EXHIBIT
4.2
SECURED & COLLATERALIZED
PROMISSORY NOTE
$500,000 PLUS INTEREST DUE &
PAYABLE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE
HARBOR PROVISION.
FOR VALUE RECEIVED, on the Effective Date, as
defined below, JMJ Financial (the "Borrower," or "Writer"), hereby
promises to pay to the Lender ("Lender" or " Holder"), as defined
below, the Principal Sum, as defined below, along with the Interest
Rate, as defined below, according to the terms herein.
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Camelot
Entertainment Group, Inc.
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The "Principal
Sum" shall be:
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$500,000 (five
hundred thousand US Dollars); Subject to the following: accrued,
unpaid interest shall be added to the Principal Sum.
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The
"Consideration" shall be:
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$500,000 (five
hundred thousand US dollars) in the form of this $500,000 Secured
& Collateralized Promissory Note as memorialized and evidenced
by the attached Exhibit A Collateral and Security
Agreement.
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The "Interest
Rate" shall be:
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12% one-time
interest charge on the Principal Sum. No interest or principal
payments are required until the Maturity Date, but both principal
and interest may be prepaid prior to maturity date.
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The "Recourse"
terms shall be:
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This is a full
recourse Note such that, for example, if the Writer defaults on the
payment of this Note, forcing the Holder to foreclose on the
security/collateral and there is a deficiency between (1) the
outstanding principal and interest amount and (2) the foreclosure
liquidation amount; then the Holder has the right to pursue
additional claims against the Writer for that
deficiency.
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The
"Collateral" or "Security" shall be:
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500,000 units
of CONFIDENTIAL Investment Fund (or similar equivalent), or
$500,000 worth of any other assets, as memorialized and evidenced
by the attached Exhibit A Collateral and Security
Agreement.
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The "Maturity
Date" is the date upon which the Principal Sum of this Note, as
well as any unpaid interest shall be due and payable, and that date
shall be:
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Three years
from the Effective Date, as defined below on the signature
page.
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The "Prepayment
Terms" shall be:
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Prepayment is
permitted at any time by payment in the form of any of the
following: (1) cash, or (2) other negotiated form of payment
mutually agreed to in writing, or (3) by surrender of the
Convertible Promissory Note Document B-08172009a, or (4) by
surrender of the Collateral or Security with which this Promissory
Note is secured.
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ARTICLE 1
PAYMENT-RELATED PROVISIONS
1.1 Loan
Payment Schedule. While no principal or interest payments are
required until the Maturity Date, unless otherwise adjusted by
Writer with written notice to Holder, or unless otherwise prepaid
as set forth above whereby prepayment is permitted at any time by
payment of cash, or other mutually agreed and negotiated payment,
or by surrender of the Convertible Promissory Note Document
B-08172009a, or by surrender of the Collateral or Security related
hereto; provided that all conversions are honored as set forth
under Convertible Promissory Note Document B-08172009a and provided
that Rule 144 is available to remove the restrictive legend from
those shares obtained in those conversions and such that the shares
effectively become immediately freely tradable, Writer will plan to
make payments in total monthly amounts of $100,000 beginning 210
days from the execution of this agreement. Writer reserves the
right to (1) make payments prior to 210 days from the execution of
this agreement, and (2) to make payments in monthly amounts in
excess of $100,000, and (3) to adjust this payment schedule and
payment amounts with written notice to Holder. Please note: The
$100,000 figure is based on recent liquidity, and is subject to
change based on change in liquidity.
1.2 Interest
Rate. Interest payable on this Note will accrue interest at the
Interest Rate and shall be applied to the Principal Sum.
1.3 Application
of Payment. Unless otherwise specified in writing by Writer, all
payments made on this Note will be first applied to the Principal
Sum.
2.1. Notices.
Any notice required or permitted hereunder must be in writing and
be either personally served, sent by facsimile or email
transmission, or sent by overnight courier. Notices will be deemed
effectively delivered at the time of transmission if by facsimile
or email, and if by overnight courier the business day after such
notice is deposited with the courier service for
delivery.
2.2. Amendment
Provision. The term "Note" and all reference thereto, as used
throughout this instrument, means this instrument as originally
executed, or if later amended or supplemented, then as so amended
or supplemented.
2.3. Assignability.
This Note will be binding upon the Writer and its successors and
permitted assigns, and will inure to the benefit of the Holder and
its successors and permitted assigns, and may be assigned by the
Holder only with written consent by Writer.
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