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EXHIBIT 10.16

SECURITY AND PARTICIPATION AGREEMENT

THIS SECURITY AND PARTICIPATION AGREEMENT ("Security Agreement"), dated as of
April 27, 2010 by and between Camelot Film Group, Inc., a Nevada corporation
(“Debtor”) and Incentive Capital, LLC, a Utah limited liability company
("Secured Party"), is made with reference to the following facts:

A.           Debtor has executed or shall execute and deliver to Secured Party
simultaneously herewith that certain Promissory Note -Term Loan (the “Note”) in
the original principal amount of $650,000 in connection with a secured term loan
(the “Loan”) from Secured Party to Debtor.

B.           Debtor has agreed to grant the Secured Party a security interest in
the property hereinafter described as security for the prompt and complete
payment of the payment and other obligations of the Debtor to the Secured Party
under the Note.

C.       Debtor has agreed to grant the Secured Party a continuing profit
participation in the revenue actually received by Debtor from the Debtor’s
exploitation of the Liberation Assets, as set forth in this Security Agreement.

D.           The property covered by this Security Agreement includes certain
assets   (the “Liberation Assets”) purchased substantially simultaneously
herewith from CMBG Advisors, Inc., a California corporation in its sole and
limited capacity as assignee for the benefit of creditors of Liberation Group,
Inc. (“CMBG”) pursuant to an Asset Purchase Agreement of even date (the “Asset
Purchase Agreement”) as well as other assets of Debtor as set forth hereinbelow.

E.           Secured Party and CMBG have entered into an Intercreditor Agreement
(the “Intercreditor Agreement”) contemporaneously herewith setting forth the
agreed rights and obligations of each as secured parties with respect to the
Liberation Assets, it being expressly understood and agreed that Secured Party
shall at all times have and maintain  a first priority security interest in the
Liberation Assets, and CMBG shall at all times have and maintain a second
priority security interest in the Liberation Assets.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
other agreements hereinafter contained, and subject to the terms and conditions
of the Intercreditor Agreement, Debtor hereby agrees with Secured Party for the
benefit of Secured Party as follows:

1.           Grant of Security Interest.

Debtor hereby grants to the Secured Party a continuing first priority security
interest in all property identified on Schedule 1 attached hereto and by this
reference incorporated herein, and all products and proceeds thereof, including
(a) the Liberation Assets; (b) all accounts, negotiable instruments, chattel
paper and electronic chattel paper, general intangibles, proceeds, and monies
derived from the disposition or other exploitation of the Liberation Assets in
all media, from all sources, worldwide during the term hereof; and (c) other
assets of the Debtor as set forth on said Schedule 1 (collectively, the
“Collateral”) .  Terms used in this Security Agreement are used as defined in
(i) the Utah Uniform Commercial Code in effect from time to time; or (ii) the
Asset Purchase Agreement.
 
 
 
 
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2.           Profit Participation.

(a)           Commencing on the date of this Security Agreement, the Debtor
shall pay to the Secured Party ten percent (10%) of one hundred percent (100%)
of all gross revenues actually received thereafter by Debtor  within 14 days of
receiving any such revenue, CMGR or their respective subsidiaries, successors
and assigns (collectively “Camelot”), from any third party paying Camelot
revenues in connection with Camelot’s exploitation of the Liberation Assets in
all media, worldwide, from all sources (the “Camelot Revenue”),  for an initial
period of five (5) years (“Initial Period”) from the date of this Security
Agreement (“Secured Party Initial Revenue Participation”).  After the Initial
Period, Camelot shall pay the Secured Party two and one-half percent (2.5%) of
all such revenues, calculated as set forth above (the “Final Secured Party
Revenue Participation”), it being understood that the Secured Party shall
receive the Final Secured Party Revenue Participation for so long as Camelot
receives Camelot Revenue from exploiting the Liberation Assets.  In the event of
a sale of all or a portion of the Liberation Assets to a third party during the
Initial Period, the Secured Party shall receive ten percent (10%) of the monies
received by Camelot from such sale; provided, however, that if such sale occurs
after the Initial Period, then the Secured Party shall receive two and one-half
percent (2.5%) of the monies received by Camelot from such sale.  Payments shall
be made payable to Incentive Capital, LLC.

(b)       Debtor shall render detailed statements (including, without
limitation, an accounting of all revenue and expenses related to the disposition
or other exploitation of the Collateral and its several parts) to the Secured
Party on a quarterly basis, commencing as of the end of the first quarter in
which Debtor receives any Camelot Revenue. Each statement shall be delivered to
Secured Party within sixty (60) days after the end of the applicable quarter,
accompanied with payment of the applicable amount, if any, shown due to Secured
Party.  In addition to the quarterly detailed accounting of Camelot Revenue and
expenses, Debtor shall provide to Secured Party on a monthly basis a general
statement indicating the total gross revenues received for or in connection with
the disposition or other exploitation of the Collateral for the previous month.
Debtor will maintain accurate records in local currency of all financial
records regarding Camelot Revenue using generally accepted accounting principles
on a consistent, uniform and nondiscriminatory basis until three (3) years after
each such statement and during any period while a dispute about payments remains
unresolved. Such records will include all receipts derived, all recoupable
expenses paid, and all other information necessary to render any statement
due.  Debtor will also maintain full and accurate copies of every statement,
contract, electronic record, audit report, correspondence and other records
relating to the Camelot Revenue, and shall make available such records for
inspection and copying by Secured Party at the Debtor's principal place of
business during normal business hours.
 
 
 
 
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(c)    The Secured Party, on thirty (30) days prior written notice, may examine
and copy, through its auditors, Debtor's financial records regarding Camelot
Revenue twice only in any year period. Such examination shall be at the Secured
Party’s expense unless it uncovers an underpayment, uncontested or later
determined due, of more than ten percent (10%) of the amount shown due Secured
Party on the statements,  in which case Debtor shall pay on demand the
reasonable costs of such  examination.

3.           Security for Obligations.  This Security Agreement secures, and the
Collateral, including the Liberation Assets, is collateral security for, the
prompt payment or performance in full when due, whether at stated maturity, by
acceleration or otherwise (including the payment of amounts which would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. Section 362(a)), to Secured Party of Debtor’s
indebtedness and other obligations now existing or hereafter arising to Secured
Party with respect to the Note, whether for principal or interest (including,
without limitation, interest which, but for the filing of a petition in
bankruptcy, would accrue on such obligations) or payments of fees, expenses or
otherwise pursuant to the Note and/or any other documents or instrument executed
pursuant thereto or hereto (all such obligations being the "Note").

4.           Actions to Perfect.  Debtor hereby authorizes Secured Party at any
time and from time to time to file one or more financing or continuation
statements describing the Collateral.  Debtor further agrees that at any time
and from time to time, at the expense of the Debtor, Debtor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be reasonably necessary or desirable, or that Secured Party may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Secured Party to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral.  Such actions may include, without limitation, the delivery to
Secured Party of Collateral for which delivery is required to perfect, the
signature by bailees or depository banks on control agreements in favor of
Secured Party with respect to Collateral in the possession of bailees, or
complying with the provisions of any applicable statutes governing perfection or
protection of the security interest granted hereby in the Collateral.

5.           Representations and Warranties.  Debtor represents and warrants as
follows:

(a)           Status of Debtor; Authorization.  Debtor (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada, and (ii) is duly qualified or licensed to conduct business in each
jurisdiction in which the nature of its business or assets requires such
qualification or licensing under applicable law except where the failure to be
so qualified would not have a material adverse effect on the business,
operations or financial condition of Debtor.  Debtor has the requisite power and
authority to own its assets and to transact the business in which it is
presently engaged and in which it proposes to engage and to grant to Secured
Party the security interests in the Collateral as herein provided.  Debtor has
taken all action necessary to authorize the execution and delivery of the Note
and this Security Agreement, and the consummation of the transactions
contemplated thereby and hereby.
 
 
 
 
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(b)           Binding Security Agreement. This Security Agreement constitutes
the legal, valid and binding agreement and obligation of Debtor, enforceable
against Debtor in accordance with its terms, except as enforceability may be
limited by the bankruptcy, insolvency, fraudulent conveyance, and similar laws
and equitable principles affecting the enforcement of creditors' rights
generally.

(c)           Title to Collateral.  Except as otherwise expressly acknowledged
and contemplated in the Purchase Agreement, such Debtor has good and marketable
title to all and every part of the Collateral, free and clear of any mortgage,
pledge, lien, security interest, encumbrance, conditional sale contract or other
title retention agreement, or any other adverse claim of any nature whatsoever
(collectively, "Lien") except for (x) the first priority security interest
granted to the Secured Party hereby; and (y) the second priority security
interest granted to CMBG as provided for in the Asset Purchase Agreement
(referred to herein collectively as the “Permitted Liens”).  No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed with respect to the Permitted Liens.

(d)           No Default or Required Consent.  Except as otherwise expressly
acknowledged and contemplated in the Asset Purchase Agreement, the execution,
delivery and performance of this Security Agreement by Debtor, and the
effectuation by the Secured Party of any of its rights and remedies thereunder
or hereunder, whether upon default or otherwise, (x) will not result in a breach
of or constitute a default under (i) the certificate of incorporation or bylaws
or other charter provision of Debtor, or (ii) any other agreement or instrument
to which Debtor is a party or by which any of the Collateral is bound except, in
the case of clause (ii), where such breach or default would not have a material
adverse effect on the Collateral or on the business, operations or financial
condition of Debtor, (y) will not violate any law or any rule or regulation of
any administrative agency or any order, writ, injunction or decree of any court
or administrative agency, and (z) does not require the consent of any person,
entity or governmental agency or any notice or filing with any governmental or
regulatory body, except as shall have been previously obtained, given or made or
where the failure to obtain such consent would not have a material adverse
effect on the Collateral or on the business, operations or financial condition
of Debtor.
 
 

 
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(e)           Perfection.  Debtor’s exact legal name, type of organization and
jurisdiction of organization is set forth in the introduction of this Security
Agreement.  Debtor’s organizational identification number is
NV20071127932.  Debtor’s principal place of business is located at the address
set forth on the date hereof in Section 14 of this Security Agreement.  Upon (i)
the execution and delivery of this Security Agreement by Debtor; and (ii) the
proper and timely filing of a financing statement with the Secretary of State of
Nevada, the Secured Party will have a first perfected first priority security
interest in and to the Collateral.

 
(f)     Employment of Jamie Thompson:  Camelot Distribution Group, Inc. (“CDG”)
has entered into an employment agreement with Jamie Thompson  (“Thompson”) as of
September 1, 2009 (the “Employment Agreement”),  whereunder Thompson
shall render services as President of CDG to, among other responsibilities,
manage and supervise CDG’s general business operations, including without
limitation services in connection with the exploitation of the Liberation
Assets.  Debtor hereby acknowledges and agrees that it shall use its best
efforts to continue Thompson’s Employment Agreement for a period of five (5)
years from the date hereof.  During said period of the Employment Agreement,
Thompson shall be primarily responsible for the exploitation of the Collateral. 
 
6.           Affirmative Covenants.  Debtor covenants and agrees that until such
time as the Note is indefeasibly paid or otherwise satisfied in full, unless the
Secured Party shall otherwise consent in writing:

(a)           Conduct of Business and Maintenance of Assets and
Licenses.  Debtor shall do or cause to be done all things reasonably necessary
to preserve in full force and effect its existence, its corporate powers and
authority, its qualifications to carry on business in all applicable
jurisdictions, and all rights, interests and assets necessary to the conduct of
its business, except where the failure to do so does not have a material adverse
effect on the financial condition or operations of Debtor.

(b)           Protection of Security and Legal Proceedings.  Subject to the
provisions of Section 6.5 of the Purchase Agreement pursuant to which the
Secured Party expressly understands and acknowledges that Debtor may have no
obligation to defend adverse claims with respect to, and certain items of the
Collateral may be sold, assigned or abandoned by Debtor as Debtor may determine
in its sole discretion, Debtor shall, at its own expense, take any and all
actions reasonably necessary to preserve, protect and defend the security
interests of the Secured Party in the Collateral and the perfection and priority
thereof against any and all adverse claims, including appearing in and defending
all actions and proceedings which purport to affect any of the
foregoing.  Debtor shall promptly reimburse the Secured Party for any and all
sums, including costs, expenses and actual attorneys' fees, which the Secured
Party may pay or incur in defending, protecting or enforcing its security
interest in the Collateral or the perfection or priority thereof.

(c)           Payment of Taxes.  Debtor shall pay or cause to be paid all taxes
and other levies with respect to the Collateral when the same become due and
payable, except for any taxes which are being diligently contested in good faith
by appropriate proceedings and for which appropriate reserves have been
established.
 
 
 
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(d)           Use and Maintenance of Collateral.  Debtor shall comply in all
material respects with all laws, statutes and regulations pertaining to its use
and ownership of the Collateral and its conduct of its business; maintain all of
the Collateral in good condition, reasonable wear and tear excepted, and keep
accurate and complete books and records pertaining to the Collateral in
accordance with generally accepted accounting principles, except where the
failure to do any of the foregoing does not have a material adverse affect on
the Collateral or the Secured Party's rights therein.

 (e)           Inspection.  Debtor shall give the Secured Party such information
as may be reasonably requested concerning the Collateral and shall during
regular business hours and upon reasonable notice during the continuance of an
Event of Default, permit the Secured Party and its agents and representatives to
have full access to and the right to examine, audit and make copies and
abstracts from any and all of Debtor's books and records pertaining to the
Collateral, to confirm and verify the value of the Collateral and to do whatever
else the Secured Party reasonably may deem necessary or desirable to protect its
interests.  Furthermore, Debtor agrees to furnish promptly to the Secured Party
such information regarding the financial condition or business of Debtor or the
Collateral as the Secured Party may reasonably request, and all such information
hereafter furnished to the Secured Party by Debtor will be true and correct in
all material respects when furnished.

(f)           Notification.  Debtor shall notify the Secured Party in writing
within ten (10) business days of the occurrence of any event which materially
adversely affects the value of the Collateral, the ability of Debtor or the
Secured Party to dispose of the Collateral or the rights and remedies of the
Secured Party in relation thereto.

7.           Negative Covenants.  Debtor covenants and agrees that until such
time as the Note is indefeasibly paid or otherwise satisfied in full, without
the prior written consent of the Secured Party:

(a)           Sale or Hypothecation of Collateral.  Except as otherwise provided
in Section 6.5 of the Purchase Agreement, Debtor shall not directly or
indirectly, whether voluntarily, involuntarily, by operation of law or otherwise
(i) sell, assign, license, transfer, exchange, lease, lend, grant any option
with respect to or dispose of any of the Collateral or any of Debtor's rights
therein, except for sales, assignments, licenses, transfers, exchanges, leases
or loans in the ordinary course of the Debtor's business; nor (ii) create or
permit to exist any lien on or with respect to any of the Collateral, other than
Permitted Liens.  The inclusion of "proceeds" as a component of the Collateral
shall not be deemed  a consent by the Secured Party to any sale, assignment,
transfer, exchange, lease, loan, granting of an option with respect to or
disposition of all or any part of the Collateral.

(b)           Change of Location or Name.  Debtor shall not, without giving to
the Secured Party at least thirty (30) days' prior written notice (i) move its
principal place of business; (ii) change its name, its trade or fictitious
business name(s) or its organizational identification number; (iii) keep
Collateral at locations other than its principal place of business, except as
otherwise disclosed to Secured Party in writing; or (iv) change its type of
organization, jurisdiction of organization or other legal structure.
 
 
 
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8.           Secured Party Appointed Attorney-in-Fact.  Debtor hereby appoints
the Secured Party as Debtor's attorney-in-fact with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, from time to time in
the Secured Party's sole and absolute 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 Security Agreement.  Debtor acknowledges that
the foregoing grant of power of attorney is coupled with an interest and is
irrevocable.

9.           Secured Party May Perform.  If either Debtor fails to perform any
agreement or covenant contained herein, then the Secured Party in its discretion
may perform or cause the performance of such agreement or covenant, and the
reasonable expenses of the Secured Party incurred in connection therewith shall
be payable by the Debtor.  However, nothing in this Security Agreement shall
obligate Secured Party to act, nor shall the actions of Secured Party under this
section be construed as a waiver or cure of any such failure.

10.           Remedies upon Default.

(a)         “Event of Default” shall mean the occurrence of any of the following
events:

i.           The failure to pay the Note when due.

ii.           The failure, refusal or neglect of Debtor to observe or perform
for any  reason any of the covenants, conditions, agreements or provisions
contained in this Security Agreement or in any of the other agreements or
instruments referenced herein or contemplated hereby (referred to herein
individually as a “Loan Document” and collectively as the “Loan Documents”)
(other than  the payment of the Note of which the failure to pay constitutes an
Event of Default described in Section 9(a)i hereof) or to execute and deliver
any documents, agreements or instruments reasonably requested by Secured Party
hereunder or thereunder, provided that if such failure, refusal or neglect is
capable of remedy within fifteen (15) days  the Debtor shall be entitled to cure
the same within fifteen (15) days of Debtor’s receipt of written notice from
Secured Party of the occurrence of such failure, refusal or neglect.

iii.           Any representation or warranty made by Debtor in any Loan
Document or any report, certificate, financial statement or other instrument
furnished by or on behalf of Debtor in connection with any Loan Document shall
prove to have been false or misleading in any material respect.
 

 
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iv.           Subject to the provisions of Section 6.5 of the Purchase
Agreement, Secured Party shall cease to have valid and perfected first priority
security interest at any time for any reason in the Collateral, or any portion
thereof (subject to Permitted Liens).
 
v.           Subject to the provisions of Section 6.5 of the Purchase Agreement,
if any judgment against Debtor or any of its property or assets which would or
might materially adversely affect (a) its ability to perform its obligations
under any Loan Document; and/or (b) the Collateral and/or the Secured Party's
rights therein, remains unpaid, unstayed or undismissed for a period of more
than forty-five (45) days.
 
vi.           Debtor shall be dissolved or shall sustain the loss, cancellation
or forfeiture of its legal status or good standing by reason of any judicial,
extrajudicial or administrative proceedings or otherwise, or shall (a) apply for
or consent to the appointment of a receiver, trustee or liquidator of Debtor or
of all or a substantial part of Debtor's assets; (b) be unable to, or admit in
writing its inability to, pay its debts as they mature; (c) make a general
assignment for the benefit of creditors; (d) be adjudicated a bankrupt or
insolvent; (e) file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement for the benefit of creditors or
take advantage of any insolvency law in its capacity as a debtor; (f) interpose
an answer admitting the material allegations of the petition filed against
Debtor in any bankruptcy, reorganization or insolvency proceedings; (g) take any
action which would have the effect of dissolving Debtor; or (h) take any action
for the purpose of effecting any of the foregoing.
 
vii.  Any (a) involuntary petition is filed against Debtor seeking to subject
Debtor to any bankruptcy, insolvency or similar laws and such petition shall
remain unstayed or not be withdrawn for a period of forty-five (45) days; or (b)
an order, judgment or decree shall be entered against Debtor by any court of
competent jurisdiction approving a petition seeking its reorganization or
appointment of a receiver, trustee or liquidator of Debtor or of all or a
substantial part of its assets and such order, judgment or decree shall continue
and stay in effect for a period of forty-five (45) days.

(b)           If an Event of Default exists, the Secured Party may exercise one
or more of the following rights and remedies at any time or times and without
notice to or demand upon Debtor:

(i)           Declare the Note to be forthwith due and payable, whereupon  the
Note shall be accelerated and shall become immediately due and payable without
presentation, demand or notice of any kind to the Debtor (all of which are
hereby waived  by Debtor ), except that if an Event of Default specified in
Sections 9(a)(vi) and 9(a)(vii) shall occur, such acceleration shall be
automatic and no declaration or other act of Secured Party shall be necessary to
effect such acceleration;

(ii)           Proceed to protect and enforce the rights of Secured Party to
payment of the Note and its rights to proceed against the Collateral and
exercise its remedies whether by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision of any of the Loan Documents or any other legal or equitable right or
remedy of Secured Party;
 
 
 
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(iii)           In addition to those actions that may otherwise be permitted to
be taken by Secured Party under any of the Loan Documents, with respect to the
Collateral, take the following actions:

(a)           Collections, etc.  Secured Party may demand, sue for, collect or
receive, in the name of Secured Party or in the name of Debtor, or otherwise,
any money or property at any time payable or receivable on account of or in
exchange for, or make any compromise or settlement deemed desirable with respect
to, any of the Collateral (but Secured Party shall be under no obligation to do
so), or extend the time of payment, arrange for payment in installments, or
otherwise modify the term of, or release, any of the Collateral, without thereby
incurring responsibility to discharge, or discharging, or otherwise affecting
any liability of Debtor hereunder.  Secured Party shall not be required to take
any steps to preserve any rights against other parties to the
Collateral.  Secured Party may (but is not obligated to) make such payments and
take all such actions as Secured Party  deems necessary to protect its security
interest in the Collateral and/or the value thereof, and Secured Party is hereby
authorized (without limiting the general nature of the authority hereinabove
conferred) to pay, purchase, contest or compromise any lien or encumbrance on
the Collateral; and

(b)            Possession and Sale of Collateral, etc.  Secured Party may
exercise in respect of the Collateral all rights and remedies hereunder and
under the Loan Documents, all the rights and remedies of a secured party under
the Code and all rights and remedies otherwise available to it.  In addition,
Secured Party may notify any and all account debtors of the Debtor to make all
further payments to Secured Party, and enter upon each premises of wherever the
Collateral may be and take possession of the Collateral and demand and receive
such possession from any Person who has possession thereof; and take such
measures as it may deem necessary or proper for the care or protection thereof,
including the right to remove all or any portion of the Collateral (but Secured
Party shall not be obligated to do so).  With or without taking such possession,
Secured Party may sell or cause to be sold, whenever Secured Party shall decide,
in one or more sales or parcels, and at such price or prices and upon such other
terms as may be commercially reasonable (irrespective of the impact of any such
sales on the market price of such assets), and for cash or on credit or for
future delivery, without assumption of any credit risk, all or any portion of
the Collateral at any broker's board or at public or private sale.  Secured
Party may be the purchaser at any public or private sale to the extent permitted
by law and provided such sale is conducted in accordance with the Code of any or
all of the Collateral so sold and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
such assets sold at any such public or private sale, to use and apply the Note
as a credit on account of the purchase price payable by Secured Party at such
sale.  Each purchaser (including the Secured Party) at any such sales shall
thereafter hold the Collateral purchased absolutely free from any claim or right
of whatever kind, including any equity of redemption of the Debtor, any such
demand, notice, claim, right and equity being hereby expressly waived and
released.  Debtor agree that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice of sale to the Debtor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  Secured Party shall not be obligated to
make any sale of the Collateral regardless of notice of sale having been
given.  Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefore, and such sale may,
without further notice be made at the time and place to which it was so
adjourned.  Debtor hereby waive any claims against Secured Party arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Secured Party accepts the first offer received and does not
offer such Collateral to more than one offeree, provided such private sale is
conducted in a commercially reasonable manner.
 
 
 
 
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(c)           Appointment of a Receiver.  Upon the occurrence of an Event  of
Default, the Secured Party shall be entitled to the appointment of a receiver,
to take possession of all or any portion of the Collateral and to exercise such
powers as the court shall confer upon the receiver.

(d)           Power of Attorney.  Debtor does hereby irrevocably make,
constitute, and appoint the Secured Party and its designees as its true and
lawful attorney-in-fact, with full power in the name of Secured Party and/or
Debtor, to take the following actions upon the occurrence of an Event of
Default: to endorse any notes, checks, drafts, money orders or other evidences
of payment relating to the Collateral that may come into the possession of the
Secured Party; to enforce all of Debtor’s rights under and pursuant to all
agreements with respect to the Collateral, all for the sole benefit of Secured
Party, to enter into and perform such agreements as may be necessary in order to
carry out the terms, covenants, and conditions of this Security Agreement which
are required to be observed or performed by Debtor, to execute such other and
further mortgages, pledges and assignments of the Collateral as Secured Party
may require for the purpose of protecting, maintaining, or enforcing the
security interests granted to Secured Party by this Security Agreement and the
other Loan Documents, and to do any and all other things necessary or proper to
carry out the intention of this Security Agreement and the other Loan Documents;
and Debtor hereby ratifies and confirms all the Secured Party, as such
attorney-in-fact, or its substitutes shall properly do by virtue of this power
of attorney, provided, however, that Secured Party agrees to notify Debtor prior
to any such endorsement, execution or action and to provide Debtor with a
reasonable period to endorse or execute the subject documents on Debtor’s own
behalf.  Such powers of attorney are coupled with an interest and are therefore
irrevocable.

(e)           Rights and Remedies Cumulative.  No right or remedy conferred upon
Secured Party herein or in any of the other Loan Documents or otherwise
available at law or in equity (or both) shall be exclusive of any other right or
remedy contained herein or therein or otherwise made available.  All such rights
and remedies are cumulative and are not exclusive of any right or remedy which
Secured Party may otherwise have.
 
 
 
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(f)           Application of Proceeds.  Any cash held by the Secured Party as
Collateral and all cash proceeds received by either of the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Secured Party, be held by
the Secured Party as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to Secured Party pursuant to this
Security Agreement) in whole or in part by the Secured Party against all or any
part of the Note in such order as the Secured Party shall elect.  Any surplus of
such cash or cash proceeds held by either of the Secured Party and remaining
after payment in full of all the Note shall be paid over to Debtor or to
whomsoever may be lawfully entitled to receive such surplus.

11.           Liability and Indemnification.  The powers conferred upon Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise such powers.  Nothing in this Security
Agreement shall be deemed to constitute an assumption by either of the Secured
Party of any liability or obligation of the Debtor with respect to any of the
Collateral.  The Secured Party shall not be liable to either Debtor for any act
(including, without limitation, any act of active negligence) or omission by the
Secured Party under this Security Agreement unless the Secured Party's conduct
constitutes willful misconduct or gross negligence.  Debtor agrees to indemnify
and to hold the Secured Party harmless from and against all losses, liabilities,
claims, damages, costs and expenses (including reasonable attorneys' fees and
disbursements) with respect to (a) any action taken (including, without
limitation, any act of active negligence) or any omission by either of the
Secured Party with respect to the Payment Obligations or this Security
Agreement, provided that Secured Party's conduct does not constitute willful
misconduct or gross negligence, and (b) any claims arising out of Debtor's
ownership of the Collateral or Secured Party's security interest therein.

12.           Expenses.  Debtor agrees to pay upon demand to the Secured Party
any and all reasonable expenses, including the reasonable fees and expenses of
its outside counsel and of any experts and agents which the Secured Party may
incur in connection with (a) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (b) the
exercise or enforcement of any of the rights of the Secured Party under the
Payment Obligation and/or this Security Agreement, and (c) the failure by Debtor
to perform or observe any of the provisions of the Payment Obligation and/or
this Security Agreement.

13.           Security Interest Absolute.  Except as otherwise provided herein
or in the Purchase Agreement or in the Intercreditor Agreement, all rights of
the Secured Party and security interests hereunder shall be absolute and
unconditional irrespective of:

(a)           any lack of validity or enforceability of the Purchase Agreement
or any other Loan Document;

 
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(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Note, or any other amendment or waiver of or
any consent to any departure from any of the Loan Documents; or

(c)           any furnishing, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Note.

14.           Amendments, Waiver.  No amendment or waiver of any provision of
this Security Agreement nor consent to any departure by Debtor herefrom shall in
any event  be effective unless the same shall be in writing and signed by the
Secured Party and Debtor and/, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose any party
for which given.

15.           Notices.  All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered by messenger or overnight delivery
service, or sent by first class mail (or air mail where available), postage
prepaid, certified or registered, return receipt requested, as set forth in the
Purchase Agreement or at such other address as may be furnished in writing. Any
notice given by messenger or overnight delivery service as provided in this
Section 15 shall be deemed given when delivered if during normal business hours
on a business day (or if not, the next business day after delivery); any notice
given by first class mail (or air mail where available), postage prepaid,
certified or registered, return receipt requested shall be deemed given five (5)
business days after the date of mailing.  Any party may by notice to the other
change the address at which notices and demands may be given to it.

16.           Continuing Security Interest; Release of Security Interest Upon
Payment.  This Security Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until indefeasible
payment or other satisfaction in full of the Note, (b) be binding upon Debtor,
and its successors and assigns, (c) inure, together with the rights and remedies
of the Secured Party hereunder, to the benefit of the Secured Party and its
successors, transferees and assigns, (d) constitute the entire agreement between
Debtor and the Secured Party with respect to the subject matters covered hereby,
and (e) be severable in the event that one or more of the provisions herein is
determined to be illegal or unenforceable.  Upon the indefeasible payment or
other satisfaction in full of the Note, the Secured Party, at the request and
expense of Debtor, shall release the security interests in the Collateral
granted herein and execute such termination statements as may be necessary
therefore, to the extent that such Collateral shall not have been sold or
otherwise applied pursuant to the terms hereof.

17.           Return of Collateral.  Subject to any duty imposed by law or
otherwise to the holder of any subordinate lien on the Collateral known to the
Secured Party, and subject to the direction of a court of competent
jurisdiction, upon payment in full of the Note, Debtor shall be entitled to the
return of all Collateral belonging to Debtor in the possession of the Secured
Party; provided, however, that the Secured Party shall not be obligated to
return to Debtor or deliver to the holder of any subordinate lien any such
Collateral until it is satisfied that all amounts with respect to the Note are
no longer subject to being recaptured under applicable bankruptcy or insolvency
laws or otherwise.  The return of Collateral, however effected, shall be without
recourse to the Secured Party and the Secured Party shall be entitled to receive
appropriate documentation to such effect. The return of Collateral shall be
effected without representation or warranty and shall not entitle Debtor to any
right to any endorsement.
 
 
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18.           Governing Law; Terms.  This Security Agreement shall be deemed to
have been made in the state of Utah and the validity, construction,
interpretation, and enforcement hereof, and the rights of the parties hereto,
shall be determined under, governed by, and construed in accordance with the
internal laws of the state of Utah.  Debtor hereby consents to the jurisdiction
of any Utah state or United States Federal court sitting in Utah with respect to
disputes arising out of this Security Agreement.

 
19.           Waiver of Jury Trial.  Debtor HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.   Any legal action or proceeding with respect to this
Security Agreement must be brought in the federal or state courts located in the
State of Utah, unless Secured Party elects to bring such legal action or
proceeding elsewhere. Debtor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
federal or state courts  located in the State of Utah as having proper
venue.  Debtor hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Security Agreement brought
in the aforesaid Utah courts and irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum, and also consents to the
service of process by any means authorized by the State of Utah.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
 
 

 
Debtor:
CAMELOT FILM GROUP, INC., a Nevada corporation
       
 
By:
/s/ Robert P. Atwell       Robert P. Atwell, CEO          

 

 
Secured Party:
INCENTIVE CAPITAL, LLC, a Utah corporation
         
 
By:
                                      , President          

 
 
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