Document:

Prepared by R.R. Donnelley Financial -- Loan Agreement & Promissory Note

  
 Exhibit 10.2 
  
 BUSINESS SECURITY AGREEMENT 
  
 This Business Security Agreement (“Agreement”) is
made and entered into by the undersigned borrower, guarantor and/or other obligor/pledgor (the “Debtor”) in favor of U.S. BANK N.A. (the “ Bank”) as of the date set forth on the last page of this Agreement. 

 
 ARTICLE I.    SECURITY INTEREST 
  
 1.1    Grant of Security Interest.    Debtor hereby grants a security interest in and collaterally assigns the Collateral (defined below) to Bank to secure all of
Debtor’s Obligations (defined below) to Bank. The intent of the parties hereto is that the Collateral secures all Obligations of Debtor to Bank, whether or not such Obligations exist under this Agreement or any other agreements, whether now or
hereafter existing, between Debtor and Bank or in favor of Bank, including, without limitation, any note, any loan or security agreement, any lease, any mortgage, deed of trust or other pledge of an interest in real or personal property, any
guaranty any letter of credit or banker’s acceptance, any agreement for any other services or credit extended by Bank to Debtor even though not specifically enumerated herein, and any other agreement with Bank (together and individually, the
“Loan Documents”). 
  
 1.2    “Collateral”    means all of the
following whether now owned or existing or hereafter acquired by Debtor (or by Debtor with spouse), wherever located (including all documents, general intangibles, additions and accessions, spare and repair parts, special tools, replacements,
returned or repossessed goods and books and records relating to the following; and all proceeds, supporting obligations and products of the following) [check all that apply]: 
  

	 	x
	 
	All accounts, instruments, documents, chattel paper, general intangibles, contract rights, investment property (including any securities entitlements and/or securities accounts
held by Debtor), securities and certificates of deposit, deposit accounts, and letter of credit rights; 
 

  

	 	x
	 
	All inventory: 
 

  

	 	x
	 
	All equipment; 
 

  

	 	 ̈
	 
	All fixtures; and 
 

  

	 	 ̈
	 
	Specific Collateral (the following, whether constituting equipment, inventory, fixtures, or other collateral)
                                 
 

  
 In the event the first four boxes are checked, Debtor acknowledges and agrees that, in applying the law of any jurisdiction that at any time enacts all
or 

  
 substantially all of the uniform provisions of Revised Article 9 of the Uniform Commercial Code (1999 Official Text),
the foregoing collateral description covers all assets of Debtor. Bank may at any time and from time to time file financing and continuation statements and amendments thereto reflecting the same. Unless otherwise defined, the terms set forth in this
Agreement shall have the meanings set forth in the Uniform Commercial Code as adopted in the Loan Documents and as amended from time to time. The defined terms hereunder shall be interpreted in a manner most favorable to Bank. 

 
 1.3    “Obligations” means all Debtor’s debts (except for consumer credit if Debtor is a natural
person), liabilities, obligations, covenants, warranties, and duties to Bank (plus its affiliates including any credit card debt, but specifically excluding any type of consumer credit), whether now or hereafter existing or incurred, whether
liquidated or unliquidated, whether absolute or contingent, whether arising out of the Loan Documents or otherwise, and all other debts and obligations due Bank under any lease, agricultural, real estate or other financing transaction and regardless
of whether such financing is related in time or type to the financing provided at the time of grant of this security interest, and regardless of whether such Obligations arise out of existing or future credit granted by Bank to any Debtor, to any
Debtor and others, to others guaranteed, endorsed or otherwise secured by any Debtor or to any debtor-in-possession or other successor-in-interest of any Debtor, and including principal, interest, fees, expenses and charges relating to any of the
foregoing. 
  
 ARTICLE II.    WARRANTIES AND COVENANTS 
  
 In addition to all other warranties and covenants of Debtor under the Loan Documents which are expressly incorporated herein as, part of this Agreement and while any part of the credit
granted Debtor under the Loan Documents is available or any Obligations of Debtor to Bank are unpaid or outstanding, Debtor continuously warrants and agrees as follows: 
  
 2.1    Debtor’s Name, Location; Notice of Location Changes.    Except as indicated in the Article 9 Certificate executed by Debtor and
made a part hereof, Debtor’s name and organizational structure has remained the same during the past five (5) years. Debtor will continue to use only the name set forth with Debtor’s signature unless Debtor gives Bank prior written notice
of any change. Furthermore, Debtor shall not do business under another name nor use any trade name without giving ten (10) days prior written notice to Bank. Debtor will not change its status or organizational structure without the prior written
consent of Bank. Debtor will not change its location or registration (if Debtor is a registered organization) to another state without prior written notice to Bank. The address appearing in the Article 9 Certificate is Debtor’s chief executive
office (or residence if Debtor is a sole proprietor). 
  
 2.2    Status of
Collateral.    All Collateral is genuine and validly existing. Except for items of insignificant value or as otherwise reflected in writing by Debtor to Bank under 

  
 a borrowing base or otherwise, (i) Collateral constituting inventory, equipment and fixtures is in good condition, not
obsolete and is either currently saleable or usable; and (ii) Collateral constituting accounts, contract rights, notes, chattel paper and other third-party obligations to pay is fully enforceable in accordance with its terms and not subject to
return, dispute, setoff, credit allowance or adjustment, except for discounts for prompt payment. Unless Debtor provides Bank with written notice to the contrary, Debtor has no notice or knowledge of anything that would impair the ability of any
third-party obligor to pay any debt to Debtor when due. 
  
 2.3    Ownership; Maintenance of Collateral;
Restrictions on Liens and Dispositions.    Debtor is the sole owner of the Collateral free of all liens, claims, other encumbrances and security interests except as permitted in writing by Bank. Debtor shall: (i) maintain the
Collateral in good condition and repair (reasonable wear and tear excepted), and not permit its value to be impaired; (ii) not permit waste, removal or loss of identity of the Collateral; (iii) keep the Collateral free from all liens, executions,
attachments, claims, encumbrances and security interests (other than Bank’s paramount security interest and those permitted in writing by Bank); (iv) defend the Collateral against all claims and legal proceedings by persons other than
Bank; (v) pay and discharge when due all taxes, levies and other charges or fees upon the Collateral except for payment of taxes contested by Debtor in good faith by appropriate proceedings so long as no levy or lien has been imposed upon the
Collateral; (vi) not lease, sell or transfer the Collateral to any party nor move it to any new location outside of the ordinary course of business; (vii) not permit the Collateral, without the consent of Bank, to become a fixture or an accession to
other goods; (viii) not permit the Collateral to be used in violation of any applicable law, regulation or policy of insurance; and, (ix) as to the Collateral consisting of instruments and chattel paper, preserve Bank’s rights in it against air
other parties. Notwithstanding the above, Debtor may sell, lease or transfer inventory in the ordinary course of its business provided that no sale, lease or transfer shall include any transferor sale in satisfaction (partial or complete) of a debt
owed by Debtor; title will not pass to buyer until Debtor physically delivers the goods to buyer or Debtor ships the goods F.O.B. to buyer’s destination; and sales and/or leases to Debtor’s affiliates shall be for fair market value, cash
on delivery, with the proceeds remitted to Bank. 
  
 2.4    Maintenance of Security Interest; Purchase Money
Security Interests.    Debtor shall take any action requested by Bank to preserve the Collateral and to establish the value of, the priority of, to perfect, to continue the perfection of or to enforce Bank’s interest in
the Collateral and Bank’s rights under this Agreement; and shall pay all costs and expenses related thereto. Debtor shall also cooperate with Bank in obtaining control (for purposes of perfection under the Uniform Commercial Code) of Collateral
consisting of deposit accounts, investment property, letter of credit rights, electronic chattel paper and any other collateral where Bank may obtain perfection through control. Debtor hereby authorizes Bank to take any and all actions described
above and in place of Debtor with respect to the Collateral and hereby ratifies any such actions Bank has taken prior to the date of this Agreement and hereafter, which actions may include, without limitation, filing UCC financing statements and
obtaining or attempting to obtain control 

  
 agreements from holders of the Collateral. Debtor and Bank intend to maintain the full effect of any purchase money
security interest granted in favor of Bank notwithstanding the fact that the Collateral so purchased is also pledged as security for other Obligations under the Loan Documents. 
  
 2.5    Collateral Inspections; Modifications and Changes in Collateral.    At reasonable times, Bank may examine the Collateral and
Debtor’s records pertaining to it, wherever located, and make copies of such records at Debtor’s expense; and Debtor shall assist Bank in so doing. Without Bank’s prior written consent, Debtor shall not alter, modify, discount,
extend, renew or cancel any Collateral, except for ordinary discounts for prompt payment on accounts, physical modifications to the inventory occurring in the manufacturing process or alterations to equipment which do not materially affect its
value. Debtor shall promptly notify Bank in writing of any material change in the condition of the Collateral and of any change in location of the Collateral. 
  
 2.6    Collateral Records, Reports and Statements.    Debtor shall keep accurate and complete records respecting the Collateral in such form as Bank may approve. At such
times as Bank may require, Debtor shall furnish to Bank any records/information Bank might require, including, without limitation, a statement certified by Debtor and in such form and containing such information as may be prescribed by Bank showing
the current status and value of the Collateral. 
  
 2.7    Chattel Paper, Instruments,
Etc.    Chattel paper, instruments, drafts, notes, acceptances, and other documents which constitute Collateral shall be on forms satisfactory to Bank. Debtor shall promptly mark chattel paper to indicate conspicuously
Bank’s security interest therein, shall not deliver any chattel paper or negotiable instruments to any other entity and, upon request, shall deliver any original chattel paper, instruments, drafts, notes, acceptances and other documents which
constitute Collateral to Bank. 
  
 2.8    United States Government Contracts.    If
any accounts or contract rights arose out of contracts with the United States or any of its departments, agencies or instrumentalities, Debtor shall promptly notify Bank and execute any writings required by Bank so that any money due or to become
due under such contracts shall be assigned to Bank under the Federal Assignment of Claims Act. 
  
 2.9    Environmental Matters.    Except as disclosed in a written schedule attached to this Agreement (if no schedule is attached, there are no exceptions), there exists no uncorrected
violation by Debtor of any federal, state or local laws (including statutes, regulations, ordinances or other governmental restrictions and requirements) relating to the discharge of air pollutants, water pollutants or process waste water or
otherwise relating to the environment or Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in the future (collectively “Environmental Laws’). The term “Hazardous Substances” shall mean
any hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence of which is prohibited or governed by any Environmental Laws. Debtor is not subject to any judgment, decree, 

  
 order or citation, or a party to (or threatened with) any litigation or administrative proceeding, which asserts that
Debtor (i) has violated any Environmental Laws; (ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous Substances (collectively “Remedial Action”); or (iii) is required to pay all or a portion
of the cost of any Remedial Action, as a potentially responsible party. There are not now, nor to Debtor’s knowledge after reasonable investigation have there ever been, any Hazardous Substances (or tanks or other facilities for the storage of
Hazardous Substances) stored, deposited, recycled or disposed of on, under or at any real estate owned or occupied by Debtor during the periods that Debtor owned or occupied such real estate, which if present on the real estate or in soils or ground
water, could require Remedial Action. To Debtor’s knowledge, there are no proposed or pending changes in Environmental Laws which would adversely affect Debtor or its business, and there are no conditions existing currently or likely to exist
while the Loan Documents are in effect which would subject Debtor to Remedial Action or other liability. Debtor currently complies with and will continue to timely comply with all applicable Environmental Laws; and will provide Bank, immediately
upon receipt, copies of any correspondence, notice, complaint, order or other document from any source asserting or alleging any circumstance or condition which requires or may require a financial contribution by Debtor or Remedial Action or other
response by or on the part of Debtor under Environmental Laws, or which seeks damages or civil, criminal or punitive penalties from Debtor for an alleged violation of Environmental Laws. 
  
 2.10    Insurance.    Debtor will maintain insurance to such extent, covering such risks and with such insurers
as is usual and customary for businesses operating similar properties, and as is satisfactory to Bank, including insurance for fire and other risks insured against by extended or comprehensive coverage, public liability insurance and workers’
compensation insurance; and will designate Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take such other action as Bank may reasonably request to ensure that Bank will receive (subject to
no other interests) the insurance proceeds of the Collateral. Debtor hereby assigns all insurance proceeds to and irrevocably directs, while any Obligations remain unpaid, any insurer to pay to Bank the proceeds of all such insurance and any premium
refund; and authorizes Bank to endorse Debtor’s name to effect the same, to make, adjust or settle, in Debtor’s name, any claim on any insurance policy relating to the Collateral; and, at the option of Bank, to apply such proceeds and
refunds to the Obligations or to restoration of the Collateral, returning any excess to Debtor. In the event of any failure of the Debtor to obtain or maintain any insurance required hereunder, the Bank shall have the authority, but not the
obligation, to obtain any such insurance coverage, and the Debtor shall immediately reimburse the Bank for the cost thereof, together with interest on such amount at the highest rate of interest then accruing on any of the Obligations. 

 
 ARTICLE III.    COLLECTIONS 
  
 3.1    Deposit with Bank.    At any time Bank may require that all proceeds of Collateral received by Debtor shall be held by Debtor upon an
express trust for Bank, shall not be commingled with any other funds or property of Debtor and shall be turned over to Bank in precisely the form received (but endorsed by Debtor, if necessary for collection) not
 
 

 
later than the business day following the day of their receipt. All proceeds of Collateral received by Bank directly or from Debtor shall be applied against the Obligations in such order and at
such times as Bank shall determine. 
  
 ARTICLE IV.    RIGHTS AND DUTIES OF BANK 
  
 In addition to all other rights (including setoff) and duties of Bank under the Loan Documents which are expressly incorporated herein as a part of this
Agreement, the following provisions shall also apply: 
  
 4.1    Authority to Perform for
Debtor.    Debtor presently appoints any officer of Bank as Debtor’s attorney-in-fact (coupled with an interest and irrevocable while any Obligations remain unpaid to do any of the following upon default by
Debtor hereunder (notwithstanding any notice requirements or grace/cure periods under this or other agreements between Debtor and Bank): (i) to file, endorse or place the name of Debtor on any invoice or document of title relating to accounts,
drafts against customers, notices to customers, notes, acceptances, assignments of government contracts, instruments, financing statements, checks, drafts, money orders, insurance claims or payments or other documents evidencing payment or a
security interest relating to the Collateral; (ii) to receive, open and dispose of all mail addressed to Debtor and to notify the Post Office authorities to change the address for delivery of mail addressed to Debtor to an address designated by
Bank; (iii) to do all such other acts and things necessary to carry out Debtor’s duties under this Agreement and the other loan Documents; and (iv) to perfect, protect and/or realize upon Bank’s interest in the Collateral. If the
Collateral includes funds or property in depository accounts, Debtor authorizes each of its depository institutions to remit to Bank, without liability to Debtor, all of Debtor’s funds on deposit with such institution upon written direction by
Bank after default by Debtor hereunder. All acts by Bank are hereby ratified and approved, and Bank shall not be liable for any acts of commission or omission, nor for any errors of judgment or mistakes of fact or law. 
  
 4.2    Verification and Notification; Bank’s Rights.    Bank may verify
Collateral in any manner, and Debtor shall assist Bank in so doing. Upon the occurrence of a default hereunder, Bank may at any time and Debtor shall, upon request of Bank, notify the account debtors to make payment directly to Bank; and Bank may
enforce collection of, sell, settle, compromise, extend or renew the indebtedness of such account debtors; all without notice to or the consent of Debtor. Until account debtors are so notified, Debtor, as agent of Bank, shall make collections on the
Collateral. Bank may at any time notify any bailee possessing Collateral to turn over the Collateral to Bank. 
  
 4.3    Collateral Preservation.    Bank shall use reasonable care in the custody and preservation of any Collateral in its physical possession but in determining such
standard of reasonable care, Debtor expressly acknowledges that Bank has no duty to: (i) insure the Collateral against hazards; (ii) ensure that the Collateral will not cause damage to property or injury to third parties; (iii) protect it from
seizure, theft or conversion by third parties, third parties’ claims or acts of God; (iv) give to Debtor any notices received by Bank regarding the Collateral; (v) perfect or continue perfection of any security interest in favor of Debtor; (vi)
perform any services, complete any work-in-process or take any
 
 

 
other action in connection with the management or maintenance of the Collateral; or (vii) sue or otherwise effect collection upon any accounts even if Bank shall have made a demand for payment
upon individual account debtors. Notwithstanding any failure by Bank to use reasonable care in preserving the Collateral, Debtor agrees that Bank shall not be liable for consequential or special damages arising therefrom. 
  
 ARTICLE V.    DEFAULTS AND REMEDIES 
  
 Bank may enforce its rights and remedies under this Agreement upon default. A default shall occur if Debtor fails to comply with the terms of any Loan Documents (including this Agreement or any guaranty by Debtor) a
demand for payment is made under a demand loan, or any other obligor fails to comply with the terms of any Loan Documents for which Debtor has given Bank a guaranty or pledge. 
  
 5.1    Cumulative Remedies; Notice; Waiver.    In addition to the remedies for default set forth in the Loan
Documents, Bank upon default shall have all other rights and remedies for default provided by the Uniform Commercial Code, as well as any other applicable law and this Agreement, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO REPOSSESS, RENDER UNUSABLE
AND/OR DISPOSE OF THE COLLATERAL WITHOUT JUDICIAL PROCESS. The rights and remedies specified herein are cumulative and are not exclusive of any rights or remedies which Bank would otherwise have. With respect to such rights and remedies:

  
 (a)  Assembling Collateral; Storage; Use of Debtor’s Name/Other
Property.    Bank may require Debtor to assemble the Collateral and to make it available to Bank at any convenient place designated by Bank. Debtor recognizes that Bank will not have an adequate remedy in law if this
obligation is breached and accordingly, Debtor’s obligation to assemble the Collateral shall be specifically enforceable. Bank shall have the right to take immediate possession of said Collateral and Debtor irrevocably authorizes Bank to enter
any of the premises wherever said Collateral shall be located, and to store, repair, maintain, assemble, manufacture, advertise and sell, lease or dispose of (by public sale or otherwise) the same on said premises until sold, all without charge or
rent to Bank. Bank is hereby granted an irrevocable license to use, without charge, Debtor’s equipment, inventory, labels, patents, copyrights, franchises, names, trade secrets, trade names, trademarks and advertising matter and any property of
a similar nature; and Debtor’s rights under all licenses and franchise agreements shall inure to Bank’s benefit. Further, Debtor releases Bank from obtaining a bond or surety with respect to any repossession and/or disposition of the
Collateral. 
  
 (b)  Notice of Disposition.    Written notice, when required by
law, sent to any address of Debtor in this Agreement, at least five (5) calendar days (counting the day of sending) before the date of a proposed disposition of the Collateral is reasonable notice but less notice may be reasonable under the
circumstances. Notification to account debtors by Bank shall not be deemed a disposition of the Collateral. Notice of any record shall be deemed delivered when the record has been (a) deposited in the United States Mail, postage pre-paid,
(b) received by overnight delivery service, (c) received by telex, (d) received by telecopy, (e) received through the internet, or (f) when personally delivered. 
 

  
 (c)  Possession of Collateral/Commercial
Reasonableness.    Bank shall not, at any time, be obligated to either take or retain possession or control of the Collateral. With respect to Collateral in the possession or control of Bank, Debtor and Bank agree that
as a standard for determining commercial reasonableness, Bank need not liquidate, collect, sell or otherwise dispose of any of the Collateral if Bank believes, in good faith, that disposition of the Collateral would not be commercially reasonable,
would-subject Bank to third-party claims or liability, that other potential purchasers could be attracted or that a better price could be obtained if Bank held the Collateral for up to 2 years. Bank may sell Collateral without giving any warranties
and may specifically disclaim any warranties of title or the like. Furthermore, Bank may sell the Collateral on credit (and reduce the Obligations only when payment is received from the buyer), at wholesale and/or with or without an agent or broker;
and Bank need not complete, process, repair, clean-up or otherwise prepare the Collateral prior to disposition. If the purchaser fails to pay for the Collateral, Bank my resell the Collateral and Debtor shall be credited with the cash proceeds of
the sale. Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

  
 (d)  Waiver by Debtor.    Bank has no obligation and Debtor waives any obligation to
attempt to satisfy the Obligations by collecting the obligations from any third parties and Bank may release, modify or waive any collateral provided by any third party to secure any of the Obligations, all without affecting Bank’s rights
against Debtor. Debtor further waives any obligation on the part of Bank to marshal any assets in favor of Debtor or in payment of the Obligations. Notwithstanding any provisions in this Agreement or any other agreement between Debtor and Bank,
Debtor does not waive any statutory rights except to the extent that the waiver thereof is permitted by law. 
  
 (e)  Waiver by Bank.    Bank may permit Debtor to attempt to remedy any default without waiving its rights and remedies hereunder, and Bank may waive any default without waiving any other
subsequent or prior default by Debtor. Furthermore, delay on the part of Bank in exercising any right, power or privilege hereunder or at law shall not operate as a waiver thereof, nor shall any single or partial exercise of such right, power or
privilege preclude other exercise thereof or the exercise of any other right, power or privilege. No waiver or suspension shall be deemed to have occurred unless Bank has expressly agreed in writing specifying. such waiver or suspension.

  
 ARTICLE VI.    MISCELLANEOUS 
  
 All other provisions in the Loan Documents are expressly incorporated as a part of this Agreement. 
  
 All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Agreement, are hereby expressly incorporated by reference. 
  
 IN WITNESS WHEREOF, the undersigned has/have executed this BUSINESS SECURITY AGREEMENT as MARCH 20, 2002. 
  
 
	 (Individual Debtor)
 	 	  	 	  	 	 NUTECH DIGITAL, INC.
 
	 	 	 	 	 	
	

	  	 	  	 	  	 	 Debtor Name (Organization)
 
	  	 	  	 	  	 	  	 	  	 	  	 	  
	  	 	  	 	 (SEAL)
 	 	  	 	 a
 	 	 CALIFORNIA Corporation
 
	
	
	
	 	 	 	 	 	 	
	

	  	 	  	 	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	 By:
 	 	 /s/    LEE
KASPER                
 
	 	 	 	 	 	 	 	 	 	
	

	 Debtor Name
 	 	 N/A
 	 	  	 	  	 	  	 	  	 	  
	 	
	
	
	
	 	 	 	 	 	 	 	 
	  	 	  	 	  	 	  	 	 Name and Title:
 	 	 Lee Kasper, President
 
	 	 	 	 	 	 	 	 	 	
	

	  	 	  	 	 (SEAL)
 	 	  	 	  	 	  	 	  
	
	
	
	 	 	 	 	 	 	 	 	 	 
	  	 	  	 	  	 	  	 	 By:
 	 	  
	 	 	 	 	 	 	 	 	 	
	

	  	 	  	 	  	 	  	 	  	 	  	 	  
	 Debtor Name
 	 	 N/A
 	 	  	 	  	 	 Name and Title:
 	 	  
	 	
	
	
	
	 	 	 	 	
	

 
 

  
 INSURANCE COVERAGE FOR THE BENEFIT OF THE BANK 
  
 
	 TO:    INSURANCE AGENT
 	 	 OWNER:
 
	 
	 PCPP4006078
 
	 	 NUTECH DIGITAL, INC
 

	 Policy Number
 	 	 Name
 
	 
	 310-207-7737
 
	 	 15210 KESWICK STREET
 

	 Telephone Number
 	 	 Address
 
	 
	 COAST INSURANCE AGENCY
 
	 	 VAN NUYS, CA 91405
 

	 Insurance Company Name
 	 	 City        State        Zip Code
 
	 
	 
	 	 

	 Insurance Agent’s Name 
 	 	  

 
  
 
	  	  	 11611 SAN VICENTE BLVD., SUITE 720
 	  	  
	 	
	
	 	 
	  	  	 Address
 	  	  	  	  	  	  
	 
	  	  	 LOS ANGELES, 
 	  	 CA
 	  	 90049
 	  	  
	 	
	
	
	
	
	
	 	 
	  	  	 City
 	  	 State
 	  	 Zip Code
 	  	  

 
  
 As set forth below, this is a request and authorization that you name U.S. BANK
N.A. (“the Bank”) as “Lenders Loss Payee” and/or “Mortgage Payee” under our property coverage from COAST INSUARANCE AGENCY (insert name of insurance company as follows: 
  
 (Fill Out the Appropriate Sections) 
  
 x    Lenders Loss Payee on all our tangible personal property (inventory/equipment) in the minimum amount of $50,000.00 and on any Business Interruption Insurance we have bound. 

 
  ̈    Lenders Loss Payee on that equipment
described below or on the attached sheet in the minimum amount of $             
  
  ̈    Lenders Loss Payee on motor vehicles up to their insurable value, as described below or on the attached sheet.

  
 
	 
	 
	 	 
	 	 
	 	 

	 Year
 	 	 Make
 	 	 Model
 	 	 VIN/Serial #
 
	 
	 
	 	 
	 	 
	 	 

	 Year
 	 	 Make
 	 	 Model
 	 	 VIN/Serial #
 

 
  
  ̈    Mortgage Payee on real estate at the following locations with coverage in the amounts specified: 
  
  
 
	  	  	 $                    
 
	 
	  	 

	 Address                                      
                        City                
            State
 	  	 Amount of Coverage
 

 

  
 
	  	  	 $                    
 
	 
	  	 

	 Address                City                State
 	  	 Amount of Coverage
 
	  	  	 $                    
 
	 
	  	 

	 Address                City                State
 	  	 Amount of Coverage
 

 
  
 The Bank will require a binder or certificate showing such coverage and listing
the Bank as Lenders Loss Payee and/or Mortgage Payee as stated above, or, alternatively, please provide the Bank with language from the policy showing its “Lender Loss Payee” and/or “Mortgage Payee” coverage. Such coverage should
insure that the Bank is paid in the event of loss despite any neglect on our part, and that the Bank is given prior notice of cancellation. 
  
 Lastly, the Bank requires that there be no other loss payee and/or mortgage payee on its collateral without its consent. If there presently exists any other loss payee and/or mortgage payee on such collateral, please
itemize such parties and their insured collateral on a separate attachment. 
  
 Please send the binder/certificate and any
applicable loss payee/mortgage list to: 
  
 U.S. Bank N.A. 
 Attn:    Corporate Loan Servicing Center 
             Commercial Collateral

 #651730594318/26 
 555 SW Oak PD_OR_P7LD 
 Portland, OR 97204 
  
 Please direct any questions regarding this
request to: 1-503-275-7136. 
  
 Thank you for your assistance. 
  
 
	 
	  
	  
 Nutech Digital, Inc. 
 

	 (Owner Name) 
 
	 
	 By:         /s/    LEE
KASPER
 

	           (Owner’s Signature)
 
	 
	 Name and Title: Lee Kasper, President
 

	 (For Company Only)
 

 

 ADDENDUM TO AMENDMENT TO LOAN AGREEMENT AND NOTE 
  
 This Addendum is made part of the Amendment to Loan Agreement and Note (the “Amendment”) made and entered into by and between the undersigned borrower (the “Borrower”) and the undersigned bank (the
“Bank”) as of the date identified below. The following provisions are hereby added to the Agreement, (or to the extent such provisions already exist, are hereby modified) as follows. 
  

1)  Borrower agrees with Bank that the section titled “Financial Statements” has been modified and replaced with: 
  
 Furnish Bank with, as soon as available, but in no event later than one hundred twenty (120) days after the end of each fiscal year, Borrower’s
balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Bank, and, as soon as available, but in no event later than sixty (60) days after the end of each fiscal quarter, Borrower’s balance
sheet and profit and loss statement for the period ended, reviewed by a certified public accountant satisfactory to Bank. All financial reports required to be provided under this Agreement shall be prepared in accordance with generally accepted
accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct. 
  
 2)  Borrower agrees with Bank that Borrower shall rest the Line of Credit facility with no outstanding principal balance for a minimum of thirty (30) consecutive days during the term of the loan. 
  
 Dated: March 20, 2002 
  
 
	 NUTECH DIGITAL, INC.
 
	 
	 By:
 	 	 /s/    LEE KASPER        
 

	  	 	 Lee Kasper, President
 

 
 

 11 

  
 Due April 30th 2003 
  
 Customer # 6517305943 
 Loan # 18/26 
  
 AMENDMENT TO LOAN AGREEMENT AND NOTE 
  
 This amendment (the “Amendment”) dated as of the date specified
below, is by and between the borrower (the “Borrower”) and the bank (the “Bank”) identified below. 
  
 RECITALS

  
 A.    The Borrower and the Bank have executed a Loan Agreement (the “Agreement”) dated
MARCH 20, 2001 and the Borrower has executed a Note (the “Note”), dated MARCH 20, 2001, either or both which may have been amended from time to time, and the Borrower (and if applicable, certain third parties) have executed the
collateral documents which may or may not be identified in the Agreement and certain other related documents (collectively the “Loan Documents”), setting forth the terms and conditions upon which the Borrower may obtain loans from
the Bank from time to time in the original amount of $ 500,000.00, as may be amended from time to time. 
  
 B.    The Borrower has requested that the Bank permit certain modifications to the Agreement and Note as described below. 
  
 C.    The Bank has agreed to such modifications, but only upon the terms and conditions outlined in this Amendment. 
  
 TERMS OF AGREEMENT 
  
 In consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the Borrower and the Bank agree as follows: 
  
 x  Extension of Maturity Date.    If checked here, any references in the Agreement or Note to the maturity date or date of final payment are hereby deleted and replaced with
“APRIL 30, 2003”. 
  
 x  Change in Maximum Loan
Amount.    If checked here, all references to “$ 500,000.00” in the Agreement and in the Note (whether or not numerically) as the maximum loan amount which may be borrowed from time to time are hereby deleted
and replaced with “$ 650.000.00”. 
  
  ̈  Change in Multiple Advance Termination Date.    If checked here, all references to “ N/A” as the termination date for multiple advances are hereby deleted and replaced
with “N/A”. 
 

  
 Change in Financial Covenant(s). 
  
 (i)   ̈   If checked here, all references to
“$            ” in the Agreement as the minimum Net Working Capital amount are hereby deleted and replaced with
“$            ” for the period beginning             and thereafter. 
  
 (ii)  x  If checked here, all references to “$400,000.00” in the
Agreement as the minimum Tangible Net Worth amount are hereby deleted and replaced with “$1,000,000.00”, for the period beginning 03/20/02 and thereafter. 
  
 (iii)  x  If checked here, all references to “4.50 TO 1.00” in the Agreement as the maximum Debt to
Worth Ratio are hereby deleted and replaced with “4.00 TO 1.00” for the period beginning 03/20/02 and thereafter. 
  
 (iv)   ̈  If checked here, all references to
“            ” in the Agreement as the minimum Current Ratio are hereby deleted and replaced with
“            “ for the period beginning                  and thereafter. 
  
 (v)   ̈  If checked here, all references to “$            ” in the Agreement as the maximum Capital Expenditures amount are hereby deleted and replaced with
“$            ” for the period beginning                  and thereafter. 
  
 (vi)   ̈  If checked here, all references to “            ” in the Agreement as the minimum Cash Flow Coverage Ratio are hereby deleted and replaced with
“            ” for the period beginning                  and thereafter. 
  
 (vii)   ̈  If checked here, all references to “$            ” in the Agreement as the maximum Officers, Directors, Partners, and Management Salaries and Other
Compensation amount are hereby deleted and replaced with “$            ” for the period beginning
                 and thereafter. 
  
  ̈  Change in Payment Schedule.    If checked here, effective upon the date of
this Amendment, any payment terms are amended as follows: 
  
  ̈  Change in Late Payment Fee.    If checked here, subject to applicable law, if any payment is not made on or before its due date,
the Bank may collect a delinquency charge of             % of the unpaid amount. Collection of the late payment fee shall not be deemed to be a waiver of the Bank’s right to declare a
default hereunder. 
  
 Effectiveness of Prior Documents.    Except as specifically amended
hereby, the Agreement, the Note and the other Loan Documents shall remain in full force and effect in accordance with their respective terms. All warranties and representations contained in the Agreement and the other Loan Documents are hereby
reconfirmed as of the date hereof All collateral previously provided to secure the Agreement and/or Note continues as security, and all guaranties guaranteeing obligations under the Loan Documents remain in full force and effect. This is an
amendment, not a novation. 
  
 

  
 Preconditions to Effectiveness.    This Amendment
shall only become effective upon execution by the Borrower and the Bank, and approval by any other third party required by the Bank. 
  
 No Waiver of Defaults; Warranties.    This Amendment shall not be construed as or be deemed to be a waiver by the Bank of existing defaults by the Borrower, whether known or undiscovered. All
agreements, representations and warranties made herein shall survive the execution of this Amendment. 
  
 Counterparts.    This Amendment may be signed in any number of counterparts, each of which shall be considered an original, but when taken together shall constitute one document. 

 
 Authorization.    The Borrower represents and warrants that the execution, delivery and performance
of this Amendment and the documents referenced herein are within the authority of the Borrower and have been duly authorized by all necessary action. 
  
 Attachments.    All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Amendment, are hereby expressly incorporated herein by reference.

  
 March 20, 2002 
 Dated as of:                                   

 
 
	  	 	  	 	  	 	 NUTECH DIGITAL, INC.
 
	 	 	 	 	 	
	

	 (Individual Borrower)
 	 	  	 	  	 	 Borrower Name (Organization)
 
	  	 	  	 	  	 	  
	  	 	  	 	 (SEAL)
 	 	  	 	 a
 	 	 CALIFORNIA Corporation
 
	 	
	
	 	 	 	 	 	 	
	

	  	 	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	 By:
 	 	 /s/    LEE
KASPER                
 
	 	 	 	 	 	 	 	 	 	
	

	 Borrower Name             
 	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	 Name and Title: Lee Kasper, President
 
	  	 	 N/A
 	 	 (SEAL)
 	 	  	 	  	 	  
	 	
	
	 	 	 	 	 	 	 	 
	  	 	  	 	  	 	  	 	 By:
 	 	  
	 	 	 	 	 	 	 	 	 	
	

	  	 	  	 	  	 	  	 	  	 	  
	 Borrower Name
 	 	  	 	  	 	 Name and Title:
 
	  	 	 N/A
 	 	  	 	  	 	  	 	  
	 	
	
	
	
	 	 	 	 	 	 
	  	 	  	 	  	 	  	 	  	 	  
	 	 	 	 	 	 	 	 	 	
	

	 
	 Agreed to:
 	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  	 	  
	  	 	 U.S. BANK N.A.
 	 	  	 	  	 	  	 	  
	 	
	
	
	
	 	 	 	 	 	 
	  	 	 (Bank)
 	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  	 	  
	 By:
 	 	 /s/    GUS GMUSAYNT
 	 	  	 	  	 	  	 	  
	 	
	
	
	
	 	 	 	 	 	 
	  	 	  	 	  	 	  	 	  	 	  
	 Name and Title: Gus Gmusaynt, Vice President
 	 	  	 	  	 	  	 	  

 
  
  
 For additional terms see attached addendum

 

  
 AUTHORIZATION FOR PREAUTHORIZED 
 DEBITS FOR PAYMENT OF LOANS 
  
 1.    NuTech Digital.
Inc.    (“Customer”) hereby authorizes and requests U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”) to initiate debit entries (“withdrawals”) from the account indicated below and to transfer the
withdrawn funds in accordance with the following instructions. 
  
 2.    The withdrawals shall be made
from:  x  Checking   ̈  Savings   ̈  Money Market 
  
 Account Number 1-534-9182-4642 
 Maintained at X Branch           Bk TR/ABA
No. 
 City Encino State CA Zip 91436 
  
 3.    The withdrawn funds shall be transferred to U.S. Bank for application to: 
  
 Loan Number                  (the “Loan”)
                 
 Maintained at
                           Bk TR/ABA No.
             
 City 
                         State      Zip
            . 
  
 4.    The amount of each
withdrawal shall be: 
  
  ̈  A fixed amount of $ 
  ̈  An amount equal to each scheduled payment periodically due on the Loan of (select only one): 
  ̈  Accrued Interest only   ̈  Designated Principal Payment plus Accrued Interest 
  ̈  Designated Principal Payment only   ̈  Designated Payment of Principal and
Interest 
  
 U.S. Bank may apply the amount withdrawn as authorized pursuant to the documents governing the Loan.

  
 5.    Withdrawals shall be made on each payment due date of the Loan, which is the: 

 
  ̈           day of each calendar month 
  ̈           day of each              (list applicable
month(s) for quarterly, semi-annual or annual payments) 
  ̈           day of each calendar month beginning                  through
and including and on the          day of each (list applicable month(s)) thereafter. 
  
 If this box is checked   ̈, notwithstanding the foregoing, Customer acknowledges that U.S. Bank will
not make a withdrawal on the final payment due date of the Loan and that U.S. Bank will bill Customer for such final payment. 
  
 Withdrawals shall be made on each day indicated above or on the following business day if that day falls on a Saturday, Sunday or legal holiday in the state where the depository account is held. 

 
 If there are insufficient funds in the account described above or U.S. Bank is otherwise unable to make any preauthorized
debit, U.S. Bank may, at its option, (a) make the 
 

 automatic debit notwithstanding insufficient available funds and allow the account to become temporarily overdrawn, or (b) refuse to
make the automatic debit, in which case Customer agrees to separately make Customer’s Loan payment. Customer agrees to pay all fees on the account resulting from the automatic debits, including any overdraft/NSF charges, and the amount of any
resulting overdraft. 
  
 Note: If the account indicated in paragraph 2 above is a Money Market Account, the number and frequency of
withdrawals is limited as set out in Customers Agreement with U.S. Bank governing such Money Market Account. 
  
 6.    Customer acknowledges and agrees that U.S. Bank may cancel this automatic withdrawal service at any time and will endeavor to give written notice to Customer of such cancellation. 
  
 7.    Subject to paragraph 6 above, this authorization shall remain in full force and effect until U.S. Bank has received written
notification from Customer that this authorization is terminated in such time as to afford U.S. Bank a reasonable opportunity to act on it. 
  
 Customer acknowledges receipt of a signed copy of this authorization. 
  
 
	 NAME:  /S/    LEE KASPER 
 	 	  	 	 TITLE
 
	 
	 BY:
 	 	  	 	 DATE:Prepared by R.R. Donnelley Financial -- Letter of Intent

  
 EXHIBIT 10.3 
  
 LETTER OF INTENT 
  
 NuTech Digital, Inc. 15210 Keswick Street, Van Nuys, CA 91405 a
California Corporation U.S.A that licenses distributes and markets movies, games and special projects wishes to enter into a Letter of Intent with Ritek Corp, 42 Kuangfu. N. Road Hsin Chu Industrial Park, Taiwan R.O.C. a Taiwanese Corporation that
replicates DVD’S and has a subsidiary named Catalyst Logic that distributes DVD’s. 
  
 A.    The
Shadoan Letter of Intent is as follows: 
  
 1.    NuTech has the licensed rights for Shadoan, an interactive
game being formatted for DVD. Ritek wishes to replicate Shadoan, secure the exclusive distribution rights for Taiwan and region 3, and receive a 5% commission for all bundling sales that Ritek secure for Shadoan. 
  
 2.    NuTech wants an advance of $400,000 USD from Ritek. $200,000 will be wired within 48 hours of receipt of the Deed of
Trust/Personal Property by Ritek. A second payment of $200,000 on or before, Sept 15, 1998 will be wired by Ritek. After wiring the first payment of $200,000 and receipt by NuTech of the funds, NuTech and Ritek both parties own 50%/50% (fifty/fifty)
the licensed rights for Shadoan, until repayment as per the terms of this Letter of Intent are completed. (See Letter of Intent A) 
  
 NuTech will replicate all Shadoan discs at Ritek’s facilities subject to final pricing competitive with existing prices in the market place approximately in Nov of 1998. The price for DVD 9 could be in the $1.50 range. However, the
price will be defined in detail by future formal manufacturer agreement. 
  
 NuTech is planning on having all the authoring, DLT
and compression done by November 6, 1998, and will plan on sending to Ritek the week of November 6, 1998 the DLT as well as the Purchase Order (PO) at the same time. The amount of the Purchase order will be for approximately 100,000 discs. Discs are
scheduled for completion and delivery by Ritek to NuTech around November 27. NuTech will package product for a release date of December 10th. The next production of discs by Ritek will be of approximately 50,000 discs which will occur at the rate of
approximately 20 days from then on. 
  
 3.    NuTech we will pay Ritek back the $400,000 by the following
method. For every unit replicated of Shadoan, NuTech will pay Ritek the replication price as agreed to in Paragraph # 2 plus an additional $2.00 pre payment per unit. For example, in November NuTech orders 100,000 units Ritek will submit
an invoice under normal terms for cost of replication 
  
 100,000 units × 1.50 or less = 150,000 
 + 100,000 units × 2.00 prepayment = 200,000 or $350,000 total due. 
  
 4.    In addition, NuTech
will pay 8.5 % per annum interest accruing from the first day of receipt of the funds from Ritek. The repayment terms for the loan will be payable monthly on the unpaid balance, beginning 30 days after the first $200,000 has 

 been dispersed by Ritek. All funds will be paid via Wire transfer. Thereafter-monthly payments will be made for the interest due on the balance until paid in
full. For example, if money is received by August 10, 1998 - The 1st payment of $1,417 interest will be paid on Sept 10th, 1998 and then monthly, computed on the average outstanding balance at EOM till balance is paid in full. 

 
 5.    After all loan funds are re-paid in full to Ritek, then all rights will revert back to Nutech. However, if after 6
months (June 10, 1999) from release date (Dec 10, 1998) Ritek hasn’t received all $400,000 from NuTech the following will occur: Ritek will send notice to NuTech indicating all monies due have not been paid. NuTech has 10 days to pay the
balance due or Ritek becomes 100% owner and license holder of Shadoan. 
  
 6.    Ritek gets total replication
for Shadoan DVD-ROM through April 1, 2003 the entire duration of the contract between NuTech and TIG Group the copyright holder. 
  
 7.    Lee Kasper, President of NuTech will provide Deed of Trust Personal Propertylassets as a Guarantee. Mr. Kasper would file the lien in the name of Ritek Corporation for the amount of $400,000. Mr. Kasper will
provide a formal document that has been certified by the court upon signing of the contract herein. Within 48 hours of receipt of the deed, Ritek will wire the first payment of $200,000. If Ritek does not wire the funds as stated herein, then Ritek
will return all rights and deeds back to Mr. Kasper, and Nutech Digital. 
  
 8.    At the time of placing the
first replication order of Shadoan, NuTech will put up a L/C for 50% of that order. This should not be sooner than October 25, 1998 
  
 9.    This Letter of Intent shall supercede and become primary to any and all other documents and agreements between the parties with reference to Shadoan. Contract A will become subordinate and
secondary to this document and will become invalid in any dispute. 
  
 B.    Miscellaneous.

  
 (a)  Preparation of Agreement.    It is acknowledged by each party that such party
either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore
any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement. 
  
 (b)  Cooperation.    Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time
to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense. 
 

  
 (c)  Interpretation. 
  

(i)  Entire Agreement/No Collateral Representations.    Each party expressly acknowledges and agrees that this Agreement,
including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the “Prior Agreements”), and
that any such prior agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any agreement
hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is
sought. 
  
 (ii)  Waiver.    No breach of any agreement or provision herein
contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except
by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a
waiver or relinquishment of any other agreement or provision or right or power herein contained. 
  
 (iii)  Remedies Cumulative.    The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled. 

 
 (iv)  Severability.    If any term or provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending
term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a
provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law. 
  
 (v)  No Reliance Upon Prior Representation.    The parties acknowledge that no other party has
made any oral representation or promise which would induce them prior to executing this Agreement to change their position to their detriment, partially perform, or part with value in reliance upon such representation or promise; the parties

 

 acknowledge that they have taken such action at their own risk; and the parties represent that they have not so changed their position,
performed or parted with value prior to the time of their execution of this Agreement. 
  
 (vi)  Headings: References: Incorporation; Gender.    The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. All cross-references in this Agreement, unless specifically directed to another agreement or document, shall be
construed only to refer to provisions within this Agreement, and shall not be construed to be referenced to the overall transaction or to any other agreement or document. Any exhibit referenced in this Agreement shall be construed to be incorporated
in this Agreement. As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice
versa, as the context requires. 
  
 (d)  Enforcement. 
  
 (i)  Applicable Law.    This Agreement and the rights and remedies of each party arising out of or relating to this Agreement
(including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, United
States of America as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California, United States of America. 
  
 (ii)  Consent to Jurisdiction: Service of Process.    Any action or proceeding arising out of or relating to this Agreement shall
be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles, United States of America. Each party generally and unconditionally accepts the exclusive jurisdiction of such courts and to
venue therein, consents to the service of process in any such action or proceeding by certified or registered mailing of the summons and complaint in accordance with the notice provisions of this Agreement, and waives any defense or right to object
to venue in said courts based upon the doctrine of “Forum Non Conveniens”. Each party irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. 
  

(e)  No Assignment of Rights or Delegation of Duties.    Neither party shall assign his or its rights or obligations under this Agreement
without the prior written consent of the other party. 
  
 (f)  Notices.    Unless otherwise
specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called “Notices”) required or permitted to be given hereunder, or which are given with respect
to this Agreement, shall be in writing, and shall be given by: (A) 
 

 personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service
(which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof
(which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice
shall be deemed to have been given upon the fifth {5th} business day following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party’s counsel, such counsel may
communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the
receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. 
  
 (g)  Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on
all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional
signature pages. 
  
 (h)  Execution by All Parties Required to be Binding; Electronically Transmitted
Documents.    This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

  
 E.    Wire Transfer Instructions 
  
 NuTech Digital, Inc 
 City National Bank 
 Encino, California Office 
 16133 Ventura Blvd. 
 Phone
818-905-4100 
 ABA # 122016066 
 Acct # 024- 774457 
 Wire Phone 818-905-4106 
  
 IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first written above. 
 

  
 
	 Dated: August 6, 1998
 	 	  	 	 Dated
 
	 
	 Signed:
 	 	 /s/    Lee Kasper        
 
	 	  	 	 Signed:
 	 	 /s/    Steven Chang        
 

	  	 	 Lee Kasper
 	 	  	 	  	 	  
	 
	 Title:
 	 	 President
 	 	  	 	 Title:
 	 	 Executive Vice President
 

 
 

  
 LETTER OF INTENT A 
  
 NuTech Digital, Inc.15210 Keswick Street, Van Nuys, CA 91405 a California Corporation U.S.A that licenses distributes and markets movies, games and special projects wishes to enter into
a Letter of Intent with Ritek Corp, 42 Kuangfu. N. Road Hsin Chu Industrial Park, Taiwan R.O.C. a Taiwanese Corporation that replicates DVD’S and has a subsidiary named Catalyst Logic that distributes DVD’s. 
  
 The Shadoan Letter of Intent is as follows: 
  
 1.    Ritek gets total replication for Shadoan DVD-ROM through April 1, 2003 the entire duration of the contract between NuTech and TIG Group the copyright holder. 
  
 NuTech has the worldwide DVD licensed rights for Shadoan from 1998 to April 1, 2003, an interactive game being formatted for DVD. Ritek will replicate Shadoan, and secure the
exclusive distribution rights for Taiwan and region 3. 
  
 Description of Shadoan 
  
 Shadoan is an interactive children’s title which follows the heroics of it’s central character Lathan Kandor, who must reassemble the missing parts of a magic amulet and return
them to the beautiful Princess Grace Delight, in order to finally defeat the evil wizard Torloc. 
  
 Shadoan features more than
70,000 hand-painted cells of animation and a unique Parental Guidance Mode which enables parents to adjust the level of cartoonish fighting scenes to what they believe to be appropriate for their children. Shadoan took over 9 months to complete
using over 300 animators working around the clock. 
  
 The sound tract contains 30 original musical scores which were created by
authors known for their arrangements for Pocahontas and Beauty and the Beast. 
  
 The title was awarded “Best of
Show” by MacWorld 1998. It also received the Parent’s Choice Approval Award for excellence in children’s entertainment in 1997. 
  
 The DVD-Rom and DVD Console are a one of a kind, brand new undertaking in the formats. It is the first totally Interactive DVD game in the world. 
  

	 	•
	 
	Dvd Rom 
 

	 	•
	 
	Dvd Video Consol 
 

	 	•
	 
	Dts 5.1 
 

	 	•
	 
	6 Languages 
 

	 	•
	 
	IBM Voice 
 

	 	•
	 
	Score Memory 
 

	 	•
	 
	Hit Sound Track 
 

	 	•
	 
	Disney Quality Animation 
 

	 	•
	 
	Hologram Packaging
 
 

 

	 	•
	 
	Non-Violent Game 
 

	 	•
	 
	Approved by 3700 P.T.A. Associations 
 

  
 2.    NuTech wants an advance of $400,000 USD from Ritek. $200,000 will be wired within 48 hours of receipt of the signing of this Letter of Intent by Ritek. A second payment of $200,000 on or before, Sept 15, 1998 will
be wired by Ritek. After wiring the first payment of $200,000 and receipt by NuTech of the payment, NuTech and Ritek both parties own 50%/50% (fifty/fifty) the licensed rights for Shadoan. 
  
 3.    Nutech can re-purchase Shadoan from Ritek after June 10, 1999 at the rate of $400,000.00 USD. 
  
 4.    Applicable Law.    This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, United States of
America as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California, United States of America. 
  
 5.    Wire Transfer Instructions 
  
 NuTech Digital, Inc 
 City National Bank 
 Encino, California Office 
 16133
Ventura Blvd. 
 Phone 818-905-4100 
 ABA # 122016066 
 Acct # 024-774457 
 Wire Phone 818-905-4106 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 
  
 
	 Dated:  August 6, 1998
 	 	  	 	 Dated:  
 
	 
	 Signed:
 	 	 /s/    LEE KASPER        
 
	 	  	 	 Signed:
 	 	 /s/    STEVEN CHANG        
 

	  	 	 Lee Kasper
 	 	  	 	  	 	  
	 Title:
 	 	 President
 	 	  	 	 Title:
 	 	 EVP

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