EXHIBIT 10.37
December 31, 2003
New Visual Corporation
0000 Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxx
Re: RESTRICTIONS ON SHARE TRANSFERS
-------------------------------
Dear Sir or Madam:
Reference is made to the Securities Purchase Agreement (the
"Agreement"), dated as of December 31, 2003, between New Visual Corporation (the
"Company") and each of the Lenders named therein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
The undersigned is a Principal (as that term is defined below) of the
Company. In such capacity the undersigned Principal has had access to the terms
of the Agreement and the other Transaction Agreements, including but not limited
to, the Registration Rights Agreement between the Company and the Lenders.
The term "Principal" is a person who meets any one or more of the
following criteria: (A) the undersigned signatory identified as the "Company
Principal;" (B) a spouse of the Company Principal (a "Principal_s Spouse") who,
directly or indirectly, holds any shares of Common Stock of the Company, (C) a
parent, sibling or child of the Company Principal who resides in the household
of the Company Principal or of a Principal_s Spouse (each, a "Principal_s
Relative") and who, directly or indirectly, holds any shares of Common Stock, or
(D) any other person or entity, including, without limitation, for profit or
non-profit corporations, partnerships and trusts, whose voting rights regarding
Common Stock of the Company is subject to the direction or control of any of the
Company Principal, a Principal_s Spouse, or a Principal_s Relative.
As an inducement to each Lender's execution, delivery and performance
of the Agreement, the undersigned Principal hereby agrees as follows:
1. Without the prior written consent of a Majority in Interest of the
Holders in each instance, the undersigned Principal and any of its Transferees
(as defined below) will not, individually or collectively with any other
Principal or any Transferee, sell or otherwise transfer or offer to sell or
otherwise transfer any shares of Common Stock directly or indirectly held by
such Principal at any time through and including the date which is the
Principal's Lock-up Date (as defined below).
2. The term "Lock-up Date" means the date which is one hundred eight
(180) days after the Effective Date, but not counting for such purposes the
days, if any, during which sale of Registrable Securities was suspended after
the Effective Date.(1)
3. The Company may undertake such measures as it deems reasonable to
enforce the provisions of this Agreement and monitor compliance with its terms.
The undersigned Principal will cooperate with the Company in connection
therewith, including, but not limited to, providing prompt responses to Company
inquiries relating to such compliance.
4. The undersigned understands that this agreement is being provided to
the Company for the benefit of, and may be enforceable against the undersigned
by, each of the Company and each Lender. Each Lender is a third party
beneficiary of this agreement.
5. In addition to any other damages or remedies that may be
appropriate, this agreement of the Principal shall be enforceable by injunction
sought by the Company and the Lenders or any one or more of them.
6. The undersigned Company Principal represents to the Company and to
each Lender that the signatories below represent all persons or entities which
are Principals on the date hereof.
7. Notwithstanding the foregoing restrictions, the undersigned may,
without obtaining the consent of any Lender, effect a private transfer of all or
part of the undersigned's Common Stock to a third party (each, a "Transferee"),
provided the Transferee agrees in writing (which shall be provided to the
Company and by the Company to each Lender) to be bound by all of the terms
hereof as if such Transferee were an original signatory hereto (and the
provisions of this agreement shall then apply to the undersigned, such
Transferee and any other of the undersigned's Transferees jointly).
8. This agreement may be signed in one or more counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same agreement.
[Balance of page intentionally left blank]
--------
(1) By way of illustration: If the sale of Registrable Securities was suspended
for ten (10) days in the interim, the applicable Principal's Initial Lock-up
Date will be one hundred ninety (190) days after the Effective Date. If on the
185th day after the Effective Date, the sale of Registrable Securities was
suspended again for five (5) days, the Principal's Initial Lock-up Date will be
one hundred ninety-five (195) days after the Effective Date.
2
9. A photocopy of t3 12/09/03 his agreement shall suffice as evidence
of its terms and its enforceability against the undersigned.
COMPANY PRINCIPAL:
_________________________________
[Print Name of Company Principal]
By: _____________________________
[Signature]
IF THERE ARE ADDITIONAL PRINCIPALS, EACH SHOULD SIGN IN ONE OF THE
SPACES BELOW. USE ADDITIONAL COPIES OF THIS PAGE IF NECESSARY.
__________________________________ __________________________________
[Print Name of Principal] [Print Name of Principal]
By: ______________________________ By: _____________________________
[Signature] [Signature]
Its: _____________________________ Its: _____________________________
__________________________________ __________________________________
[Print Name of Principal] [Print Name of Principal]
By: _____________________________ By: _____________________________
[Signature] [Signature]
Its: _____________________________ Its: _____________________________
__________________________________ __________________________________
[Print Name of Principal] [Print Name of Principal]
By: _____________________________ By: _____________________________
[Signature] [Signature]
Its: _____________________________ Its: _____________________________
3
