GUARANTY AGREEMENT
THIS
GUARANTY AGREEMENT, dated as of June 28, 2005, by Cedric Kushner
Promotions, Inc. a Delaware corporation
("CKP") and Ckrush Entertainment, Inc. a
Delaware corporation and wholly owned
subsidiary of CKP
("Ckrush"),
(CKP and
Ckrush are collectively referred to herein as the "Guarantor") in favor of
CORNELL CAPITAL PARTNERS, L.P., a Delaware
limited partnership ("Cornell").
W I T N E S S E T H:
WHEREAS, Ckrush
and Headliners
Entertainment, Inc.
("Headliners") entered
into a Subscription Agreement dated as of the date hereof (the
"Subscription
Agreement") in connection with an investment by Headliners
in units of revenue
participation rights (the "Units") in connection
with two motion
pictures (the
"Pictures");
WHEREAS,
Cornell has purchased,
and Headliners has issued to Cornell,
a
Convertible Debenture dated as of the date hereof
with a principal
amount of
$3,000,000 (the "Convertible Debenture"),
the net proceeds of which will be used
by Headliners for its purchase of the
Units;
WHEREAS,
to induce Cornell to
purchase the Convertible Debenture Cornell
and Headliners have entered into that
certain Security
Agreement,
dated as of
the date hereof (the "Security Agreement") pursuant to which, among other
things, Headliners grants to Cornell a security
interest in and to the Pledged
Property (as defined in the Security
Agreement);
WHEREAS,
to induce Cornell to
purchase the Convertible Debenture Cornell
and Headliners have entered into that certain Amended Pledge and Escrow
Agreement, dated as of the date hereof
(the "Pledge Agreement") pursuant to
which, among other things, Headliners pledged to Cornell the
Pledged Shares (as
defined in the Pledge Agreement);
WHEREAS,
to induce Cornell to purchase the
Convertible
Debenture and to
finance Headliners investment in the Picture,
the Guarantor will
guarantee the
repayment of the Convertible Debenture to
Cornell.
WHEREAS,
the Guarantor will benefit from Cornell's purchase of the
Convertible Debenture issued by Headliners
through Headliners' investment in the
Units which will provide Ckrush with
financing in connection with the Pictures;
and
NOW, THEREFORE,
in consideration of
the promises and the agreements herein
and in order to induce Cornell to purchase the Convertible Debenture, the
Guarantor hereby agrees with Cornell as
follows:
Section 1.
Definitions.
All terms used in this
Guaranty which are defined
in the Convertible Debenture and not otherwise
defined herein shall have the
same meanings herein as set forth in the
Convertible Debenture.
<PAGE>
Section 2.
Guaranty.
(a) Subject to the
provisions of Section
2(c) below, the
Guarantor
does hereby irrevocably, absolutely and unconditionally guaranty the prompt
payment by Headliners, as and when due and payable
(whether maturity,
required
payment, acceleration, demand or otherwise), of all of the obligations
(collectively, the "Obligations") from time to time owing by Headliners to
Cornell under the Convertible Debenture,
whether for principal,
Disbursements,
interest (including, without limitation, all interest that accrues after
the
commencement of any insolvency proceeding
with respect to Headliners, whether or
not a claim for post-filing interest is allowed in such proceeding), fees,
commissions, expense reimbursements,
indemnifications or
otherwise, and whether
accruing before or subsequent to the
commencement of any
insolvency
proceeding
with respect to Headliners (notwithstanding the operation of
the automatic stay
under Section 362(a) of the U.S.
Bankruptcy
Code), and the due
performance and
observance by Headliners of its other
Obligations now or
hereafter existing
in
respect of the Convertible Debenture (the
"Guaranteed Obligations"),
(b) The Guarantor
does hereby agrees to pay any and all expenses
(including counsel fees and expenses) incurred by Cornell in
enforcing any
rights under this Guaranty. Without limiting the generality of the
foregoing,
the Guarantor's liability shall extend to all amounts that
constitute part of
the Guaranteed Obligations and would be owed by
Headliners to Cornell under the
Convertible Debenture but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Headliners or any
Guarantor.
(c) Condition to
Guaranty.
Notwithstanding
anything to the contrary
set forth in this Guaranty, Cornell shall have the absolute
right to enforce
this Guaranty at any time commencing on the second anniversary of the date
hereof, but in no event prior to such date,
provided however,
that Cornell may
enforce this Guaranty earlier upon the
occurrence of (i) a material breach under
the Limited Liability Company Agreements of TV The Movie
Holdings, LLC or
Beer
League Holdings, LLC which affects the rights or
interests of Cornell,
(ii) an
Event of Default under the Security Agreement dated the date hereof by and
between TV The Movie Holdings, LLC, Headliners, and the Other Investors (as
defined therein) ("TV The Movie Security
Agreement") or the
Security Agreement
dated the date hereof by and between Beer
League Holdings, LLC, Headliners, and
the Other Investors (as defined
therein) ("Beer League Security Agreement"),
(ii) a material breach by Ckrush under the
Subscription Agreement
which affects
the rights or interests of Headliners, or (iv) a material breach under the
Security Agreement dated the date hereof between
Ckrush and Cornell
("Ckrush
Security Agreement"); provided, however, that upon the
occurrence of any of the
items set forth in (i), (ii), (iii), or (iv) above, prior to any actions by
Cornell to enforce this Guaranty, Cornell shall provide the Guarantor with
written notice of such occurrence and an opportunity
for the Guarantor to
cure
any material breach or Event of Default, as
applicable within ten (10) days from
its receipt of written notice
<PAGE>
Section 3.
Guaranty Absolute; Continuing Guaranty; Assignments.
(a) Subject to the
conditions to this
Guaranty set forth in
Section
2(c) above, the Guarantor hereby guarantees
that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Convertible Debenture,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of
Cornell with respect
thereto. The Guarantor agrees that its guarantee constitutes a guaranty of
payment of the Obligations and not of
collection and waives any right to require
that any resort be made by Cornell to any collateral. The Obligation of the
Guarantor under this Guaranty are independent of the Obligation under the
Convertible Debenture, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against Headliners or the Guarantor or whether
Headliners or the Guarantor is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be
irrevocable,
absolute
and unconditional irrespective of, and the Guarantor
hereby irrevocably
waives
any defenses it may now or hereafter
have in any way
relating to, any or all of
the following:
(i) any lack of validity or enforceability of the Convertible
Debenture or any agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of payment of, or
in
any other term in respect of, all or any of
the Guaranteed
Obligation,
or any
other amendment or waiver of or any
consent to departure
from the
Convertible
Debenture, provided, however, the Guarantor shall not be liable under this
Guarantee as a result of any increase in
the Guaranteed
Obligations
resulting
from the extension of additional credit to Headliners or the Guarantor or
otherwise;
(iii) any taking,
exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all
or any of the Guaranteed Obligations;
(iv) the existence of any claim, set-off, defense or other right
that the Guarantor may have against any
Person, including,
without
limitation,
Cornell;
(v) any change,
restructuring or
termination of the
corporate,
limited liability company or partnership
structure or existence of Cornell; or
(vi) any other circumstance (including any statute of
limitations) or any existence of or reliance on
any representation
by Cornell
that might otherwise constitute a defense available to, or a discharge of,
Headliners or any Guarantor or surety.
(b) This Guaranty shall continue to be effective or be reinstated,
as
the case may be, if at any time any payment
of any of the Guaranteed Obligation
is rescinded or must otherwise be returned by Cornell
or any other Person upon
the insolvency, bankruptcy or reorganization of
Headliners or otherwise, all as
though such payment had not been made.
<PAGE>
(c) This Guaranty is a
continuing
guaranty and shall (i) remain in
full force and effect until the payment in
full, whether in cash
or securities,
as the case may be, of the Guaranteed
Obligation and all
other amounts
payable
under this Guaranty, (ii) shall be binding upon the
Guarantor,
its successors
and assigns and (iii) inure to the benefit
of and be enforceable
by Cornell and
its successors, pledgees, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), Cornell may pledge, assign or
otherwise transfer all or any portion of its rights under the Convertible
Debenture to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect
thereof granted to such Cornell herein
or otherwise, in each case as provided in
the Convertible Debenture.
Section
4. Waivers. The Guarantor hereby waives, to the full extent
permitted by applicable law, (i) promptness and diligence; (ii) notice of
acceptance and notice of the incurrence of any Obligation by
Headliners or the
Guarantor; (iii) notice of any actions taken
by Cornell under the
Convertible
Debenture or any other agreement or
instrument related
thereto; (iv) all
other
notices, demands and protests, and all other formalities of every kind in
connection with the enforcement of the Obligation or of the
Obligation of the
Guarantor hereunder, the omission of or delay in which,
but for the provisions
of this Section 4, might constitute grounds for relieving the
Guarantor of its
Obligation hereunder; (v) any right to compel or direct
Cornell to seek payment
or recovery of any amounts owed under this
Guaranty from any one particular fund
or source; (vi) any requirement that
Cornell protect,
secure, perfect or insure
any security interest or security interest or any property
subject thereto or
exhaust any right or take any action
against Headliners,
any other Guarantor or
any other Person or any collateral; and
(vii) any other defense available to the
Guarantor. The Guarantor acknowledges that it will receive
direct and indirect
benefits from the financing arrangements
contemplated herein and that the waiver
set forth in this Section 4 is knowingly
made in contemplation of such benefits.
The Guarantor hereby waives any right to
revoke this Guaranty,
and acknowledges
that this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the
future.
Section 5.
Subrogation.
(a) Until the final
payment in cash and
securities pursuant
to the
terms of the Convertible Debenture and performance in full of all of the
Obligations, the Guarantor shall not exercise any rights
against Headliners
arising as a result of payment by Headliners by way of subrogation,
reimbursement, restitution, contribution or otherwise,
and will not prove
any
claim in competition with Cornell in respect of any payment
hereunder in any
insolvency proceedings; the Guarantor will not claim any
set-off, recoupment or
counterclaim against Headliners or any other Guarantor in respect of any
liability of the Guarantor to Headliners; and the Guarantor and Headliners
<PAGE>
waives any benefit of and any right to
participate in any
collateral
security
which may be held by Cornell. Following the
final payment in cash and securities
pursuant to the terms of the Convertible Debenture and performance in full of
all
