EXHIBIT 10.4
SECURITY INTEREST AGREEMENT
SECURITY INTEREST AGREEMENT ("Security Interest Agreement"), dated as
of January 24, 2006, by and among the persons set forth on Schedule 1 (each a
"Secured Party" and collectively, the "Secured Parties"), RIM SEMICONDUCTOR
COMPANY (formerly known as New Visual Corporation), a Utah corporation with
headquarters located at 000 XX 000xx Xxx., Xxxxx 000, Xxxxxxxx, XX 00000 (the
"Company" or the "Debtor"), and XXXXXXX & XXXXXX, LLP, as agent for the Secured
Parties (the "Agent").
RECITALS
A. Reference is made to (i) that certain Bridge Loan Agreement of even
date herewith (the "Bridge Loan Agreement") to which the Debtor and each of the
Secured Party are parties, and (ii) the Transaction Agreements, including,
without limitation, the Notes. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the relevant Transaction Agreements.
B. Pursuant to the Notes, the Debtor has certain obligations to each of
the Secured Parties (all such obligations, the "Obligations").
C. In order to induce each of the Secured Parties to execute and
deliver the Transaction Agreements and to make the advances to the Debtor
contemplated thereby, and as contemplated by the Bridge Loan Agreement and the
Notes, the Debtor has agreed to grant to each of the Secured Parties a security
interest in the Collateral (as defined below) to secure the due and punctual
fulfillment of the Obligations. Each of the Secured Parties is willing to enter
into the Bridge Loan Agreement and the other Transaction Agreements only upon
receiving the Debtor's execution of this Security Interest Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. GRANT OF SECURITY INTEREST.
(a) In order to secure the due and punctual fulfillment of the
Obligations, the Debtor hereby grants, conveys, transfers and assigns to the
Secured Parties (and to each of them based on their respective Allocable Shares,
as defined below) a continuing security interest in the Collateral.
(b) For purposes of this Agreement, the following terms shall have the
meanings indicated:
"COLLATERAL" is all right, title and interest of Debtor in and to all of the
following, whether now owned or hereafter arising or acquired and wherever
located: All assets of the Debtor, including, but not limited to: all personal
and fixture property of every kind and nature, including without limitation all
goods (including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including accounts
receivable), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, and all general intangibles (including all
payment intangibles); all Equipment; all Intellectual Property; and any and all
claims, rights and interests in any of the above, and all guaranties and
security for any of the above, and all substitutions and replacements for,
additions, accessions, attachments, accessories, and improvements to, and
proceeds (including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Debtor's
books relating to any and all of the above and includes, without limiting the
generality of the above, the assets listed in Exhibit B.
"CODE" is the Uniform Commercial Code, in effect in the State of Delaware as in
effect from time to time.
"COPYRIGHTS" are all copyrights, copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"EQUIPMENT" has the meaning set forth in the Code and includes all present and
future machinery, equipment, tenant improvements, furniture, fixtures, vehicles,
tools, parts and attachments in which Debtor has any interest.
"INTELLECTUAL PROPERTY" is all present and future (a) Copyrights, (b) trade
secret rights, including all rights to unpatented inventions and know-how, and
confidential information; (c) mask work or similar rights available for the
protection of semiconductor chips; (d) Patents; (e) Trademarks; (f) computer
software and computer software products; (g) designs and design rights; (h)
technology; (i) all claims for damages by way of past, present and future
infringement of any of the rights included above; (j) all licenses or other
rights to use any property or rights of a type described above.
"PATENTS" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
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"TRADEMARKS" are trademarks, servicemarks, trade styles, and trade names,
whether or not any of the foregoing are registered, and all applications to
register and registrations of the same and like protections, and the entire
goodwill of the business of Debtor connected with and symbolized by any such
trademarks.
(b)The security interests granted pursuant
to this Section (the "Security Interests") are granted as security only and
shall not subject any of the Secured Parties to, or transfer or in any way
affect or modify, any obligation or liability of the Debtor under any of the
Collateral or any transaction which gave rise thereto.
(c)The term "Allocable Share" means, with
respect to each Secured Party (if there is more than one Secured Party), as of
the relevant date, the fraction equal to (i) the outstanding principal of the
Notes then held by such Secured Party, divided by (ii) the aggregate outstanding
principal of the Notes then held by all Secured Parties.
SECTION 2. FILING; FURTHER ASSURANCES.
(a)The Debtor will, at its expense, cause to
be searched the public records with respect to the Collateral and will execute,
deliver, file and record (in such manner and form as each of the Secured Parties
may reasonably require), or permit each of the Secured Parties to file and
record, as its attorney in fact for such purpose, any financing statement, any
carbon, photographic or other reproduction of a financing statement or this
Security Interest Agreement (which shall be sufficient as a financing statement
hereunder), any specific assignments or other paper that may be reasonably
necessary or desirable, or that the Secured Parties may reasonably request, in
order to create, preserve, perfect or validate any Security Interest or to
enable each of the Secured Parties to exercise and enforce its rights hereunder
with respect to any of the Collateral.
(b)Each Secured Party has designated an
Agent as provided in the Section titled "Agent" below. Among other things, such
Agent shall be agent of each such Secured Party for execution of and
identification on any financing statement or similar instrument referring to or
describing the Collateral.
(c)If Debtor does not comply with Section
2(a) hereof in a prompt manner, the Agent is authorized to execute and file any
and all financing statements desired to be filed by the relevant Secured Party
to reflect the security interest in the Collateral in any and all jurisdictions.
For such purposes, the Debtor irrevocably appoints the Agent (acting by Xxxxxx
X. Xxxxxxx and Xxxxxx Xxxxxxxx, or either one of them), with full power of
substitution to execute and file such financing statements naming the Debtor as
debtor thereon.
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SECTION 3.REPRESENTATIONS AND WARRANTIES OF DEBTOR. The Debtor hereby
represents and warrants to each Secured Party (a) that, except for the Permitted
Liens as defined in set forth in Exhibit A attached hereto, the Debtor is, or to
the extent that certain of the Collateral is to be acquired after the date
hereof, will be, the owner of the Collateral free from any adverse lien,
security interest or encumbrance; and (b) that except for such financing
statements as may be described on Exhibit A attached hereto and made a part
hereof, no financing statement covering the Collateral is on file in any public
office, other than the financing statements filed pursuant to this Security
Agreement.
SECTION 4.COVENANTS OF DEBTOR. The Debtor hereby covenants and agrees
with each Secured Party that the Debtor (a) will, at the Debtor's sole cost and
expense, defend the Collateral against all claims and demands of all persons at
any time claiming any interest therein junior to the Secured Party's interest;
(b) will provide the Secured Party with prompt written notice of (i) any change
in the chief executive officer of the Debtor or the office where the Debtor
maintains its books and records pertaining to the Collateral; (ii) the movement
or location of all or a material part of the Collateral to or at any address
other than as set forth in said Exhibit B; and (iii) any facts which constitute
a Debtor Event of Default (as such term is defined below), or which, with the
giving of notice and/or the passage of time, could or would constitute a Debtor
Event of Default, pursuant to the Section titled "Debtor Events of Default"
below; (c) will promptly pay any and all taxes, assessments and governmental
charges upon the Collateral prior to the date penalties are attached thereto,
except to the extent that such taxes, assessments and charges shall be contested
in good faith by the Debtor; (d) will immediately notify the Secured Party of
any event causing a substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of the amount of
such loss or diminution; (e) will not sell or offer to sell or otherwise assign,
transfer or dispose of the Collateral or any interest therein, without the prior
written consent of the Secured Party, except in the ordinary course of business;
(f) will keep the Collateral free from any adverse lien, security interest or
encumbrance (except for encumbrances specified in Exhibit A attached hereto) and
in good order and repair, reasonable wear and tear excepted, and will not waste
or destroy the Collateral or any part thereof; and (g) will not use the
Collateral in material violation of any statute or ordinance the violation of
which could materially and adversely affect the Debtor's business.
SECTION 5.RECORDS RELATING TO COLLATERAL. The Debtor will keep its
records concerning the Collateral at its offices designated in the caption of
this Security Interest Agreement or at such other place or places of business of
which the Secured Party shall have been notified in writing no less than ten
(10) days prior thereto. The Debtor will hold and preserve such records and
chattel paper and will permit representatives of the Secured Party at any time
during normal business hours upon reasonable notice to examine and inspect the
Collateral and to make abstracts from such records and chattel paper, and will
furnish to the Secured Party such information and reports regarding the
Collateral as the Secured Party may from time to time reasonably request.
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SECTION 6.GENERAL AUTHORITY. From and during the term of any Debtor
Event of Default, the Debtor hereby appoints the Secured Party the Debtor's
lawful attorney, with full power of substitution, in the name of the Debtor, for
the sole use and benefit of the Secured Party, but at the Debtor's expense, to
exercise, all or any of the following powers with respect to all or any of the
Collateral:
(a)to demand, xxx for, collect, receive and give acquittance for any
and all monies due or to become due;
(b)to receive, take, endorse, assign and deliver all checks, notes,
drafts, documents and other negotiable and non- negotiable instruments and
chattel paper taken or received by the Secured Party;
(c)to settle, compromise, prosecute or defend any action or proceeding
with respect thereto;
(d)to sell, transfer, assign or otherwise deal in or with the same or
the proceeds thereof or the related goods securing the Collateral, as fully and
effectually as if the Secured Party were the sole and absolute owner thereof;
(e)to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto; and
(f)to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon;
provided, however, that the Secured Party shall give the Debtor not less than
ten (10) business days prior written notice of the time and place of any sale or
other intended disposition of any of the Collateral.
The exercise by the Secured Party or by the Agent of or failure to so
exercise any authority granted herein shall in no manner affect Debtor's
liability to the Secured Party, and provided, further, that the Secured Party
and the Agent shall be under no obligation or duty to exercise any of the powers
hereby conferred upon them and they shall be without liability for any act or
failure to act in connection with the collection of, or the preservation of, any
rights under any of the Collateral.
SECTION 7. DEBTOR EVENTS OF DEFAULT.
(a)The Debtor shall be in default under this
Security Agreement upon the occurrence of an Event of Default (as defined in the
Note) by the Debtor (a "Debtor Event of Default").
(b)The Debtor hereby irrevocably agrees
that, upon the occurrence of a Debtor Event of Default, the Debtor shall be
deemed to have consented to an immediate conveyance and transfer to the Secured
Party of the copyrights and all other rights the Debtor may have in the software
included in the Collateral, including, but not necessarily limited to, the
software identified in Schedule B attached hereto. In furtherance of the
foregoing, and not in limitation thereof, the Debtor will, upon the occurrence
of a Debtor Event of Default, deliver to the Secured Party copies of the source
code of the relevant software, with accompanying written assignment of the
software to the Secured Party. Without limiting the foregoing, such source code
and assignment shall be in form sufficient to enable the Secured Party to
register the software in Secured Party's name with the Copyright Register. The
Debtor hereby agrees to take all steps necessary or appropriate, as requested by
the Secured Party, to effectuate and reflect such conveyance and transfer or
assignment to Secured Party. In all events, such conveyance, transfer or
assignment shall be deemed to vest title in such software in the Secured Party.
(c) In furtherance of the foregoing and not
in limitation thereof, the Debtor acknowledges and agrees that the Secured Party
may, upon the occurrence of a Debtor Event of Default, seek the immediate entry
of a preliminary injunction prohibiting the Debtor's use of such software in any
shape, way or manner, including, but not necessarily limited to, through the
sale of products that use any of such software, and the Debtor hereby
irrevocably agrees that it will not contest an application seeking entry of a
preliminary injunction and that it will accept the entry of such injunction.
SECTION 8.REMEDIES UPON DEBTOR EVENT OF DEFAULT. If any Debtor Event of
Default shall have occurred, then in addition to the provisions of Section 7
hereof, the Secured Party may exercise all the rights and remedies of a secured
party under the Code. The Secured Party may require the Debtor to assemble all
or any part of the Collateral and make it available to the Secured Party at a
place to be designated by the Secured Party which is reasonably convenient. The
Secured Party shall give the Debtor ten (10) business days prior written notice
of the Secured Party's intention to make any public or private sale or sale at a
broker's board or on a securities exchange of the Collateral. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels, as
the Secured Party, in its sole discretion, may determine. The Secured Party
shall not be obligated to make any such sale pursuant to any such notice. The
Secured Party may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be adjourned. The Secured Party, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
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SECTION 9.APPLICATION OF COLLATERAL AND PROCEEDS. The proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied in the following order of priorities: (a) first, to pay the reasonable
expenses of such sale or other realization, including, without limitation,
reasonable attorneys' fees, and all expenses, liabilities and advances
reasonably incurred or made by the Secured Party in connection therewith, and
any other unreimbursed expenses for which the Secured Party is to be reimbursed
pursuant to the Section titled "Expenses; Secured Party's Lien" below; (b)
second, to the payment of the Obligations in such order of priority as the
Secured Party, in its sole discretion, shall determine; and (c) finally, to pay
to the Debtor, or its successors or assigns, or as a court of competent
jurisdiction may direct, any surplus then remaining from such proceeds.
SECTION 10.EXPENSES; SECURED PARTY'S LIEN. If any Debtor Event of
Default shall have occurred, the Debtor will forthwith upon demand pay to the
Secured Party: (a) the amount which the Secured Party may have been required to
pay to free any of the Collateral from any lien thereon; and (b) the amount of
any and all reasonable out-of-pocket expenses, including, without limitation,
the reasonable fees and disbursements of its counsel, and of any agents not
regularly in its employ, which the Secured Party may incur in connection with
the collection, sale or other disposition of any of the Collateral.
SECTION 11.TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the payment, performance or other satisfaction in full of all the
Obligations, the Security Interests shall terminate and all rights to the
Collateral shall revert to the Debtor. Upon any such termination of the Security
Interests or release of Collateral, the Secured Party will, at the Debtor's
expense, to the extent permitted by law, execute and deliver to the Debtor such
documents as the Debtor shall reasonably request to evidence the termination of
the Security Interests or the release of such Collateral, as the case may be.
SECTION 12.NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (a) personally served,
(b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be for (i) the Debtor as
provided in the Bridge Loan Agreement for notices to the Company, (ii) for each
Secured Party as provided in the Bridge Loan Agreement for notices to the Lender
and (iii) for the Agent as provided in the Bridge Loan Agreement for notices to
the Escrow Agent. Any party hereto may from time to time change its address or
facsimile number for notices under this Section in the manner contemplated by
the Bridge Loan Agreement.
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SECTION 13. AGENT.
(a)Anything in the other provisions of this Security Interest Agreement
to the contrary notwithstanding, the Secured Party may designate another entity
to act as agent (the "Agent") for the Secured Party with respect to any one or
more of the rights of Secured Party hereunder, including, but not necessarily
limited to, the right to hold the security interest and/or be named as secured
party (as agent for the Secured Party) in any filed financing statement and to
take action in the name and stead of the Secured Party hereunder. Such
designation may be made with or without power of substitution, Such designation
shall remain in effect until canceled by the Secured Party, as provided herein;
provided, however, that such cancellation shall not affect the validity of any
action theretofore taken by such agent pursuant to this Security Interest
Agreement. The Debtor acknowledges and agrees to honor such designation and
acknowledges that the Agent is acting as the agent of the Secured Party and not
as a principal.
(b)Each Secured Party hereby confirms that the Secured Party has
designated Xxxxxxx & Xxxxxx, LLP (acting by Xxxxxx X. Xxxxxxx and Xxxxxx
Xxxxxxxx, or either one of them), as its initial Agent, with full right of
substitution.
(c)If there is more than one Secured Party, the Agent shall act as
agent for all Secured Parties. Any revocation of the authority of the Agent or
the designation of an alternate Agent shall be done only by Secured Parties who
represent a Majority in Interest of the Holders (as defined below) at that time;
provided that at all times all Secured Parties shall be represented by one and
the same Agent. The term "Majority in Interest of the Holders" means, as of the
relevant date, one or more Secured Parties whose respective outstanding
principal amounts of the Notes held by each of them, as of such date, aggregate
more than fifty percent (50%) of the aggregate outstanding principal amounts of
the outstanding Notes held by all Secured Parties on that date.
(d)Reference is made to the provisions of Sections 2 through 15,
inclusive, of the Joint Escrow Instructions. All such provisions are
incorporated herein by reference, as if set forth herein in full, except that,
for such purposes, the references therein to (i) the "Escrow Agent" shall be
deemed to be references to the "Agent" under this Security Interest Agreement,
(ii) the "Company" shall be deemed to be references to the Debtor under this
Security Interest Agreement, and (iii) the "Lender" shall be deemed to be
references to the relevant Secured Party under this Security Interest Agreement.
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SECTION 14. MISCELLANEOUS.
(a)No failure on the part of the Secured Party to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or remedy under this Security Interest Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise by the Secured Party of any
right, power or remedy under this Security Interest Agreement preclude the
exercise, in whole or in part, of any other right, power or remedy. The remedies
in this Security Interest Agreement are cumulative and are not exclusive of any
other remedies provided by law. Neither this Security Interest Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
(b)The execution and delivery by Debtor of this Security Interest
Agreement and all documents delivered in connection herewith have been duly and
validly authorized by all necessary corporate action of Debtor and this
Agreement and all documents delivered in connection herewith have been duly and
validly executed and delivered by Debtor. The execution and delivery by Debtor
of this Security Interest Agreement and all documents delivered in connection
herewith will not result in a breach or default of or under the Certificate of
Incorporation, By-laws or any agreement, contract or indenture of Debtor. This
Security Interest Agreement and all documents delivered in connection therewith
are legal, valid and binding obligations of Debtor enforceable against Debtor in
accordance with their terms.
(c)In the event that any action is taken by Debtor or Secured Party in
connection with the this Security Interest Agreement, or any related document or
matter, the losing party in such legal action, in addition to such other damages
as he or it may be required to pay, shall pay reasonable attorneys' fees to the
prevailing party.
SECTION 15.SEPARABILITY. If any provision hereof shall prove invalid or
unenforceable in any jurisdiction whose laws shall be deemed applicable, the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured Party.
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SECTION 16. GOVERNING LAW.
(a)This Security Interest Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of Wilmington or (except with respect to issues relating to the copyright
in and to the software, as contemplated by Section 7 hereof, which shall
exclusively be in the aforesaid federal courts) or of the state courts of the
State of Delaware sitting in the City of Wilmington in connection with any
dispute arising under this Security Interest Agreement and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions or to any claim that such venue of the suit, action or proceeding
is improper. To the extent determined by such court, the Debtor shall reimburse
the Secured Party for any reasonable legal fees and disbursements incurred by
the Secured Party in enforcement of or protection of any of its rights under
this Security Interest Agreement. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
(b) The Debtor and the Secured Party acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Security Interest Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Security Interest Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity.
SECTION 16.JURY TRIAL WAIVER. The Debtor and the Secured Party hereby
waive a trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other in respect of any matter arising
out of or in connection with the Note or this Security Interest Agreement.
SECTION 17.ASSIGNMENT. Except in connection with the transfer of all of
the rights of a Secured Party under the Transaction Agreements, a Secured Party
shall not assign or transfer its security interest granted hereunder, and,
further, upon the occurrence of a permitted transfer of a Secured Party's
security interest in the Collateral, the transferee shall be vested with all of
the rights and powers of the assigning Secured Party hereunder with respect to
the Collateral.
[Balance of page intentionally left blank]
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SECTION 18.WAIVER. The Debtor waives any right that it may have to
require Secured Party to proceed against any other person, or proceed against or
exhaust any other security, or pursue any other remedy Secured Party may have.
IN WITNESS WHEREOF, the Parties have executed this Security Interest Agreement
as of the day, month and year first above written.
SECURED PARTY:
SECURED PARTIES (named in Schedule 1):
By: Xxxxxxx & Xxxxxx LLP, as their agent
By:/s/ Xxxxxx Xxxxxxxx
------------------------------
DEBTOR:
RIM SEMICONDUCTOR COMPANY
By: /s/ Xxxx Xxxxx
-------------------------------------
President and Chief Executive Officer
AGENT:
XXXXXXX & PRAGER, LLP
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
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SCHEDULE 1
The Secured Parties are:
------------------------------------------------ -------------------------------
Name Address
------------------------------------------------ -------------------------------
Double U Master Fund, LP Harbour House, Waterfront Drive
P. O. Box 972
Road Town, Tortola, BVI
------------------------------------------------ -------------------------------
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EXHIBIT A
EXCEPTIONS TO REPRESENTATIONS
1.That certain Security Interest Agreement ("Security Interest Agreement") dated
as of May 26, 2005, to which Rim Semiconductor Company (formerly known as New
Visual Corporation) (the "Company") and the Secured Parties (as defined in the
Security Interest Agreement) are parties, with such Security Interest Agreement
having been executed in connection with the transaction (the "Transaction") as
described in the Securities Purchase Agreement dated as of May 26, 2005, by and
between the Company and certain individuals and entities named on executed
counterpart signature pages to such Securities Purchase Agreement, and in
connection with which a certain financing statement was filed in the State of
Utah, which remains in effect.
2.Certain encumbrances and liens, including (i) mechanics', materialmen's, and
similar liens, (ii) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (iii)
purchase money liens and liens securing rental payments under capital lease and
similar arrangements, and other liens arising in the ordinary course of business
and not incurred in connection with the borrowing of money.
ALL OF THE ABOVE EXCEPTIONS TO REPRESENTATIONS ON THIS EXHIBIT A SHALL BE
COLLECTIVELY REFERRED TO AND DEFINED AS THE "PERMITTED LIENS" AND INDIVIDUALLY
AS A "PERMITTED LIEN".
EXHIBIT B
ADDITIONAL INFORMATION RE COLLATERAL, ETC.
NONE
