1
EXHIBIT 4.19
CONVERTIBLE NOTES
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 29th day of December,
1999, between CPR (USA) INC., a Delaware corporation ("CPR"), LIBERTYVIEW FUNDS,
L.P., a Cayman Islands exempted limited partnership ("LP") and
successor-in-interest to LIBERTYVIEW PLUS FUND, a Cayman Islands corporation,
and LIBERTYVIEW FUND, LLC, a Delaware limited liability company ("LLC", and
together with CPR and LP, the "Holders"), and SPATIALIZER AUDIO LABORATORIES,
INC., a Delaware corporation having its principal place of business at 00000
Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are receiving from the Company that certain Secured
Non-Negotiable Convertible Promissory Note (the "Note"), dated of even date
herewith, made by the Company in favor of the Holders.
WHEREAS, pursuant to the terms and conditions of the Note, the principal
and accrued interest outstanding under the Note may under certain circumstances
be converted into shares of Common Stock. (Capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
Note). The shares of Common Stock issuable to Holders pursuant to a conversion
under the Note are referred to herein as the "Note Shares"; and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
Securities" shall mean the Note Shares; provided, however, that with respect to
any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the "Act")
and disposed of pursuant thereto, (ii) registration under the Act is no longer
required for the immediate public distribution of such security as a result of
the provisions of Rule 144, or (iii) it has ceased to be outstanding. In the
event of any merger, reorganization, consolidation, recapitalization or other
change in corporate structure affecting the Common Stock, such adjustment shall
be made in the definition of Registrable Security as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Section 1.
Section 2. Restrictions on Transfer. The Holders acknowledge and
understand that prior to the registration of the Registrable Securities as
provided herein, the Registrable Securities are "restricted securities" as
defined in Rule 144 promulgated under the Act. The Holders understand that no
disposition or transfer of the Registrable Securities may be made by
2
CONVERTIBLE NOTES
Holders in the absence of (i) an opinion of counsel reasonably satisfactory to
the Company that such transfer may be made or (ii) a registration statement
under the Act is then in effect with respect thereto.
Section 3. Registration Rights.
(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission (the "SEC"), within thirty (30) days after
the date hereof, a registration statement on Form S-3 or if the Company is not
eligible to use such Form S-3, another appropriate form of registration
statement (the "Registration Statement"), at the sole expense of the Company
(except as provided in Section 3(c) hereof), in respect of Holders' Registrable
Securities, so as to permit resale of the Registrable Securities under the Act.
The Company agrees that it will cause the Registration Statement to become
effective by April 15, 2000. The number of Registrable Securities to be
registered shall be the number of shares of Common Stock that the Company would
issue if the entire amount of principal and accrued interest outstanding under
the Note as of the date hereof were converted into shares of Common Stock at the
Floor Price.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof current under Act
until the earlier of (i) the date that all of the Registrable Securities have
been sold pursuant to the Registration Statement, (ii) the date that the
Registrable Securities may be sold under the provisions of Rule 144 or (iii)
three (3) years after the effective date of the Registration Statement (the
"Effective Date").
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under Section 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. The Holders shall bear the costs of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered on its behalf and all of the other fees and expenses
of such registration, including of its counsel and such other expenses as are
necessary to qualify the sale of Registrable Securities in compliance with any
state Blue Sky laws. The Company shall use its best efforts to qualify any of
the securities for sale in such states as the Holders reasonably designate and
shall furnish indemnification in the manner provided in Section 9 hereof.
However, the Company shall not be required to qualify the Registrable Securities
in any state or jurisdiction which will require an escrow or other restriction
relating to the Company and/or the sellers, or where the Company would be
required to qualify as a dealer in securities under the securities or blue sky
laws of such state or jurisdiction. The Company at its expense will supply the
Holders with copies of such Registration Statement and the prospectus or
offering circular included therein and other related documents in such
quantities as may be reasonably requested by the Holders.
(d) The Company shall not be required by this Section 3 to
include the Holders' Registrable Securities in the Registration Statement which
is to be filed if, in the opinion of counsel for both the Holders and the
Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the
2
3
CONVERTIBLE NOTES
Holders and the Company), the proposed offering or other transfer as to which
such registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not restricted securities, as defined in Rule 144 under the
Act.
(e) No provision contained herein shall preclude the Company from
selling securities pursuant to any registration statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(f) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed by the Company by the
thirtieth (30th) day after the Closing Date, or if the Registration Statement is
not declared effective by the SEC by the April 15, 2000 (the "EFFECTIVE DATE"),
then the Company will pay, in cash, to the Holders on a pro-rata basis by wire
transfer, as liquidated damages for such failure and not as a penalty, two (2%)
percent of the principal amount of the Notes then outstanding each month
thereafter until the Registration Statement has been filed and/or declared
effective. The liquidated damages shall be payable within five (5) calendar days
of written demand by the Holder(s).
If the Company does not remit the damages to the Holder as set
forth above, the Company will pay the to the Holders the reasonable costs of
collection, including attorneys fees, in addition to the liquidated damages.
Such payment shall be made to the Holders in cash immediately if the
registration of the Securities are not effected; provided, however, that the
payment of such liquidated damages shall not relieve the Company from its
obligations to register the Securities pursuant to this Section. The
registration of the Securities pursuant to this provision shall not affect or
limit Holder's other rights or remedies as set forth in this Agreement.
(g) The Company agrees that within three business days after
being notified by the SEC that the Registration Statement(s) has been cleared to
go effective, the Company it will declare such Registration Statement effective.
The Company also agrees that it shall respond in writing to any questions and/or
comments from the SEC that relate to the Registration Statement(s) within ten
business days of receipt of such question or comment.
(h) In the event the number of shares of Common Stock included in
the Registration Statement shall be insufficient to cover the number of
Registrable Securities due to the Holder under the terms of the Purchase
Agreement and/or the Notes, the Company agrees that it shall file either a new
Registration Statement including such additional shares or amend the then
existing Registration Statement. The Company agrees that in such event it will
file with the SEC either an amendment to the then existing Registration
Statement or a new Registration Statement within 30 days of when required
hereunder, and use its best efforts to cause either the amendment or such
Registration Statement to become effective within 90 calendar days from when
required. If such amendment or new Registration Statement is not filed and/or
declared effective in a timely manner as set forth herein, the Company shall be
subject to liquidated damages as pursuant to the provisions of Section 3(f).
3
4
CONVERTIBLE NOTES
Section 4. Cooperation with Company. Holders will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. Registration Procedures. Whenever the Company is required by
the provisions of this Agreement to effect the registration of any of the
Registrable Securities under the Act, the Company shall (except as otherwise
provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the SEC such amendments and supplements
to such registration statement and the Prospectus used in connection therewith
as may be necessary to keep such registration statement effective as per Section
3(b) herein and to comply with the provisions of the Act with respect to the
sale or other disposition of all securities covered by such registration
statement when the Holders of such securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities from time to time in connection with a registration statement
pursuant to Rule 415 under the Act);
(b) furnish to the Holders such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Act, and such other documents, as the Holders may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by the Holders;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holders shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable the
Holders to consummate the public sale or other disposition in such jurisdiction
of the securities owned by the Holders; provided, however, that: (i) the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process, and (ii) the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 5(c) in any jurisdiction in
which the Company would be required to qualify as a dealer in securities under
the securities or blue sky laws of such jurisdiction.
(d) list such securities on the OTC Bulletin Board or any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
4
5
CONVERTIBLE NOTES
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted the Holders under this
Agreement shall only be assigned to affiliates, heirs, and successors of the
Holders. This Agreement is binding upon and inures to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns.
Section 7. Termination of Registration Rights. The rights granted
pursuant to this Agreement shall terminate as to any Holder upon the occurrence
of any of the following:
(a) all of such Holder's securities subject to this
Agreement have been registered;
(b) the Holder's securities subject to this Agreement may be
sold without such registration pursuant to Rule 144
promulgated by the SEC pursuant to the Act;
(c) the Holder's securities subject to this Agreement can be
sold pursuant to Rule 144(k).
Section 8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Holders
and each person, if any, who controls any Holder within the meaning of the Act
("Distributing Holders") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all attorneys'
fees), to which the Distributing Holder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
or any related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment, or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holders, specifically for use in the preparation
thereof. This Section shall not inure to the benefit of any Distributing Holder
with respect to any person asserting such loss, claim, damage or
5
6
CONVERTIBLE NOTES
liability who purchased the Registrable Securities which are the subject thereof
if the Distributing Holder failed to send or give (in violation of the Act or
the rules and regulations promulgated thereunder) a copy of the prospectus
contained in the Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable Securities,
where the Distributing Holder was obligated to do so under the Act or the rules
and regulations promulgated hereunder. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer, director of the Company or person,
if any, who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Act or otherwise,
insofar as such losses claims, damages or liabilities (or actions in respect
thereof); arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement prepared
by the Company, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
such Distributing Holder, specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the Distributing
Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than as to the particular item as to which indemnification is then
being sought solely pursuant to this Section. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the provisions herein
stated and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
6
7
CONVERTIBLE NOTES
reasonably satisfactory to the indemnified party; provided that if the
indemnified party is the Distributing Holder, the fees and expenses of such
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party, or (ii) the named parties to any such action (including any impleaded
parties) include both the Distributing Holder and the indemnifying party and the
Distributing Holder shall have been advised by such counsel that there may be
one or more legal defenses available to the indemnifying party different from or
in conflict with any legal defenses which may be available to the Distributing
Holder (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the Distributing Holder, it being
understood, however, that the indemnifying party shall, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable only for the reasonable fees and expenses of one separate firm of
attorneys for the Distributing Holder, which firm shall be designated in writing
by the Distributing Holder). No settlement of any action against an indemnified
party shall be made without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
Section 9. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) the Distributing Holder, or
the Company, makes a claim for indemnification, but is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Agreement provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
Distributing Holder, or the Company, then the Company and the applicable
Distributing Holder shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), in either such case (after contribution
from others) on the basis of relative fault as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
7
8
CONVERTIBLE NOTES
Section 10. Notices. Any notice pursuant to this Agreement by the
Company or by any Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery or (iii) if mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Holders:
c/o LibertyView Capital Management, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxx
(b) If to the Company, at the address set forth above, or to such
other address as any such party may designate by notice to the other party.
Notices shall be deemed given at the time they are delivered personally or five
(5) business days after they are mailed in the manner set forth above. If notice
is delivered by facsimile and followed by mail, delivery shall be deemed given
two (2) days after such facsimile is sent.
Section 11. "Piggy-Back" Registration. The Holders shall have the right
to include the Registrable Securities as part of any registration of securities
filed by the Company (other than in connection with a transaction contemplated
by Rule 145(a) promulgated under the Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the Holders agree
they shall not have any piggy-back registration rights pursuant to this Section
if the Note Shares may be sold in the United States pursuant to the provisions
of Rule 144. The Holders shall have five (5) business days to notify the Company
in writing as to whether the Company is to include the Holders or not include
the Holders as part of the registration; provided, however, that if any
registration pursuant to this Section shall be underwritten, in whole or in
part, the Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the underwriter evidenced in
writing of such offering only a limited number of Registrable Securities should
be included in such offering, or no such shares should be included, the Holders,
and all other selling stockholders, shall be limited to registering such
proportion of their respective shares as shall equal the proportion that the
number of shares of selling stockholders permitted to be registered by the
underwriter in such offering bears to the total number of all shares then held
by all selling stockholders desiring to participate in such offering. Those
Registrable Securities which are excluded from an underwritten offering pursuant
to the foregoing provisions of this Section (and all other Registrable
Securities) shall be withheld from the market by the Holders thereof for a
period, not to exceed one hundred eighty (180) days, which the underwriter may
reasonably determine is necessary in order to effect such underwritten offering.
The Company shall have the right to terminate or withdraw any registration
initiated by it under this Section prior to the effectiveness of such
registration. All registration expenses incurred by the
8
9
CONVERTIBLE NOTES
Company in complying with this Section shall be paid by the Company, exclusive
of underwriting discounts, commissions and legal fees and expenses for counsel
to the Holders.
Section 12. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 14. Governing Law, Venue. This Agreement shall be exclusively
construed and enforced in accordance with and governed by the laws of the State
of New York except for matters arising under the Act, without reference to
principles of conflicts of law. Each of the parties consents to the exclusive
jurisdiction of the xxxxxxx xxxxx, xxxxxxx xxxxxxxx of the State of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. Each party hereby agrees that if another party to this Agreement
obtains a judgment against it in such a proceeding, the party which obtained
such judgment may enforce same by summary judgment in the courts of any state or
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
Section 15. Severability/Defined Terms. If any provision of this
Agreement shall for any reason be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein. Terms not otherwise defined herein shall be defined
in accordance with the Note.
[Remainder of Page Intentionally Left Blank]
9
10
CONVERTIBLE NOTES
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, on the day and year first above written.
SPATIALIZER AUDIO LABORATORIES, INC.
By: /S/ Xxxxx X. Xxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
----------------
Title: Interim Chief Executive Officer
-------------------------------
WITNESSED:
/S/ Xxxxxxxx X. Xxxx
---------------------
Xxxxxxxx X. Xxxx
CPR (USA) INC.
By: /S/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
----------------
Title: Managing Director,
------------------
CPR (USA), Inc.
LIBERTYVIEW FUNDS, L.P.
By: /S/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
----------------
Title: Authorized Signatory
--------------------
LIBERTYVIEW FUND, LLC
By: /S/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
----------------
Title: Authorized Signatory
--------------------
10
