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EXHIBIT 4.26
BANK XXXXXXXX DE BEAUFORT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated the 29th
day of December, 1999, between BANK XXXXXXXX DE BEAUFORT, a Netherlands Bank
with an address at Xxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx (the
"Holder"), 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 Holder is purchasing from the Company, pursuant to that certain
Common Stock Subscription Agreement (the "Subscription Agreement"), dated of
even date herewith, Four Hundred Forty-eight Thousand Six Hundred Thirty-two
(448,632) shares of Common Stock, and a Warrant to purchase an aggregate of Five
Hundred Thousand (500,000) shares of Common Stock. The shares of Common Stock of
the Company underlying the Warrants acquired by the Holder or the other
purchasers are referred to as the "Warrant Shares" (capitalized terms defined in
the Subscription Agreement and not otherwise defined herein have the meanings
specified in the Subscription Agreement); and
WHEREAS, the Company desires to grant to the Holder 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" means the shares of Common Stock subscribed for and purchased by the
Holder pursuant to the Subscription Agreement, and the Warrant 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 Holder acknowledges and
understands 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 Holder understands that no
disposition or transfer of the Registrable Securities may be made by Holder 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.
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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 (the "Registration
Statement"), at the sole expense of the Company (except as provided in Section
3(c) hereof), in respect of Holder's 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 May 1, 2000. The
number of securities to be registered shall include all of Holder's Registrable
Securities.
(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 by Holder 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 Holder shall bear the costs of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered on its behalf, the fees and expenses of any counsel
it selects, and such other extraordinary expenses as are necessary to qualify
the sale of the 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 Holder reasonably designates 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 Holder 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 Holder.
(d) 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 April 15, 2000, then the Company will pay,
in cash, to the Holder by wire transfer, as liquidated damages for such failure
and not as a penalty, two percent (2%) of the Purchase Price (as defined in the
Subscription Agreement) per share of Registrable Security each month thereafter
until such 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.
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(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.
Section 4. Cooperation with Company. Holder 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 Holder 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 Holder 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 such Holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Holder;
(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 Holder shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable the
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by the Holder; 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;
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(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;
(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 Holder under this
Agreement shall not be assigned. 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 the Holder upon the occurrence
of any of the following:
(a) all of the Holder's securities subject to this Agreement
have been registered;
(b) such 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) such 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 Holder
and each person, if any, who controls 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,
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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 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 Amended 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 Amended 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
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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 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
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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.
Section 10. Notices. Any notice pursuant to this Agreement by the
Company or by the 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 Holder, to its address set forth herein.
(b) If to the Company, at the address set forth herein, 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) days after they are mailed in the manner set forth above. If notice is
delivered by facsimile to the Company and followed by mail, delivery shall be
deemed given two (2) days after such facsimile is sent.
Section 11. "Piggy-Back" Registration. The Holder 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 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 holder, 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 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 Holder.
Section 12. Facsimile/Counterparts/Entire Agreement. Except as otherwise
stated herein, in lieu of the original, a facsimile transmission or copy of the
original shall be as effective and enforceable as the original. This Agreement
may be executed in counterparts which shall be
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considered an original document and which together shall be considered a
complete document. This Agreement constitutes the entire agreement between
Subscriber and the Company with respect to the subject matter hereof. This
Agreement may be amended only by a writing executed by all parties.
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 will be construed and
enforced in accordance with and governed by the laws of the State of California,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of California or
the state courts of the State of California 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 Subscription Agreement.
Section 16. Legal Costs and Fees. In any action to enforce the
provisions of this Agreement, the prevailing party shall be able to collect as
damages from the other party, in addition to all other remedies provided by
applicable law, the prevailing party's court costs and reasonable attorneys'
fees.
[Remainder of Page Intentionally Left Blank]
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BANK XXXXXXXX DE BEAUFORT
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
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Name: Xxxxx X. Xxxxxxx
Title: Interim Chief Executive Officer
WITNESSED:
/S/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx
BANK XXXXXXXX DE BEAUFORT
By: /S/ R. Xxxxx /S/ M.G. Boessenhoer
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Name: R. Xxxxx M.G. Boessenhoer
Title: Director Manager Operations
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