties . Pledgor hereby represents and warrants to the Secured Party as follows:

A.   Authority and Compliance . The Pledgor has full power and authority to execute and deliver this Agreement and to incur and perform the obligations provided for herein. No consent or approval of any governmental authority or other third party is or will be required as a condition to the enforceability of this Agreement, and the Collateral is and will be in compliance in all material respects with all laws and regulatory requirements to which it is subject.

B.   Binding Agreement . This Agreement is duly authorized, executed and delivered by the Pledgor and is enforceable against the Pledgor in accordance with its terms. The Collateral secures all of the Obligations, without limitation as to amount or the nature of the Obligations.

C.   Ownership . Pledgor is the sole record and beneficial owner of the Collateral and (i) the Collateral is and will be free and clear of any setoff, claim, restriction, pledge, lien, security interest, encumbrance or other charge of any type, except for the security interest created hereunder, (ii) the Shares were acquired in a transaction that complied with the requirements of the Securities Act of 1933, as amended, and all applicable state securities or “blue sky” laws and (iii) the Shares constitute all of the issued and outstanding shares of capital stock of the Company. The Shares have been duly authorized and validly issued and are fully paid and non-assessable.

D.   No Conflict . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the fulfillment of, nor the compliance with, the terms, conditions or provisions hereof nor the pledge of any Collateral, will conflict with, result in a breach of, or constitute a default under (i) any relevant statute, law, ordinance, rule or regulation applicable to Pledgor or the Collateral (including, without limitation, any of the foregoing issued or enforced by the Board) or (ii) any indenture, agreement or other instrument, or any judgment, order or decree, to which Pledgor is a party or by which any of its assets including, without limitation, the Collateral, may be bound. There is no litigation, claim or judicial, administrative or governmental proceeding of which Pledgor has been notified or, to the knowledge of Pledgor, threatened with respect to the Collateral, nor is there any basis for any such litigation, claim or proceeding.

E.   Security Interest . The pledge of the Collateral pursuant to this Agreement, together with the delivery to the Secured Party of certificates with respect to the Shares and stock powers in blank with respect thereto, creates a valid and perfected first priority security interest in the Collateral, securing the payment of the Obligations.

F.   Financing Statements . No financing statement or similar instrument covering the Collateral is or will be on file in any public office, and no security interest, other than the one herein created, has attached or been perfected in the Collateral or any part thereof.

V.   Pledgor’s Covenants . Until full payment and performance of all of the Obligations, unless the Secured Party otherwise consents in writing:

A.   Rights to Collateral . Pledgor shall defend the Collateral against all claims and demands of all persons at any time claiming any interest therein adverse to the Secured Party. Pledgor shall keep the Collateral free from all claims, restrictions, encumbrances, security interests, pledges, liens, demands or charges of any type, except the security interest hereby created. Pledgor shall not lease, lend, assign, or otherwise hypothecate, pledge or encumber the Collateral or any interest therein. Without Secured Party’s prior written consent, Pledgor shall not consent to the amendment to any document, instrument or agreement governing the terms of the Collateral or the rights of Pledgor with respect thereto.

B.   Sale of Collateral . Without the prior written consent of the Secured Party, Pledgor shall not sell or otherwise dispose of the Collateral or any part thereof.

C.   Secured Party’s Costs . Pledgor shall pay all costs necessary to obtain, create, preserve, perfect, defend and enforce the security interest created by this Agreement, collect the Obligations, and preserve, defend, enforce and collect the Collateral, including but not limited to taxes, assessments, reasonable attorney’s fees, legal expenses and expenses of sales. Whether the Collateral is or is not in the Secured Party’s possession, and without any obligation to do so and without waiving Pledgor’s default for failure to make any such payment, the Secured Party at its option may pay any such costs and expenses and discharge encumbrances on the Collateral, and such payments shall be a part of the Obligations and bear interest at the rate set out in the documents evidencing the Obligations. Pledgor agrees to reimburse the Secured Party on demand for any costs so incurred.

D.   Information and Inspection . Pledgor shall (i) promptly furnish to the Secured Party any information with respect to the Collateral requested by the Secured Party; (ii) allow the Secured Party or its representatives to inspect and copy, or furnish to the Secured Party or its representatives with copies of, all records relating to the Collateral and the Obligations; and