PARADISE MUSIC & ENTERTAINMENT INC
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>c32286_ex10-7.txt
<TEXT>

                                                                    EXHIBIT 10.7

                               SECURITY AGREEMENT
                               ------------------

       THIS SECURITY  AGREEMENT dated as of April 12, 2004 (this "Agreement") by
and between  MME,  Inc.,  a New Jersey  corporation  (the  "Secured  Party") and
PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware corporation having an office at
PMB 300 1630 A 30th Street, Boulder, Colorado 80301 (the "Debtor").

                              W I T N E S S E T H:
                              - - - - - - - - - -


       WHEREAS,  pursuant  to a certain  loan  agreement  dated as of (the "Loan
Agreement")  Secured Party loaned the principal sum of $880,000.00  (the "Loan")
to Debtor;

       WHEREAS,  pursuant  to a  certain  promissory  note  dated as of the date
hereof (the  "Promissory  Note") issued by Debtor to Secured  Party,  Debtor has
agreed to pay to Secured Party the Loan in accordance with the terms thereof;

       WHEREAS,  in connection  with the execution,  delivery and performance of
the Loan Agreement and Promissory Note,  Debtor has agreed to provide to Secured
Party security for its obligations  under the Loan Agreement and Promissory Note
in accordance with the terms hereof.

       NOW, THEREFORE, in consideration of the mutual benefits to be derived and
the  representations  and warranties,  conditions and promises herein contained,
and intending to be legally bound hereby, the parties hereto agree as follows:

       1.     GRANT OF SECURITY INTEREST.  As collateral security for the prompt
and complete payment and performance  when due (whether at stated  maturity,  by
acceleration  or  otherwise)  of all the  Secured  Obligations  (as  hereinafter
defined)  and to induce  Secured  Party to make the Loan to Debtor  contemplated
under the Promissory  Note in accordance  with the terms thereof,  Debtor hereby
assigns,  conveys,  mortgages,  pledges,  hypothecates  and transfers to Secured
Party,  and hereby  grants to Secured  Party,  a  security  interest  in, all of
Debtor's assets,  wherever located,  whether now owned or hereafter  acquired or
arising,  and  all  proceeds  and  products  thereof  (all  of  the  same  being
hereinafter called the "Collateral"), including without limitation, all personal
and  fixture  property  of every kind and nature,  goods  (including  inventory,
equipment and any accessions thereto), instruments (including promissory notes),
documents,  accounts,  chattel paper (whether  tangible or electronic),  deposit
accounts,  letter-of-credit  rights  (whether  or not the  letter  of  credit is
evidenced  by a  writing),  commercial  tort  claims,  securities  and all other
investment property, supporting obligations, any other contract rights or rights
to the payment of money, insurance claims and proceeds,  tort claims,  software,
copyrights,  trademarks  and all  general  intangibles  (including  all  payment
intangibles).

       2.     PROTECTION OF COLLATERAL.  (i) For so long as the Promissory  Note
remains unpaid, Debtor shall:

<PAGE>


              (a)    timely  pay all  taxes  levied  upon all or any part of the
                     Collateral;

              (b)    keep the Collateral in good repair and condition;

              (c)    not  suffer or permit  the  Collateral  to be  attached  or
                     seized and defend  title to the  Collateral  against  third
                     parties; and

              (d)    not use  the  Collateral  in  violation  of any  applicable
                     statute or ordinance.

       3.     DEBTOR'S  RECORDS.  Debtor  shall  keep  at all  times  reasonably
available for inspection by Secured Party,  accurate and complete records of the
status of the Collateral.

       4.     LOCATION AND INSPECTION OF  COLLATERAL.  Debtor shall maintain the
Collateral  on the  premises  where it is now located at the office of Debtor at
the address set forth above.  Secured Party or its agent shall have the right at
any time during normal  business hours to inspect the Collateral and the records
of Debtor relating thereto.

       5.     FINANCING STATEMENTS. Debtor hereby agrees to do all such acts and
things,  and to execute  and  deliver  to  Secured  Party from time to time such
financing statements,  certificates and any additional agreements, documents and
instruments and obtain all such consents and approvals  considered  necessary by
Secured  Party or its  counsel to  effectuate,  finalize,  record or perfect the
transactions contemplated under the Promissory Note, the Loan Agreement and this
Agreement and to secure the rights of Secured Party  thereunder  and  hereunder.
Debtor hereby irrevocably authorizes Secured Party, or its designee, at Debtor's
expense,  to do any of the foregoing acts and to execute any and all agreements,
documents and instruments,  including without limitation, to file such financing
statements with or without Debtor's signature,  as Secured Party deems necessary
or desirable,  and, to irrevocably appoint (which appointment is coupled with an
interest)  Secured  Party as the  attorney-in-fact  of  Debtor to  execute  such
agreements, documents, instruments and financing statements.

       6.     DEFAULT.  Debtor shall be in default under this Agreement upon the
happening of any of the following events or conditions:

              (a)    Debtor  defaults in the payment of principal or interest on
                     the  Promissory  Note when and as the same shall become due
                     and payable whether by acceleration thereof or otherwise;

              (b)    Debtor  defaults in the performance or observance of any of
                     the covenants and  agreements  contained in the  Promissory
                     Note (other than those  relating to payment) and same shall
                     remain unremedied for a period ending on the first to occur
                     of five (5) business days

                                      -2-
<PAGE>


                     after Debtor shall receive  written  notice of such default
                     from Secured Party,  unless such cure cannot  reasonably be
                     completed  within  said  period,  then if a  remedy  is not
                     commenced  within  said  time  period  and  diligently  and
                     continuously  prosecuted to  completion  within thirty (60)
                     days following the default;

              (c)    Debtor makes an assignment  for the benefit of creditors or
                     admits in writing its inability to pay its debts  generally
                     as they become due; or Debtor files any petition for relief
                     under the federal  Bankruptcy Code; or any order,  judgment
                     or  decree  is  entered  adjudicating  Debtor  bankrupt  or
                     insolvent;

              (d)    Debtor  petitions  or  applies  to  any  tribunal  for  the
                     appointment of a trustee, receiver or liquidator of Debtor,
                     or of  any  substantial  part  of  the  assets  of  or  any
                     proceedings  for the voluntary  liquidation and dissolution
                     of Debtor under any bankruptcy, reorganization, compromise,
                     arrangement,  insolvency, readjustment of debt, dissolution
                     or  liquidation  law of any  jurisdiction,  whether  now or
                     hereafter in effect;

              (e)    any such  petition  or  application  is filed,  or any such
                     proceedings are commenced, against Debtor and Debtor by any
                     act  indicates  its approval  thereof,  consent  thereto or
                     acquiescence  therein, or any order,  judgment or decree is
                     entered   appointing   any  such   trustee,   receiver   or
                     liquidator,   or   approving   the  petition  in  any  such
                     proceedings  and such  order,  judgment  or decree  remains
                     unstayed and in effect for more than thirty (30) days; or

              (f)    any order,  judgment or decree is entered in any proceeding
                     against Debtor decreeing the dissolution of Debtor and such
                     order,  judgment or decree  remains  unstayed and in effect
                     for more than thirty (30) days.

       7.     REMEDIES.  Upon the  occurrence  of any event of default by Debtor
hereunder,  as described more fully in Section 6 hereof,  Secured Party shall be
entitled to realize  upon the  Collateral  to satisfy any and all of the Secured
Obligations. Upon such occurrence, Secured Party:

              (a)    may, at its option, accelerate and declare the whole of the
                     unpaid balance of the Promissory  Note  immediately due and
                     payable;

              (b)    may,  after first  notifying  Debtor of its intention to do
                     so, notify  account  debtors of Debtor that the  Collateral
                     and the right, title and

                                      -3-
<PAGE>


                     interest  of  Debtor  in and to the  Collateral  have  been
                     assigned to Secured Party and that payment thereunder shall
                     be made directly to Secured Party. In addition and upon the
                     request  of  Secured  Party,  Debtor  will so  notify  such
                     account debtors;

              (c)    may, in its own name or in the name of others,  communicate
                     with such account  debtors in respect of the  Collateral to
                     verify with such  persons to Secured  Party's  satisfaction
                     the existence, amount and terms of the Collateral;

              (d)    shall have and may  exercise  all the  rights and  remedies
                     available  to a  secured  party  for the  foreclosure  of a
                     security interest under the Uniform Commercial Code; and

              (e)    shall  have  the  right  to  do  all  things  necessary  or
                     convenient  to  realize  upon  all  or any  portion  of the
                     Collateral.

              All remedies of Secured Party  hereunder  shall be cumulative.  In
the event of Secured Party's  realization on the sale of the Collateral  exceeds
the sum due to  Secured  Party  under the  Promissory  Note and this  Agreement,
Debtor shall be entitled to any surplus;  otherwise,  Debtor shall,  jointly and
severally,  remain  liable to Secured  Party for any  deficiency.  Secured Party
shall give Debtor  reasonable notice of the time and place of any public sale of
the Collateral or of the time after which any private sale or any other intended
disposition  of the  Collateral is to be made.  Any  requirements  of reasonable
notice  under  this  Section 7 shall be met if such  notice is  mailed,  postage
prepaid,  to the  address of Debtor set forth  herein at least  thirty (30) days
before the time of the sale or  disposition.  Secured Party shall be entitled to
recover from Debtor its expense of retaking,  holding,  preparing  for sale,  or
selling the Collateral which expenses shall include  reasonable  attorneys' fees
incurred by Secured Party.

       8.     REPRESENTATIONS  OF DEBTOR.  Debtor represents that the execution,
delivery  and  performance  of  this  Security  Agreement  are  within  Debtor's
corporate  powers,  have been duly  authorized,  are not in contravention of the
terms of Debtor's  Certificate  of  Incorporation,  By-Laws or any  agreement to
which Debtor is a party or by which it is bound.

       9.     TERMINATION.  This  Agreement  shall  automatically  terminate and
shall be null and void and of no force and effect,  when the Secured Obligations
are fully satisfied.

              Upon  satisfaction  in full of the  Secured  Obligations,  Secured
Party,  if so requested by Debtor,  agrees to execute and cause to be filed with
the appropriate  governmental  authorities such termination statements under the
Uniform  Commercial  Code,  or such other  documents,  as shall be  necessary to
release  the lien  created  by this  Agreement  against  the  Collateral  and to
terminate any security interest of Secured Party created hereby.

                                      -4-
<PAGE>


       10.    MISCELLANEOUS.

              (a)    ENTIRE  AGREEMENT.   This  Agreement  contains  the  entire
agreement   between  the  parties  hereto  with  respect  to  the   transactions
contemplated  by  this  Agreement  and  supersedes  all  prior  arrangements  or
understandings with respect thereto.

              (b)    DESCRIPTIVE  HEADINGS.  The  descriptive  headings  of this
Agreement are for  convenience  only and shall not control or affect the meaning
or construction of any provision of this Agreement.

              (c)    NOTICES. All notices, requests,  demands,  instructions and
other  communications  required or  permitted  to be given under this  Agreement
shall be in  writing  and shall be deemed to have been duly  given (i) upon hand
delivery,  (ii) upon  receipt by  facsimile,  (iii) the next  business day after
delivery to a reputable  overnight courier which provides for acknowledgement of
receipt,  or (iv) three (3) days after  deposit  in the  United  States  mail by
first-class,  postage  prepaid,  registered or certified  mail,  return  receipt
requested, as follows:

              (i)    If to Secured Party, at:

                     MME, Inc.
                     204 Federal Road, Ste. 319
                     Brookfield, CT 06804



              (ii)   If to Debtor, to:

                     Mr. Kelly T. Hickel, President
                     Paradise Music & Entertainment, Inc.
                     PMB 300 1630 A 30th Street
                     Boulder, Colorado 80301
                     Fax No. (212) 590-2151

                     With a copy to:

                     Mr. Jeffrey Rinde
                     Bondy & Schloss
                     60 E. 42nd. St.
                     NY,NY 10165
                     Fax No. (212) 972-1677

              (d)    GOVERNING  LAW.  This  Agreement  shall be  governed by and
construed in accordance  with the laws of the State of  Connecticut  (other than
the choice of law  principles

                                      -5-
<PAGE>


thereof).  Any action,  suit or other  proceeding  initiated by any either party
hereto against the other party hereto under or in connection with this Agreement
may be brought in any Federal or state court in the State of Connecticut, as the
party bringing such action,  suit or proceeding shall elect, having jurisdiction
over the  subject  matter  thereof.  Secured  Party  and  Debtor  hereby  submit
themselves  to the  jurisdiction  of any such  court and agree  that  service of
process on them in any such action,  suit or  proceeding  may be effected by the
means by which notices are to be given to them under this Agreement.

              (e)    REMEDIES. The parties hereto acknowledge that the remedy at
law for any breach of the  obligations  undertaken by the parties  hereto is and
will be  insufficient  and  inadequate  and that  the  parties  hereto  shall be
entitled to  equitable  relief,  in addition to remedies at law. In the event of
any action to enforce the provisions of this Agreement, the parties hereto shall
waive the defense that there is an adequate  remedy at law.  The parties  hereto
acknowledge  that the  benefits to be obtained by the parties  hereto are unique
and  cannot be readily  obtainable  on the open  market.  Without  limiting  any
remedies any party may otherwise have, in the event any party refuses to perform
its obligations under this Agreement, the other party shall have, in addition to
any other remedy at law or in equity, the right to specific performance.

              (f)    ILLEGALITIES.  In the event that any provision contained in
this Agreement shall be determined to be invalid,  illegal or  unenforceable  in
any respect for any reason,  the validity,  legality and  enforceability  of any
such  provision  in every other  respect and the  remaining  provisions  of this
Agreement  shall  not,  at the  election  of the  party for  whose  benefit  the
provision exists, be in any way impaired.

              (g)    ASSIGNABILITY.  This  Agreement  shall not be assignable by
either party hereto,  and any  purported  assignment by any party shall be void;
PROVIDED, HOWEVER, that Secured Party may assign this Agreement to any person to
whom Secured  Party has  negotiated  or assigned all or part of its rights under
any of the Secured Obligations.

              (h)    THIRD PARTY RIGHTS.  Notwithstanding any other provision of
this Agreement,  this Agreement shall not create benefits on behalf of any third
party,  and this Agreement shall be effective only as between the parties hereto
and their respective successors, heirs and permitted assigns.

              (i)    AMENDMENTS  AND  WAIVERS.  Any  term or  provision  of this
Agreement  may be  waived  at any time by the  party  which is  entitled  to the
benefits thereof,  and any term or provision of this Agreement may be amended or
supplemented  at any time by the mutual  consent of the parties  hereto,  except
that any waiver of any term or condition,  or any amendment or  supplementation,
of this Agreement shall be effective only if in writing.

              (j)    EXPENSES.  Debtor shall be responsible  for Secured Party's
legal  fees and other  costs  and  expenses  with  respect  to the  negotiation,
execution and the delivery of this Agreement.  Additionally, Debtor shall pay on
demand all costs and expenses (including, without

                                      -6-
<PAGE>


limitation,  reasonable  legal fees) incurred by the Secured Party in connection
with the enforcement of the Promissory Note and/or this Agreement.

              (k)    FURTHER  ACTIONS.  From time to time subsequent to the date
hereof,  as and when  requested  by Secured  Party,  Debtor  shall  execute  and
deliver,  or cause to be executed and delivered,  such documents and instruments
and shall take,  or cause to be taken,  such further or other  actions as may be
reasonably  necessary to  consummate  and to effect the  transactions  expressly
required to be performed by Debtor hereunder.

              (l)    COUNTERPARTS.  This Agreement may be executed in any number
of  counterparts,  and each  such  counterpart  hereof  shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.


                                      -7-
<PAGE>


       IN WITNESS  WHEREOF,  the undersigned  have executed this Agreement as of
the date first above written.

                                            SECURED PARTY:

                                            MME, Inc.


                                            By: [SIGNATURE ILLEGIBLE]
                                               ------------------------------



                                            DEBTOR:

                                            PARADISE MUSIC & ENTERTAINMENT, INC.


                                            By: /s/ Kelly T. Hickel
                                               ------------------------------
                                                Name:  Kelly T. Hickel
                                                Title: Chairman and President



                                      -8-

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</DOCUMENT>
