INTELLECTUAL PROPERTY SECURITY AGREEMENT
Exhibit
4.6
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Exhibit
4.6
Intellectual
Property Security Agreement by and among the Company and the
Investors
INTELLECTUAL
PROPERTY SECURITY AGREEMENT (this
“Agreement”
dated as
of December 27, 2006, by and among Camelot Entertainment Group, Inc., a Delaware
Corporation (the “Company”),
and
the secured parties signatory hereto and their respective endorsees, transferees
and assigns (collectively, the “Secured
Party”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date hereof, between
Company and the Secured Party (the “Purchase
Agreement”),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company’s 8% Callable Secured
Convertible Notes, due three years from the date of issue (the “Notes”),
which
are convertible into shares of Company’s Common Stock, par value $.001 per share
(the “Common
Stock”).
In
connection therewith, Company shall issue the Secured Party certain Common
Stock
purchase warrants (the “Warrants”);
and
WHEREAS,
in order to induce the Secured Party to purchase the Notes, Company has agreed
to execute and deliver to the Secured Party this Agreement for the benefit
of
the Secured Party and to grant to it a first priority security interest in
certain Intellectual Property (defined below) of Company to secure the prompt
payment, performance and discharge in full of all of Company’s obligations under
the Notes and exercise and discharge in full of Company’s obligations under the
Warrants; and
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:
34. Defined
Terms.
Unless
otherwise defined herein, terms which are defined in the Purchase Agreement
and
used herein are so used as so defined; and the following terms shall have the
following meanings:
“Software
Intellectual Property”
shall
mean:
A. all
software programs (including all source code, object code and all related
applications and data files), whether now owned, upgraded, enhanced, licensed
or
leased or hereafter acquired by the Company, above;
B. all
computers and electronic data processing hardware and firmware associated
therewith;
C. all
documentation (including flow charts, logic diagrams, manuals, guides and
specifications) with respect to such software, hardware and firmware described
in the preceding clauses (a) and (b); and
D. all
rights with respect to all of the foregoing, including, without limitation,
any
and all upgrades, modifications, copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications and
substitutions, replacements, additions, or model conversions of any of the
foregoing.
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“Copyrights”
shall
mean (a) all copyrights, registrations and applications for registration,
issued
or
filed, including any reissues, extensions or renewals thereof, by or with the
United States Copyright Office or any similar office or agency of the United
States, any state thereof, or any other country or political subdivision
thereof, or otherwise, including, all rights in and to the material constituting
the subject matter thereof, including, without limitation, any referred to
in
Schedule
B
hereto,
and (b) any rights in any material which is copyrightable or which is protected
by common law, United States copyright laws or similar laws or any law of any
State, including, without limitation, any thereof referred to in Schedule
B
hereto.
“Copyright
License”
shall
mean any agreement, written or oral, providing for a grant by the Company of
any
right in any Copyright, including, without limitation, any thereof referred
to
in Schedule
B
hereto.
“Intellectual
Property”
shall
means, collectively, the Software Intellectual Property, Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses and Trade
Secrets.
“Obligations”
means
all of the Company’s obligations under this Agreement and the Notes, in each
case, whether now or hereafter existing, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later decreased, created or incurred, and all or any portion
of
such obligations or liabilities that are paid, to the extent all or any part
of
such payment is avoided or recovered directly or indirectly from the Secured
Party as a preference, fraudulent transfer or otherwise as such obligations
may
be amended, supplemented, converted, extended or modified from time to
time.
“Patents”
shall
mean (a) all letters patent of the United States or any other country or any
political subdivision thereof, and all reissues and extensions thereof,
including, without limitation, any thereof referred to in Schedule
B
hereto,
and (b) all applications for letters patent of the United States and all
divisions, continuations and continuations-in-part thereof or any other country
or any political subdivision, including, without limitation, any thereof
referred to in Schedule
B
hereto.
“Patent
License”
shall
mean all agreements, whether written or oral, providing for the grant by the
Company of any right to manufacture, use or sell any invention covered by a
Patent, including, without limitation, any thereof referred to in Schedule
B
hereto.
“Security
Agreement”
shall
mean a Security Agreement, dated the date hereof between Company and the Secured
Party.
“Trademarks”
shall
mean (a) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos and other
source or business identifiers, and the 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, including, without limitation, any thereof
referred to in Schedule
B
hereto,
and (b) all reissues, extensions or renewals thereof.
“Trademark
License”
shall
mean any agreement, written or oral, providing for the grant by the Company
of
any right to use any Trademark, including, without limitation, any thereof
referred to in Schedule
B
hereto.
“Trade
Secrets”
shall
mean common law and statutory trade secrets and all other confidential or
proprietary or useful information and all know-how obtained by or used in or
contemplated at any time for use in the business of the Company (all of the
foregoing being collectively called a “Trade
Secret”),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each
Trade
Secret license referred to in Schedule
B
hereto,
and including the right to xxx for and to enjoin and to collect damages for
the
actual or threatened misappropriation of any Trade Secret and for the breach
or
enforcement of any such Trade Secret license.
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35. Grant
of Security Interest.
In
accordance with Section 3(m) of the Security Agreement, to secure the complete
and timely payment, performance and discharge in full, as the case may be,
of
all of the Obligations, the Company hereby, unconditionally and irrevocably,
pledges, grants and hypothecates to the Secured Party, a continuing security
interest in, a continuing first lien upon, an unqualified right to possession
and disposition of and a right of set-off against, in each case to the fullest
extent permitted by law, all of the Company’s right, title and interest of
whatsoever kind and nature in and to the Intellectual Property (the
“Security
Interest”).
Notwithstanding the above, the Company is not granting a security interest
in
its wholly owned subsidiaries, Camelot Film Group, Inc. and Camelot Studio
Group, Inc. which shall not be considered Collateral under this
Agreement.
36. Representations
and Warranties.
The
Company hereby represents and warrants, and covenants and agrees with, the
Secured Party as follows:
A. The
Company has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by the Company of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. This
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally.
B. The
Company represents and warrants that it has no place of business or offices
where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where
the
Intellectual Property is stored or located, except as set forth on Schedule
A
attached
hereto;
C. The
Company is the sole owner of the Intellectual Property (except for non-exclusive
licenses granted by the Company in the ordinary course of business), free and
clear of any liens, security interests, encumbrances, rights or claims, and
is
fully authorized to grant the Security Interest in and to pledge the
Intellectual Property, except as set forth on Schedule
D.
There
is not on file in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement, license or transfer
or any notice of any of the foregoing (other than those that have been filed
in
favor of the Secured Party pursuant to this Agreement) covering or affecting
any
of the Intellectual Property, except as set forth on Schedule
D.
So long
as this Agreement shall be in effect, the Company shall not execute and shall
not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Party pursuant to the terms of this
Agreement), except as set forth on Schedule
D or
for a
financing statement covering assets acquired by the Company after the date
hereof, provided that the value of the Intellectual Property covered by this
Agreement along with the Collateral (as defined in the Security Agreement)
is
equal to at least 150% of the Obligations.
D. The
Company shall at all times maintain its books of account and records relating
to
the Intellectual Property at its principal place of business and its
Intellectual Property at the locations set forth on Schedule
A
attached
hereto and may not relocate such books of account and records 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 the necessary documents have been
filed and recorded and other steps have been taken to perfect the Security
Interest to create in favor of the Secured Party valid, perfected and continuing
first priority liens in the Intellectual Property to the extent they can be
perfected through such filings.
E. This
Agreement creates in favor of the Secured Party a valid security interest in
the
Intellectual Property securing the payment and performance of the Obligations
and, upon making the filings required hereunder, a perfected first priority
security interest in such Intellectual Property to the extent that it can be
perfected through such filings.
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F.
Upon
request of the Secured Party, the Company shall execute and deliver any and
all
agreements, instruments, documents, and papers as the Secured Party may request
to evidence the Secured Party’s security interest in the Intellectual Property
and the goodwill and general intangibles of the Company relating thereto or
represented thereby, and the Company hereby appoints the Secured Party its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Obligations have
been fully satisfied and are paid in full.
G. Except
as
set forth on Schedule
D,
the
execution, delivery and performance of this Agreement does not conflict with
or
cause a breach or default, or an event that with or without the passage of
time
or notice, shall constitute a breach or default, under any agreement to which
the Company is a party or by which the Company is bound. No consent (including,
without limitation, from stock holders or creditors of the Company) is required
for the Company to enter into and perform its obligations
hereunder.
H. The
Company shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected first priority liens and security interests
in
the Intellectual Property to the extent they can be perfected by filing in
favor
of the Secured Party until this Agreement and the Security Interest hereunder
shall terminate pursuant to Section 11. The Company hereby agrees to defend
the
same against any and all persons. The Company shall safeguard and protect all
Intellectual Property for the account of the Secured Party. Without limiting
the
generality of the foregoing, the Company shall pay all fees, taxes and other
amounts necessary to maintain the Intellectual Property and the Security
Interest hereunder, and the Company shall obtain and furnish to the Secured
Party from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the Security
Interest hereunder.
I. The
Company will not transfer, pledge, hypothecate, encumber, license (except for
non-exclusive licenses granted by the Company in the ordinary course of
business), sell or otherwise dispose of any of the Intellectual Property without
the prior written consent of the Secured Party, which consent will not be
unreasonably withheld.
J. The
Company shall, within ten (10) days of obtaining knowledge thereof, advise
the
Secured Party promptly, in sufficient detail, of any substantial change in
the
Intellectual Property, and of the occurrence of any event which would have
a
material adverse effect on the value of the Intellectual Property or on the
Secured Party’s security interest therein.
K. The
Company shall permit the Secured Party and its representatives and agents to
inspect the Intellectual Property at any time, and to make copies of records
pertaining to the Intellectual Property as may be requested by the Secured
Party
from time to time.
L. The
Company will take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Intellectual Property.
M. The
Company shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Intellectual Property and of any other information received
by the Company that may materially affect the value of the Intellectual
Property, the Security Interest or the rights and remedies of the Secured Party
hereunder.
N. All
information heretofore, herein or hereafter supplied to the Secured Party by
or
on behalf of the Company with respect to the Intellectual Property is accurate
and complete in all material respects as of the date furnished.
O. Schedule
A
attached
hereto contains a list of all of the subsidiaries of Company.
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P. Schedule
B
attached
hereto includes all Licenses, and all Patents and Patent Licenses, if any,
owned
by the Company in its own name as of the date hereof. Schedule
B
hereto
includes all Trademarks and Trademark Licenses, if any, owned by the Company
in
its own name as of the date hereof. Schedule
B
hereto
includes all Copyrights and Copyright Licenses, if any, owned by the Company
in
its own name as of the date hereof. Schedule
B
hereto
includes all Trade Secrets and Trade Secret Licenses, if any, owned by the
Company as of the date hereof. To the best of the Company’s knowledge, each
License, Patent, Trademark, Copyright and Trade Secret is valid, subsisting,
unexpired, enforceable and has not been abandoned. Except as set forth in
Schedule
B,
none of
such Licenses, Patents, Trademarks, Copyrights and Trade Secrets is the subject
of any licensing or franchise agreement. To the best of the Company’s knowledge,
no holding, decision or judgment has been rendered by any Governmental Body
which would limit, cancel or question the validity of any License, Patent,
Trademark, Copyright and Trade Secrets. Except as set forth in Schedule
B,
no
action or proceeding is pending (i) seeking to limit, cancel or question the
validity of any License, Patent, Trademark, Copyright or Trade Secret, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any License, Patent, Trademark, Copyright or Trade Secret. The Company
has used and will continue to use for the duration of this Agreement, proper
statutory notice in connection with its use of the Patents, Trademarks and
Copyrights and consistent standards of quality in products leased or sold under
the Patents, Trademarks and Copyrights.
Q. With
respect to any Intellectual Property:
| 1. |
such
Intellectual Property is subsisting and has not been adjudged invalid
or
unenforceable, in whole or in part;
|
| 2. |
such
Intellectual Property is valid and
enforceable;
|
| 3. |
the
Company has made all necessary filings and recordations to protect
its
interest in such Intellectual Property, including, without limitation,
recordations of all of its interests in the Patents, Patent Licenses,
Trademarks and Trademark Licenses in the United States Patent and
Trademark Office and in corresponding offices throughout the world
and its
claims to the Copyrights and Copyright Licenses in the United States
Copyright Office and in corresponding offices throughout the
world;
|
| 4. |
other
than as set forth in Schedule
B,
the Company is the exclusive owner of the entire and unencumbered
right,
title and interest in and to such Intellectual Property and no claim
has
been made that the use of such Intellectual Property infringes on
the
asserted rights of any third party;
and
|
| 5. |
the
Company has performed and will continue to perform all acts and has
paid
all required fees and taxes to maintain each and every item of
Intellectual Property in full force and effect throughout the world,
as
applicable.
|
R. Except
with respect to any Trademark or Copyright that the Company shall reasonably
determine is of negligible economic value to the Company, the Company
shall:
1. maintain
each Trademark and Copyright in full force free from any claim of abandonment
for non-use, maintain as in the past the quality of products and services
offered under such Trademark or Copyright; employ such Trademark or Copyright
with the appropriate notice of registration; not adopt or use any xxxx which
is
confusingly similar or a colorable imitation of such Trademark or Copyright
unless the Secured Party shall obtain a perfected security interest in such
xxxx
pursuant to this Agreement; and not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any Trademark
or
Copyright may become invalidated;
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2. not,
except with respect to any Patent that it shall reasonably determine is of
negligible economic value to it, do any act, or omit to do any act, whereby
any
Patent may become abandoned or dedicated; and
3. notify
the Secured Party immediately if it knows, or has reason to know, that any
application or registration relating to any Patent, Trademark or Copyright
may
become abandoned or dedicated, or of any adverse determination or development
(including, without limitation, the institution of, or any such determination
or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office or any court or tribunal in any country)
regarding its ownership of any Patent, Trademark or Copyright or its right
to
register the same or to keep and maintain the same.
S. Whenever
the Company, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office,
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof or acquire rights to any new
Patent, Trademark or Copyright whether or not registered, report such filing
to
the Secured Party within five business days after the last day of the fiscal
quarter in which such filing occurs.
T. The
Company shall take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, to maintain and pursue
each
application (and to obtain the relevant registration) and to maintain each
registration of the Patents, Trademarks and Copyrights, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.
U. In
the
event that any Patent, Trademark or Copyright included in the Intellectual
Property is infringed, misappropriated or diluted by a third party, promptly
notify the Secured Party after it learns thereof and shall, unless it shall
reasonably determine that such Patent, Trademark or Copyright is of negligible
economic value to it, which determination it shall promptly report to the
Secured Party, promptly xxx for infringement, misappropriation or dilution,
to
seek injunctive relief where appropriate and to recover any and all damages
for
such infringement, misappropriation or dilution, or take such other actions
as
it shall reasonably deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright. If the Company lacks the financial resources
to
comply with this Section 3(t), the Company shall so notify the Secured Party
and
shall cooperate fully with any enforcement action undertaken by the Secured
Party on behalf of the Company.
37. Defaults.
The
following events shall be “Events
of Default”:
A. The
occurrence of an Event of Default (as defined in the Notes) under the Notes
that
has not been cured in a timely manner;
B. Any
representation or warranty of the Company in this Agreement or in the Security
Agreement shall prove to have been incorrect in any material respect when made;
C. The
failure by the Company to observe or perform any of its obligations hereunder
or
in the Security Agreement for ten (10) days after receipt by the Company of
notice of such failure from the Secured Party; and
D. Any
breach of, or default under, the Warrants.
38. Duty
To Hold In Trust.
Upon
the occurrence of any Event of Default and a failure to cure such default in
a
timely manner and at any time thereafter, the Company shall, upon receipt by
it
of any revenue, income or other sums subject to the Security Interest, whether
payable pursuant to the Notes or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Party and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
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39. Rights
and Remedies Upon Default.
Upon
occurrence of any Event of Default that has not been cured in a timely manner
and at any time thereafter, the Secured Party shall have the right to exercise
all of the remedies conferred hereunder and under the Notes, and the Secured
Party shall have all the rights and remedies of a secured party under the UCC
and/or any other applicable law (including the Uniform Commercial Code of any
jurisdiction in which any Intellectual Property is then located). Without
limitation, the Secured Party shall have the following rights and
powers:
A. The
Secured Party shall have the right to take possession of the Intellectual
Property and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Intellectual Property, or any part thereof,
is or
may be placed and remove the same, and the Company shall assemble the
Intellectual Property and make it available to the Secured Party at places
which
the Secured Party shall reasonably select, whether at the Company’s premises or
elsewhere, and make available to the Secured Party, without rent, all of the
Company’s respective premises and facilities for the purpose of the Secured
Party taking possession of, removing or putting the Intellectual Property in
saleable or disposable form.
B. The
Secured Party shall have the right to operate the business of the Company using
the Intellectual Property and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Intellectual Property,
at public or private sale or otherwise, either with or without special
conditions or stipulations, for cash or on credit or for future delivery, in
such parcel or parcels and at such time or times and at such place or places,
and upon such terms and conditions as the Secured Party may deem commercially
reasonable, all without (except as shall be required by applicable statute
and
cannot be waived) advertisement or demand upon or notice to the Company or
right
of redemption of the Company, which are hereby expressly waived. Upon each
such
sale, lease, assignment or other transfer of Intellectual Property, the Secured
Party may, unless prohibited by applicable law which cannot be waived, purchase
all or any part of the Intellectual Property being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
Company, which are hereby waived and released.
40. Applications
of Proceeds.
The
proceeds of any such sale, lease or other disposition of the Intellectual
Property hereunder shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including,
without limitation, any taxes, fees and other costs incurred in connection
therewith) of the Intellectual Property, to the reasonable attorneys’ fees and
expenses incurred by the Secured Party in enforcing its rights hereunder and
in
connection with collecting, storing and disposing of the Intellectual Property,
and then to satisfaction of the Obligations, and to the payment of any other
amounts required by applicable law, after which the Secured Party shall pay
to
the Company any surplus proceeds. If, upon the sale, license or other
disposition of the Intellectual Property, the proceeds thereof are insufficient
to pay all amounts to which the Secured Party is legally entitled, the Company
will be liable for the deficiency, together with interest thereon, at the rate
of 15% per annum (the “Default
Rate”),
and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Intellectual Property, unless
due to the gross negligence or willful misconduct of the Secured
Party.
41. Costs
and Expenses.The
Company agrees to pay all out-of-pocket fees, costs and expenses incurred in
connection with any filing required hereunder, including without limitation,
any
financing statements, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Party. The Company shall also pay all other
claims and charges which in the reasonable opinion of the Secured Party might
prejudice, imperil or otherwise affect the Intellectual Property or the Security
Interest therein. The Company will also, upon demand, pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable fees
and
expenses of its counsel and of any experts and agents, which the Secured Party
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Intellectual Property, or (iii) the exercise or
enforcement of any of the rights of the Secured Party under the Notes. Until
so
paid, any fees payable hereunder shall be added to the principal amount of
the
Notes and shall bear interest at the Default Rate.
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42. Responsibility
for Intellectual Property.
The
Company assumes all liabilities and responsibility in connection with all
Intellectual Property, and the obligations of the Company hereunder or under
the
Notes and the Warrants shall in no way be affected or diminished by reason
of
the loss, destruction, damage or theft of any of the Intellectual Property
or
its unavailability for any reason.
43. Security
Interest Absolute.
All
rights of the Secured Party and all Obligations of the Company hereunder, shall
be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Notes, the Warrants or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof;
(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 Notes, the Warrants or any
other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Intellectual Property, or any release
or
amendment or waiver of or consent to departure from any other Intellectual
Property for, or any guaranty, 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 sole discretion any insurance claims or matters made or arising
in
connection with the Intellectual Property; or (e) any other circumstance which
might otherwise constitute any legal or equitable defense available to the
Company, or a discharge of all or any part of the Security Interest granted
hereby. Until the Obligations shall have been paid and performed in full, the
rights of the Secured Party shall continue even if the Obligations are barred
for any reason, including, without limitation, the running of the statute of
limitations or bankruptcy. The Company expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for performance.
In
the event that at any time any transfer of any Intellectual Property or any
payment received by the Secured Party hereunder shall be deemed by final order
of a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than the
Secured Party, then, in any such event, the Company’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with
the terms and provisions hereof. The Company waives all right to require the
Secured Party to proceed against any other person or to apply any Intellectual
Property which the Secured Party may hold at any time, or to marshal assets,
or
to pursue any other remedy. The Company waives any defense arising by reason
of
the application of the statute of limitations to any obligation secured
hereby.
44. Term
of Agreement.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Notes have been made in full or at such time as the Secured
Party fully converts the Notes and all other Obligations have been paid or
discharged. Upon such termination, the Secured Party, at the request and at
the
expense of the Company, will join in executing any termination statement with
respect to any financing statement executed and filed pursuant to this
Agreement.
45. Power
of Attorney; Further Assurances.
A. The
Company authorizes the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with
full
power of substitution, as the Company’s true and lawful attorney-in-fact, with
power, in its own name or in the name of the Company, to, after the occurrence
and during the continuance of an Event of Default that has not been cured in
a
timely manner, (i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Intellectual Property that may come
into
possession of the Secured Party; (ii) to sign and endorse any UCC financing
statement or any invoice, freight or express xxxx, xxxx of lading, storage
or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Intellectual Property; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Intellectual Property; (iv) to demand, collect, receipt for,
compromise, settle and xxx for monies due in respect of the Intellectual
Property; and (v) generally, to do, at the option of the Secured Party, and
at
the Company’s expense, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve and realize upon
the Intellectual Property and the Security Interest granted therein in order
to
effect the intent of this Agreement, the Notes and the Warrants, all as fully
and effectually as the Company might or could do; and the Company hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as any of
the
Obligations shall be outstanding.
Page
- 9
B. On
a
continuing basis, the Company will make, execute, acknowledge, deliver, file
and
record, as the case may be, in the proper filing and recording places in any
jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule
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 Interest granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a security interest
in all the Intellectual Property.
C. Following
an Event of Default that has not been cured in a timely manner, the Company
hereby irrevocably appoints the Secured Party as the Company’s attorney-in-fact,
with full authority in the place and stead of the Company and in the name of
the
Company, from time to time in the Secured Party’s discretion, to take any action
and to execute any instrument which the Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including the filing,
in
its sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Intellectual Property without the
signature of the Company where permitted by law.
46. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed to
have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent
by facsimile, upon receipt of proof of sending thereof, (iii) if sent by
nationally recognized overnight delivery service (receipt requested), the next
business day or (iv) if mailed by first-class registered or certified mail,
return receipt requested, postage prepaid, four days after posting in the U.S.
mails, in each case if delivered to the following addresses:
If
to the
Company:
Camelot
Entertainment Group, Inc.
0000
Xxxx
Xxxxxx, #000
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Chief Executive Officer
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
With
a
copy
to:
Xxxxxx
& Xxxxxx, LLP
000
Xxxxx
0, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to the
Secured
Party:
AJW
Partners, LLC
AJW
Offshore, Ltd.
AJW
Qualified Partners, LLC
New
Millennium Capital Partners, II, LLC
0000
Xxxxxxxx Xxxxxxxxx
Xxxxx
000
Xxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxx Xxxxxxxx
Facsimile:
000-000-0000
With
copies
to:
Xxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000
Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx, Esquire
Facsimile:
000-000-0000
Page
- 10
47. Other
Security.
To the
extent that the Obligations are now or hereafter secured by property other
than
the Intellectual Property 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.
48. Miscellaneous.
A. No
course
of dealing between the Company and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Notes shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
B. All
of
the rights and remedies of the Secured Party with respect to the Intellectual
Property, whether established hereby or by the Notes or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.
C. This
Agreement and the Security Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement specifically
referring to this Agreement and signed by the parties hereto.
D. In
the
event that any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
E. No
waiver
of any breach or default or any right under this Agreement shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
F. This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
G. Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
H. This
Agreement shall be construed in accordance with the laws of the State of New
York, except to the extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Intellectual Property which
are
governed by a jurisdiction other than the State of New York in which case such
law shall govern. Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any New York State or United States Federal court sitting in
Manhattan county over any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such
New
York State or Federal court. The parties hereto agree that a final judgment
in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The parties hereto further waive any objection to venue in the State of New
York
and any objection to an action or proceeding in the State of New York on the
basis of forum non conveniens.
Page
- 11
I. EACH
PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE
COURT.
J. This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Page
- 12
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
By:
_____________________________________
Xxxxxx
X.
Xxxxxx
Chief
Executive Officer
AJW
PARTNERS, LLC
By:
SMS
Group, LLC
By:
_____________________________________
Xxxxx
X.
Xxxxxxxx
Manager
AJW
OFFSHORE, LTD.
By:
First
Street Manager II, LLC
By:
_____________________________________
Xxxxx
X.
Xxxxxxxx
Manager
AJW
QUALIFIED PARTNERS, LLC
By:
AJW
Manager, LLC
By:
_____________________________________
Xxxxx
X.
Xxxxxxxx
Manager
NEW
MILLENNIUM CAPITAL PARTNERS II, LLC
By:
First
Street Manager II, LLC
By:
_____________________________________
Xxxxx
X.
Xxxxxxxx
Manager
Page
- 13
SCHEDULE
A
Principal
Place of Business of the Company:
0000
Xxxx Xxxxxx
Xxxxx
000
Xxxxxx,
XX 00000
Locations
Where Intellectual Property is Located or Stored:
Principal
Place of Business
List
of Subsidiaries of the Company:
Camelot
Development, LLC. (1)
NV
Camelot
Distribution Group, Inc. (2) NV
Camelot
Features, Inc.
(3)
NV
Camelot
Films, Inc. (4)
CA,
DE,
NV
Camelot
Production Services Group, Inc. NV
Camelot
Technologies, Inc.
NV
Capital
Arts Enterprises, Inc.
(5)
CA
Capital
Arts International, Inc.
(6)
CA
Xxxxxx.xxx,
Inc.
XX
Xxxxxx
Wheel Films, Inc.
(7) CA,
NV
Latin
Ladies,
LLC. NV
Pioneer
Entertainment,
LLC. NV
Notes:
| (8) |
A
subsidiary of Camelot Studio Group
|
| (9) |
A
subsidiary of Camelot Film Group
|
| (10) |
A
subsidiary of Camelot Film Group
|
| (11) |
A
subsidiary of Camelot Film Group
|
| (12) |
A
subsidiary of Camelot Film Group
|
| (13) |
A
subsidiary of Camelot Film Group
|
| (14) |
A
subsidiary of Camelot Film Group
|
Page
- 14
SCHEDULE
B
A. Licenses,
Patents and Patent Licenses
Registration
or
Patent Application
or Registration No. Country Filing
Date
B. Trademarks
and Trademark Licenses
Registration
or
Trademark Application
or Registration No. Country Filing
Date
Camelot
Films Pending US 2004
C. Copyrights
and Copyright Licenses
Registration
or
Name Application
or Registration No. Country Filing
Date
D. Trade
Secrets and Trade Secret Licenses
Registration
or
Name Application
or Registration No. Country Filing
Date
Page
- 15
SCHEDULE
C
Jurisdictions:
Delaware
Page
- 16
