Exhibit 10.10
COPYRIGHT AND ROYALTY SECURITY AGREEMENT
----------------------------------------
THIS COPYRIGHT AND ROYALTY SECURITY AGREEMENT ("Agreement"), dated as
of the 27th day of June, 2002, by and between XXXXXX PRODUCTION, LLC, a
Pennsylvania limited liability company ("Debtor") and INTERNATIONAL TRAVEL CD`S,
INC., a Colorado corporation ("Secured Party");
W I T N E S S E T H:
WHEREAS, Secured Party is willing to make a loan to Debtor in a
principal amount not to exceed FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($400,000.00) (the "Loan"), evidenced by a Secured Promissory Note of even date
herewith, in the original principal amount of $400,000, made and executed by
Debtor, payable to the order of Secured Party (the "Note"), and
WHEREAS, Secured party requires as a condition of making the Loan that
Debtor secure the payment and performance of all of its obligations to Secured
Party by means of the security interest herein granted;
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:
1. Grant of Security Interest. As collateral security for the payment
---------------------------
in full of the Obligations (as hereafter defined), Debtor hereby assigns,
transfers and sets over to Secured Party, and grants to Secured Party a second
priority security interest in the following (collectively the "Collateral"):
(a) All of Debtor`s right, title and interest in and to the
feature motion picture "Xxxxxx" (the "Movie"), all copies thereof in whatever
medium, and all published and copyrighted material related thereto now or
hereafter owned by Debtor or in which Debtor now or hereafter has an interest,
including but not limited to those set forth in attached Exhibit A, which is
herein incorporated by this reference thereto, all versions thereof and all
works derived therefrom, whether now owned or hereafter created or acquired by
Debtor, and all rights of every kind and nature in the foregoing, including,
without limitation, the worldwide and United States copyrights or similar rights
therein, all renewals and extensions of said copyrights throughout the world to
the extent of Debtor`s rights therein, all distribution rights on or through any
medium, all merchandising rights, all publication rights, all syndication
rights, all mechanical royalties, all print royalties, all licensing royalties,
all videocassette royalties, all digital video disc (DVD) royalties, all
Internet royalties and all other royalty interests of Debtor therein and all
other rights of every nature and description now or hereafter inuring to or
vested in the copyright proprietor of said Publications by virtue of the
Copyright Law of the United States, being Title 17 of the United States Code, by
virtue of any and all international agreements or conventions to which the
United States is now or may hereafter be a signatory, or otherwise, together
with all accounts receivable, contract rights, chattel paper and general
intangibles in respect of the foregoing and any and all proceeds of all of the
foregoing; and in all documents, books and records of all kinds evidencing or
related to the foregoing.
(b) All of Debtor`s right, title and interest in and to all
monies and claims for monies due or to become due to Debtor as royalties or
otherwise from the exploitation of the Movie and the copyrights described in
subparagraph (a) above which might arise or otherwise become payable to Debtor
under agreements heretofore or hereafter entered into by Debtor with any other
person(s), company or companies, their successors and assigns (which entities
will be collectively referred to as the "Royalty Payors"). All agreements
heretofore or hereafter existing between Debtor and Royalty Payors are hereby
assigned to Secured Party; provided, however, that this assignment is for
security only, and Secured Party shall have no obligation to perform the duties
and obligations of Debtor and shall not be liable to any person or entity under
any of said agreements. All contract rights, accounts receivable, chattel paper,
and general tangibles of Debtor, and the proceeds thereof, as the same relate
to, create, evidence, or derive from such monies, claims, or agreements. It is
expressly understood and agreed by the parties hereto that the security interest
and assignment created and evidenced hereby is not limited to royalties earned
by the Debtor in connection with agreements with Royalty Payors heretofore
entered into by the Debtor, but that it extends to any similar agreements
entered into or to be entered into by the Debtor with any such entities until
the Obligations secured hereby are paid in full.
(c) All of the Debtor`s right, title and interest in the Movie
and the copyrights described in subparagraph (a) and any and all other tangible
and intangible personal property, or interests therein, of the Debtor, whether
now owned or hereafter acquired, relating to the Movie and the copyrights
described in subparagraph (a) above, and whether constituting inventory,
equipment, general intangibles, or otherwise (all of the foregoing, including
both the tangible and intangible components thereof, herein referred to as the
"Related Collateral") and all contracts, agreements and licenses for the use or
ownership of the Related Collateral by the Debtor and all of Debtor`s copyrights
or interests therein with respect thereto.
2. Obligations Secured. The assignment herein made and security
---------------------
interest hereby granted secures:
(a) the full and timely payment of the indebtedness evidenced
by the Note, and any amendments, extensions, modifications and/or renewals
thereof and any notes given in payment thereof;
(b) the full and prompt performance of all of the obligations
of Debtor to Secured Party under and by virtue of the Note and any other
documents executed in connection herewith; and
(c) the full and prompt payment of all court costs, expenses
and costs of whatever kind incident to the collection of the indebtedness
evidenced by the Note, the enforcement or protection of the security interests
securing the Note, or the exercise by Secured Party of any rights or remedies of
Lender (as defined in the Note) with respect to the indebtedness evidenced by
the Note, including without limitation attorney`s fees incurred by Secured
Party, all of which Debtor has agreed to pay to Secured Party upon demand. All
of the foregoing indebtedness and other obligations are herein collectively
2
referred to as the "Obligations".
3. Financing Statements. Debtor hereby authorizes Secured Party to file
--------------------
any Financing Statements under the Uniform Commercial Code against Debtor
describing the collateral to perfect and maintain perfection of Secured Party`s
security interest granted hereby.
4. Duration of Security Interest. The assignment herein made and
---------------------------------
security interest herein granted are absolute and unconditional, and shall
remain in full force and effect until payment in full of all outstanding
indebtedness of Debtor to Secured Party, including without limitation the
indebtedness evidenced by the Note.
5. Representations and Warranties of Debtor. Debtor hereby represents
-----------------------------------------
and warrants to Secured Party as follows:
(a) Except for the security interest of Secured Party granted
hereby, the security interest granted to the Screen Actors Guild, Inc. pursuant
to that certain Security Agreement dated as of September 7, 2000, (the "SAG
Interest") and except as provided in Paragraph 6 hereof, Debtor is, and as to
Collateral acquired after the date hereof, shall and will be, the owner of all
Collateral, free from any lien, security interest, encumbrance, claim or other
right, title or interest of any other person, firm or entity, and Debtor shall
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to Secured Party.
(b) Except for any documents reflecting the perfection or
recording of the SAG Interest, there is no financing statement, conditional
assignment, chattel mortgage or similar document now on file in any public
office covering the Collateral (including without limitation the office of the
Register of Copyrights for the United States or similar office of any other
county or other political unit); and so long as any portion of any indebtedness
or other liabilities of Debtor to Secured Party remains unpaid, Debtor will not
execute nor permit to be filed in any public office any such documents except
for the recording of this agreement with the U.S. Register of Copyrights and the
financing statement(s) filed or to be filed in connection with the perfection of
the security interest herein granted and any security interest hereafter created
pursuant to the provisions of subparagraph 6(c) hereof.
(c) All contracts, Certificates of Registration of Claim to
Copyright and all other documents relating to Collateral now owned or hereafter
acquired by Debtor are now or will immediately hereafter be maintained and kept
at Debtor`s principal place of business located at Bryn Mawr, Pennsylvania, and
Debtor will promptly notify Secured Party, in writing, of any change in or
addition to the location set forth above.
(d) Debtor is a Pennsylvania limited liability company and its
organizational identification number is 2923573. The address of Debtor`s chief
executive office is set forth in Section 10 hereof.
3
6. Special Provisions Relating to Collateral.
------------------------------------------
(a) Debtor has advised Secured Party and Secured Party
acknowledges that some of the Collateral is subject to the contractual rights of
the authors and creators thereof to receive a portion of the sums derived by
Debtor from its exploitation of the Collateral. Debtor agrees to furnish to
Secured Party, upon request, copies of all such contracts and agreements.
(b) In the event that any of the Collateral is shown on
Exhibit A to be owned by Debtor either jointly or as a tenant in common with any
other person, firm or entity and/or subject to any agreement granting to any
other person or entity and interest in the proceeds of the exploitation thereof,
Secured Party acknowledges and agrees that, with respect to such Collateral, it
is the intent of the parties hereto that the assignment herein made and security
interest hereby granted shall be limited to the interest of Debtor in such
Collateral.
(c) Debtor agrees to promptly pay or cause to be paid all
royalties that may become due during the term of this Agreement, and Debtor
agrees to give immediate written notice to Secured Party of any claim of
non-payment or other deficiency in such payments or other obligations with
respect to the Collateral.
(d) Debtor agrees to furnish to Secured Party immediate
written notice of any claims by any third party that any work included in the
Collateral is an infringement of another work or is lacking in originality or is
not the subject of a valid copyright. Debtor hereby indemnifies Secured Party,
and its officers, directors, shareholders and agents (collectively the
"Indemnified Parties"), and shall defend the Indemnified Parties from and
against any claim, demand or loss arising from infringement of another work.
(e) Debtor will furnish to Secured Party, upon request, such
reports and other information concerning the Collateral as Secured Party may
reasonably require to enable Secured Party to determine the status of the
Collateral, and shall permit Secured Party to inspect Debtor`s books, records of
account and other documents or information in Debtor`s possession pertaining to
the Collateral, at any reasonable time. Debtor hereby consents to the release to
Secured Party of information from Royalty Payors concerning amounts payable or
anticipated to be payable to Debtor or for Debtor`s account and any advancements
made or anticipated to be made to Debtor by such Royalty Payors.
7. Debtor`s Rights to Deal in the Collateral. In the ordinary course of
------------------------------------------
business, Debtor may commercially exploit the copyright materials which are
subject to the assignment herein made and security interest herein granted, may
license or otherwise grant to a third party the right to exercise and exploit
the rights vested in Debtor as the owner and copyright proprietor of said
materials, and may generally deal with the Collateral in accordance with the
ordinary and accepted customs and practices of the film industry; provided,
however, Secured Party in its sole discretion may, at any time following an
Event of Default, give notice directing any persons owing any royalties or other
payments in respect of the Collateral to make the payment and delivery thereof
to Secured Party and require the delivery thereof by Debtor to Secured Party of
4
all such royalties and other payments in the same form as received by Debtor.
With respect to such royalties and other payments, Debtor hereby appoints the
officers of Secured Party or any other person whom Secured Party may designate
as Debtor`s attorney-in-fact, with full power, upon the occurrence of an Event
of Default, to endorse Debtor`s name upon any checks, notes, money orders,
drafts or other forms of payment or remittance delivered to Secured Party by
Debtor pursuant to the terms hereof or which may otherwise come into Lender`s
possession, and this power, being coupled with an interest, is irrevocable so
long as any indebtedness or other obligations of Debtors to Secured Party remain
unpaid. Any person owing any such royalties or other payments to Debtor shall,
upon notice from Secured Party to do so, be fully protected in remitting any
amounts due or becoming due with respect to said royalties or other payments to
Secured Party, and such person shall not be required to inquire into Secured
Party`s right to give such notice or to inquire into the circumstances giving
rise to or surrounding the giving of such notice. Any such royalties or other
payments so received by Secured Party may be applied to the payment of the
Obligations, with the excess above amounts then due and payable to be paid over
promptly to Debtor except in the event of default relative to the Obligations,
in which case all amounts so received by Secured Party may be applied to payment
of the Obligations, whether or not then due and payable.
8. Covenants of Debtor. Debtor hereby covenants and agrees with Secured
--------------------
Party as follows:
(a) Debtor agrees to pay promptly when due all taxes,
assessments and governmental charges, if any, upon or against the Debtor or the
property or operations of the Debtor, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings.
(b) Debtor agrees not to change its state of formation, type
of organization or the location of its chief executive office without providing
at least 90 days prior written notice thereof to Secured Party. Debtor agrees to
execute and deliver any and all instruments of further assurance and to do all
such other and further things as may be necessary or appropriate, in the sole
discretion of Secured Party, to protect and enforce the assignment herein made
and security interest hereby granted and the priority thereof.
(c) In the event that Debtor shall fail to keep the Collateral
free from all other security interests, liens or encumbrances other than the SAG
Interest, Secured Party may, but shall not be required to, make expenditures for
any or all such purposes, including without limitation the payment of any taxes
which may become a lien upon the Collateral, and the amount so extended,
together with interest thereon at the maximum contract rate of interest from
time to time allowed by applicable law, shall become immediately due and payable
by Debtor to Secured Party, and payment of all such sums shall be secured
hereby. All costs and expenses of Secured Party in taking, holding, collecting
or otherwise realizing upon the Collateral upon the occurrence of any Event of
Default (as defined in the Note), including court costs and reasonable
attorney`s fees and legal expenses, shall likewise constitute additional
indebtedness of Debtor to Secured Party, which Debtor promises to pay on demand
and which shall be secured hereby.
9. Default and Remedies. Debtor shall be in default hereunder upon any
---------------------
failure to pay when due all or any part of the Obligations, or upon any failure
to observe or perform any of Debtor`s other agreements herein contained and such
5
failures are not cured within five (5) days, or upon any Event of Default as
defined in the Note, or if any warranty or statement by Debtor herein or
furnished in connection herewith is false or misleading, or if any bankruptcy or
other insolvency proceeding is instituted by or against Debtor and is not
dismissed within sixty (60) days of commencement, or if Debtor makes an
assignment for the benefit of creditors, or if Debtor shall suffer any final
judgment for the payment of money in excess of Fifty Thousand Dollars ($50,000)
and the same shall not be discharged or stayed within a period of thirty (30)
days from the date of entry thereof. Upon default, Secured Party may, at its
option, declare the entire outstanding principal balance of and accrued interest
on all outstanding indebtedness and other liabilities of Debtor to Secured
Party, including without limitation the indebtedness evidenced by the Note, to
be immediately due and payable, and may proceed to exercise any and all rights,
privileges and remedies of Secured Party hereunder, under any of the other
documents executed in connection herewith or otherwise at law or in equity.
Without limiting the foregoing, Secured Party shall have all of the rights and
remedies of a secured party prescribed by the Uniform Commercial Code as in
effect in the Commonwealth of Pennsylvania, and may require Debtor to assemble
the Collateral and all documents and instruments evidencing the rights of Debtor
therein, together with all other documents and instruments reasonably necessary,
to enable Secured Party or its assignee to collect and realize upon the
Collateral, and making same available to Secured Party at a place designated by
Secured Party. Any requirement of the Uniform Commercial Code providing for the
giving of reasonable notice to Debtor shall be deemed met if such notice is
deposited in the United States mail, postage prepaid, addressed to Debtor at the
address set forth herein, at least five (5) days prior to the time of deposition
or other event giving rise to the required notice. Secured Party may waive any
default before or after the same has been declared without impairing its right
to declare a subsequent default hereunder, this right being a continuing one.
10. Notices. For the purpose of the giving of any notice, election or
--------
demand required or permitted to be made hereunder, the address of Debtor is:
Xxxxxx Production, LLC
000 Xxxxxxx Xxxxx
0xx Xxxxxxxx
Xxxx Xxxx, XX 00000
ATTN: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with copy to:
Erskine, Wolfson, Gibbon & Xxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
6
and the address of Secured Party is:
International Travel CD`s, Inc.
The GSB Building
Xxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
ATTN: President
Facsimile: (000) 000-0000
with copy to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000--0000
ATTN: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
11. Severability. If any provision of this Agreement shall for any
-------------
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
12. Miscellaneous. This Agreement and all rights and liabilities
--------------
hereunder and in and to any and all Collateral shall inure to the benefit of
Secured Party and its successors and assigns, and shall be binding upon Debtor
and its successors and assigns. This Agreement and all rights and obligations
hereunder, including matters of validity, construction and performance shall be
governed by the laws of the Commonwealth of Pennsylvania.
7
IN WITNESS WHEREOF, Debtor and Secured Party have caused this Agreement
to be executed as of the date first above written.
DEBTOR:
XXXXXX PRODUCTION, LLC, by its
Managing Member
ATTEST METROPOLITAN RECORDING, INC.
By:
------------------------------------- --------------------------------
Xxxxx Xxxxxxxx, President
SECURED PARTY
-------------
INTERNATIONAL TRAVEL CD`S, INC.
ATTEST
By:
------------------------------------- ------------------------------------
Name:
Title:
8
EXHIBIT "A"
-----------
Debtor owns the U.S. Copyright No. PAu-2-457-921 to the original
screenplay written by Xxxxxxx Xxxxxx and Xxx Xxxxx entitled "Xxxxxx" by virtue
of a Copyright Assignment from Perimeter Pictures, Inc. dated February 21, 2000
and recorded on February 29, 2000 in volume 3448, p. 906 at the U.S. Copyright
Office.
When production of the film entitled "Xxxxxx" is complete, Debtor
intends to register a copyright on the film and any other publications
associated with its release and distribution.
9
COMMONWEALTH OF PENNSYLVANIA )
)
COUNTY OF PHILADELPHIA )
Before me, the undersigned, a Notary Public in and for the State and
County aforesaid, personally appeared Xxxxx Xxxxxxxx, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be the President and sole shareholder of
Metropolitan Recording, Inc., the Managing Member of XXXXXX PRODUCTION, LLC, the
within named bargainor, a limited liability company, and that he as such
President of the Managing Member, executed the foregoing instrument for the
purposes therein contained, by signing the name of the limited liability by
himself as such president of the Managing Member.
WITNESS my hand, at office in , this _______
---------------------
day of _________________, 2002.
Notary Public
My Commission Expires:
_________________________________
COMMONWEALTH OF PENNSYLVANIA )
)
COUNTY OF PHILADELPHIA )
Personally appeared before me, , a Notary Public, _________________,
with whom I am personally acquainted, who acknowledged that __________ executed
the within instrument for the purposes therein contained, and who further
acknowledged that ________ is the ___________________, of INTERNATIONAL TRAVEL
CD`S, INC., a Colorado corporation, and that he as such _____________, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as such __________.
WITNESS my hand, at office, this _______ day of _______________, 2002.
__________________________
Notary Public
My Commission Expires:
_____________________________________
10
