EXHIBIT 10.3
SECURITY INTEREST AGREEMENT
SECURITY INTEREST AGREEMENT ("Security Interest Agreement"), dated as
of May 26, 2005, by and among the persons set forth on Schedule 1 (each a
"Secured Party" and collectively, the "Secured Parties"), NEW VISUAL
CORPORATION, a Utah corporation having its principal executive offices 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 Securities Purchase Agreement
of even date herewith (the "Securities Purchase Agreement") to which the Debtor
and the Secured Parties are parties, and (ii) the Transaction Agreements,
including, without limitation, the Debentures and the Registration Rights
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the relevant Transaction Agreements.
B. Pursuant to the Transaction Agreements, the Debtor has certain
obligations to the Secured Parties (all such obligations, the "Obligations"),
including, but not limited to, obligations pursuant to the Securities Purchase
Agreement, the Debentures and the Registration Rights Agreement.
C. In order to induce 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 Securities Purchase Agreement and the
Debenture, the Debtor has agreed to grant to the Secured Parties a security
interest in the Collateral (as defined below) to secure the due and punctual
fulfillment of the Obligations. The Secured Parties are willing to enter into
the Securities Purchase 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:
SECTION 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 following described
properties, assets and rights of Debtor, wherever located, whether now owned or
hereafter acquired or arising, and all cash and non-cash proceeds and products
thereof (all of the same hereinafter collectively called the "Collateral"):
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 Copyrights (as defined below)
and any and all royalties, payments and other amounts payable to Debtor
in connection with the Copyrights, together with all renewals and
extensions of the Copyrights, the right to recover for all past and
future infringements of the Copyrights, and all manuscripts, documents,
writings, tapes, disks, storage media, computer programs, computer
databases, computer program flow diagrams, source codes, object codes
and all tangible property embodying or incorporating the Copyrights,
and all other rights of every kind whatsoever accruing thereunder or
pertaining thereto; all of Debtor's right, title and interest in and to
any and all present and future license rights or agreements, with
respect to the Copyrights or otherwise; and all present and future
accounts and other rights to payment arising from, in connection with
or relating to the Copyrights or otherwise.
"Copyrights" means any or all of the following: all present and future
United States registered copyrights and copyright registrations,
including Debtor's United States registrations and copyright
registrations listed in Exhibit C to this Security Interest Agreement,
all of Debtor's present and future United States applications for
copyright registrations listed in Exhibit D to this Security Interest
Agreement, and all of Debtor's present and future copyrights that are
not registered in the United States Copyright Office ("Copyright
Office"), including without limitation derivative works.
(b) The security interests granted pursuant to this Section (the
"Security Interests") are granted as security only and shall not subject the
Secured Party 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 Debenture then held by
such Secured Party, divided by (ii) the aggregate outstanding principal of the
Debentures 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 the Secured Party may require), or permit the
Secured Party to file and record, as its attorney in fact, any financing
statements, any carbon, photographic or other reproduction of a financing
statement or this Security 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 Party may request, in
order to create, preserve, perfect or validate any Security Interest or to
enable the Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral. The Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to execute in the name and behalf of Debtor such
additional financing statements as Secured Party may request.
(b) Each Secured Party has designated an Agent as provided in Section
titled "Agent" below. Among other things, such Agent shall be agent of the
Secured Party for execution of and identification on any financing statement or
similar instrument referring to or describing the Collateral.
(c) The Agent is authorized to execute and file any and all financing
statements desired to be filed by the Secured Parties 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 or 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.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF DEBTOR. The Debtor hereby
represents and warrants to the Secured Party (a) that, except as 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; (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; and (c) that all additional
information, representations and warranties contained in Exhibit B attached
hereto and made a part hereof are true, accurate and complete on the date
hereof.
SECTION 4. COVENANTS OF DEBTOR. The Debtor hereby covenants and agrees
with the 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 Section 7 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 have
and maintain adequate insurance at all times with respect to the Collateral, for
such other risks as are customary in the Debtor's industry for the respective
items included in the Collateral, such insurance to be payable to the Secured
Party and the Debtor as their respective interests may appear, and shall provide
for a minimum of ten (10) days prior written notice of cancellation to the
Secured Party, and Debtor shall furnish the Secured Party with certificates or
other evidence satisfactory to the Secured Party of compliance with the
foregoing insurance provisions; (f) 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; (g) will keep the Collateral free from any adverse lien, security
interest or encumbrance (except for encumbrances specified in Exhibit A attached
hereto or otherwise specified herein) and in good order and repair, reasonable
wear and tear excepted, and will not waste or destroy the Collateral or any part
thereof, and in furtherance of the foregoing, and not in limitation thereof,
will not grant a security interest senior to or pari passu with the security
interest of the Secured Parties contemplated hereby to any other party (except
to a party such as a government agency, where the priority of such party is
provided by relevant law or regulation); and (h) 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
(collectively, "Audit"), 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. As long as no Event of Default has occurred and is
continuing, such Audits will be conducted not more often than once every twelve
(12) months. Unless an Event of Default is continuing at the time of the Audit,
the Secured Party shall bear its own costs of the Audit. If an Event of Default
has occurred and is continuing, Secured Party may make Audits more frequently
and the Debtor will be responsible for the related costs.
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 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 Secured Party of or failure to so exercise any
authority granted herein shall in no manner affect Debtor's liability to Secured
Party, and provided, further, that Secured Party 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. The Debtor shall be in default
under this Security Agreement upon the occurrence of any of the following events
(a "Debtor Event of Default"):
(i) if any representation or warranty made by the Debtor
in this Security Interest Agreement, in the
Securities Purchase Agreement or in any of the other
Transaction Agreements shall be false or misleading
in any material respect; or
(ii) the occurrence of an Event of Default (as defined in
the Debenture) by the Debtor.
SECTION 8. REMEDIES UPON DEBTOR EVENT OF DEFAULT. If any Debtor Event
of Default shall have occurred, the Secured Party may exercise all the rights
and remedies of a Secured Party under the Uniform Commercial 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.
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 Section 10; (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. The Debtor will forthwith
upon demand pay to the Secured Party: (a) the amount of any taxes which the
Secured Party may have been required to pay by reason of the Security Interests
(including, without limitation, any applicable transfer taxes) or to free any of
the Collateral from any lien thereon (provided, the Debtor is not actively
contesting the lien in good faith); 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 (i) the preparation of any
amendments or modifications of this Security Agreement, (ii) the collection,
sale or other disposition of any of the Collateral; (iii) the exercise by the
Secured Party of any of the powers conferred upon it hereunder, or (iv) any
default by the Debtor hereunder.
SECTION 11. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the earlier of
(i) the date on which less than one-third of the original principal
amount of the Debentures issued on the Closing Date (but not counting
any Debentures canceled pursuant to Section 4(o)(iii) of the Securities
Purchase Agreement) are outstanding, or
(ii) the payment and performance 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, promptly 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.
The Debtor further covenants and agrees that it will not grant any other lien in
the Collateral (however denominated) as long as any of the Obligations remains
outstanding other than Permitted Liens (as defined below).
SECTION 12. PERMITTED LIENS. The term "Permitted Liens" means any or
more of the following:
(a) liens shown on Exhibit A attached hereto or arising under the
latest Disclosure Letter provided to the Holders no later than the Closing Date
or specified in the Company's SEC Documents;
(b) liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being actively contested in good faith by the
Debtor;
(c) purchase money liens (i) on equipment acquired or held by the
Debtor, where such lien was created in connection with the financing of the
acquisition of such equipment, or (ii) existing on equipment when such equipment
is or was acquired by the Company; provided, in each case that the lien is
limited to the specific item or items of equipment and improvements and proceeds
thereof;
(d) liens associated with licenses or sublicenses granted by the Debtor
in the ordinary course of its business, and not otherwise prohibited by the
terms of this Agreement, if such liens have no priority over the Security
Interests;
(e) liens associated with licenses or sublicenses granted to the Debtor
in the ordinary course of its business, in connection with the Debtor's leased
premises or leased property, if such liens have no priority over the Security
Interests;
(f) leases or subleases granted in the ordinary course of the Debtor's
business, including in connection with the Debtor's leased premises or leased
property; or
(g) liens incurred in the extension, renewal, or refinancing of the
indebtedness secured by liens described in subparagraphs (a) through and
including (c) above, but any such extension, renewal or replacement lien must be
limited to the property encumbered by the existing lien and the principal amount
of the indebtedness may not increase.
SECTION 13. 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 Securities Purchase Agreement for notices to the Company, (ii)
for each Secured Party as provided in the Securities Purchase Agreement for
notices to the relevant Buyer and (iii) for the Agent as provided in the
Securities Purchase 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 Securities Purchase Agreement.
SECTION 14. 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 or 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 at that time; provided that at
all times all Secured Parties shall be represented by one and the same Agent.
(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) each "Buyer" shall be deemed to be references to
each Secured Party under this Security Interest Agreement.
SECTION 15. 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) Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code have the meanings therein stated.
(c) 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.
(e) 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 16. 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.
SECTION 17. GOVERNING LAW.
(a) This Security Interest Agreement shall be governed by and construed
in accordance with the laws of the State of New York 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
County of New York or the state courts of the State of New York sitting in the
County of New York 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 18. 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 Debenture or this Security Interest Agreement.
SECTION 19. ASSIGNMENT. Only in connection with the transfer of the
rights under the Transaction Agreements in accordance with their terms, a
Secured Party may assign or transfer the whole or any part of its security
interest granted hereunder, and may transfer as collateral security the whole or
any part of Secured Party's security interest in the Collateral. Any transferee
of the Collateral 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]
SECTION 20. 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 PARTIES (named in Schedule 1):
By: Xxxxxxx & Xxxxxx LLP, as their agent
By: Xxxxxx Xxxxxxxx, Esq
DEBTOR:
NEW VISUAL CORPORATION
By: /s/ Xxxx Xxxxx
President
AGENT:
XXXXXXX & PRAGER, LLP
By: Xxxxxx Xxxxxxxx, Esq.
SCHEDULE 1
The Secured Parties are:
Name Address
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Alpha Capital AG Attn: Xxxxxx Xxxxxxxx
Xxxxxxxxx 0
Xxxxxxxxxx 0000
Xxxxx, Xxxxxxxxxxxxx
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Yokim Asset Management Corp. x/x Xxxxxxxx
0X Xxxxxx xx Xxxxxxx
0000 Xxxxxx, Xxxxxxxxxxx
----------------------------------------------------------------- -----------------------------------------------
Puritan LLC 000 XxXxxxxx Xxxxxx
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Whalehaven Capital Fund Limited 3d Floor
14 Par La Xxxxx Xxxx
X.X. Xxx XX 0000
Xxxxxxxx XXXX Xxxxxxx
----------------------------------------------------------------- -----------------------------------------------
Clearview International Investment Ltd. 0 Xxxxxxxxx Xxx.
Xxx Xxxxx, Xxxxxx 00000
----------------------------------------------------------------- -----------------------------------------------
Double U Master Fund LP Harbour House, Waterfront Dr.
Road Town
Tortola, British Virgin Islands
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Gross Foundation, Inc. 0000 00xx Xx.
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Notzer Chesed 0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Truk Opportunity Fund, LLC Xxx Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
First Mirage, Inc. 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Generation Capital Associates 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
JM Investors LLC 000 X. 0xx Xx.
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Professional Traders Fund, LLC 0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
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Republic Aggressive Growth Xxxxx 00 Xxxxxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxxx Xxxxx Xxxx Xxxx 00
Xxxxxx, Xxxxxx
----------------------------------------------------------------- -----------------------------------------------
Barucha Pension LLC 00 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
CMS Capital 00-00 Xxx Xxxx Xxxx., #000
Xxxxxxxx Xxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Xxxxxx Xxxxx Family Partnership 000 X. XxXxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Harborview Master Fund LP Harbour House, 2d Floor
Road Town, Tortola
British Virgin Islands
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----------------------------------------------------------------- -----------------------------------------------
Name Address
----------------------------------------------------------------- -----------------------------------------------
Nite Capital LP 000 X. Xxxx Xxxxxx #000
Xxxxxxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Cong. Xxxxxx Xxxxx
000 Xxxxxxxx
Xxxx Xxxxxxxx,
XX 00000
----------------------------------------------------------------- -----------------------------------------------
Xxxxxx Xxxxxxxx 0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
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Quines Financial SA 00 Xxxxx Xxxxxxxx
Xxxxxx X00 0XX Xxxxxxx
----------------------------------------------------------------- -----------------------------------------------
Xxxxxxxxx Xxxxxxxxx, Inc. Profit Sharing & Retirement Plan c/o Xxxxx Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
HSI Partnership c/o Xxxxx Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Xxxxx Xxxxxxxx 000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
Truk International Fund, LP Xxx Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, XX 00000
----------------------------------------------------------------- -----------------------------------------------
EXHIBIT A
EXCEPTIONS TO REPRESENTATIONS
1. The following security interests (the "Prior Security Interest") were
granted by the Company in the Collateral (or the specified portions
thereof) to the Secured Parties named therein (the "Prior Secured
Parties") and perfected by the relevant Prior Secured Party prior to
March 8, 2005:
None
2. Each Prior Security Interest has priority over the security interest
granted to the Secured Parties named in the current Security Agreement
to which this Exhibit A is attached.
EXHIBIT B
ADDITIONAL INFORMATION RE COLLATERAL, ETC.
None
EXHIBIT C
COPYRIGHTS
None
EXHIBIT D
COPYRIGHT APPLICATIONS
None
