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EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is made as of December 29,
1999, by and between SPATIALIZER AUDIO LABORATORIES, INC., a Delaware
corporation ("DEBTOR"), 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 collectively with CPR and LP, "SECURED PARTY")
1. Definitions.
(a) Certain Defined Terms. The following terms, as used herein, have the
meanings set forth below:
ARI - means that certain Agreement Regarding Indebtedness (including all
Exhibits annexed thereto) of even date herewith, by and between Debtor and
Secured Party.
Assets - shall mean all of the assets (including but not limited to:
tangible, intangible and goodwill, all "equipment" (as defined in the UCC),
including, without limitation, all machinery, motor vehicles, trucks, trailers,
vessels, and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor) of the Debtor.
Collateral - has the meaning assigned to that term in Section 2.
Event of Default - has the meaning assigned to that term in Section 9.
Material Adverse Effect - means any effect on the business, operations,
properties, results of operations, prospects, or financial condition of the
Debtor that is material and adverse to the Debtor and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Debtor to enter into and perform any of its obligations under
this Agreement or the Notes in any material respect.
Notes - mean those certain Secured Non-Negotiable Convertible Promissory
Notes of even date herewith, in the aggregate original principal amount of
$225,241.10, made and executed by Debtor and issued to Secured Party, and all
amendments and supplements thereto, restatements thereof and renewals,
extensions, restructuring and refinancings thereof.
Person - means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
Proceeds - means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims against third
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parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance with respect to any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
Secured Obligations - has the meaning assigned to that term in Section
3.
Security Interests - means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
UCC - means the Uniform Commercial Code as in effect on the date hereof
in the State of New York, provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
(b) Other Definition Provisions. References to "SECTIONS",
"SUBSECTIONS", "EXHIBITS" and "SCHEDULES" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1(a) may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference. All references to statutes and related regulations shall include
(unless otherwise specifically provided herein) any amendments of same and any
successor statutes and regulations.
2. Grant of Security Interest
In order to secure the payment and performance of the Secured
Obligations in accordance with the terms thereof, Debtor hereby grants to
Secured Party a continuing security interest in and to all right, title and
interest of Debtor in the Assets (and any Proceeds therefrom) described on
Attachment A hereto, whether now owned or existing or hereafter acquired or
arising (all being collectively referred to as the "COLLATERAL").
3. Security for Obligations
This Agreement secures the payment and performance of the ARI and the
Notes, and all renewals, extensions, restructuring and refinancings thereof (the
"SECURED OBLIGATIONS").
4. Representations and Warranties. Debtor represents and warrants as
follows:
(a) Binding Obligation. This Agreement has duly executed and
delivered by the Debtor, which is a legal, valid and binding obligation of
Debtor, enforceable against Debtor in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditor's rights generally. This Agreement is not in violation of any other
agreements,
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instruments, orders or judgments by which Debtor is bound or subject. The
execution, delivery and performance of this Agreement by Debtor does not require
the consent or approval of any other person, entity or governmental agency.
(b) Location of Assets. All of the Assets are located in the
State of California.
(c) Ownership of Collateral. Debtor owns the Collateral free and
clear of any lien, security interest or encumbrance. No effective financing
statement or other form of lien notice covering all or any part of the
Collateral is on file in any recording office. Debtor is, and as long as this
Agreement shall be in effect pursuant to its terms, shall be the sole, record,
legal and beneficial owner of, and has good and marketable title to, the Assets,
subject to no lien, pledge or encumbrance, except the lien on the Assets created
by this Agreement.
(d) Office Locations; Debtor Names.
(i) As of the date hereof, the chief place of business,
the chief executive office and the office where Debtor keeps its books
and records is located at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx
Xxxxx, XX 00000. Debtor has not maintained any other street address at
any time during the five years preceding the date hereof.
(ii) Debtor does not do business nor, as of the date
hereof, has it done business during the past five years under any
corporate name, trade name or fictitious business name except for
Debtor's corporate name set forth above.
(e) Perfection. This Agreement, and the filing of an appropriate
UCC-1 financing statement with the Secretary of State of the State of
California, create to secure the Secured Obligations a valid, perfected and
priority security interest in the Collateral.
(f) Governmental Authorizations; Consents. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or consent of any other Person is required either
(i) for the grant by Debtor of the Security Interests granted hereby or for the
execution, delivery or performance of this Agreement by Debtor, or (ii) for the
perfection of or the exercise by Secured Party of its rights and remedies
hereunder (except as may have been taken by or at the direction of Debtor or
Secured Party) other than the filing of appropriate UCC-1 financing statements
in connection with the perfection of the Security Interests.
(g) Value of Collateral. The value of the Collateral as of the
date hereof is equal to not less than Three Hundred Thousand United States
Dollars ($300,000).
(h) Accurate Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Debtor with respect to
the Collateral is and will be accurate and complete in all material respects.
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(i) Deficiency. Debtor will remain liable for any deficiency in
the event that the delivery of the Assets to the Secured Party is insufficient
to satisfy the Debtor's obligations under the Notes.
(j) Survival. From and after the date hereof and so long as this
Agreement shall be in effect pursuant to its terms, the Debtor agrees that it
shall not take any action that would cause the Debtor to be in breach or default
of any of the Secured Obligations, that all representations and warranties made
by Debtor shall survive this Agreement and that as of the date hereof, the
Secured Party shall be deemed to have a priority lien on the Assets for the
purposes and in accordance with the terms and provisions hereof, and the Debtor
shall cooperate with the Secured Party and take all action requested by the
Secured Party to ensure the representations and warranties shall survive this
Agreement with respect thereto.
(k) Validity. The Debtor's performance of its obligations under
this Agreement will not result in the creation or imposition by the Debtor of
any liens, charges, claims or other encumbrances upon the Assets, or any of the
assets of the Debtor other than the security interest granted under this
Agreement.
(l) No Conflicts. The execution, delivery and performance of this
Agreement by the Debtor and the consummation by the Debtor of the transactions
contemplated hereby do not and will not (i) result in a violation of its
Articles of Incorporation or ByLaws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, patent, patent license,
indenture, instrument or any "lock-up" or similar provision of any underwriting
or similar agreement to which the Debtor is a party, or (iii) result in a
violation of any federal, state or local law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Debtor or by which any property or asset of the Debtor is
bound or affected, nor is the Debtor otherwise in violation of, in conflict
with, or in default under, any of the foregoing except as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. The business of the Debtor is not being conducted in violation of any
law, ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(m) Insurance. The Debtor is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Debtor believes to be prudent and customary in the businesses
in which the Debtor is engaged. The Debtor has no notice to believe that the
Debtor will not be able to renew its existing insurance coverage as and when
such coverage expires, or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
(n) Taxes. Except for the Debtor 's failure to (i) file its
federal and state tax returns for its fiscal year 1998, and (ii) pay any federal
or state taxes owed for its fiscal year 1998 (which taxes are not of a material
amount), all federal, state, city and other tax returns, reports and
declarations required to be filed by or on behalf of the Debtor have been filed
and such returns are complete and accurate and disclose all taxes (whether based
upon income, operations,
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purchases, sales, payroll, licenses, compensation, business, capital, properties
or assets or otherwise) required to be paid in the periods covered thereby.
(o) Title to Assets. Debtor has good and marketable title to the
Assets, and all properties and material assets as owned by it, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest
other than such as are not material to the business of the Debtor.
5. Further Assurances; Covenants
(a) Other Documents and Actions. Debtor will, from time to time,
promptly execute and deliver all further instruments and documents prepared by
Secured Party at Secured Party's expense, and take all further action that may
be necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Debtor will: (i) execute such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby; (ii) at any reasonable time, upon demand by
Secured Party exhibit the Collateral to allow inspection of the Collateral by
Secured Party or persons designated by Secured Party; and (iii) upon Secured
Party's request, appear in and defend any action or proceeding that may affect
Debtor's title to, or Secured Party's security interest in, the Collateral.
(b) Secured Party Authorized. Debtor hereby authorizes Secured
Party to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral without the signature of
Debtor where permitted by law.
(c) Corporate or Name Change. Debtor will notify Secured Party
promptly in writing at least 30 days prior to (a) any change in Debtor's name
and (b) Debtor's commencing the use of any trade name, assumed name or
fictitious name.
(d) Business Locations. Debtor will keep the Collateral at the
location specified in Section 4(b) above. Debtor shall give Secured Party thirty
(30) days' prior written notice of any change in its chief place of business or
of any new location of business or any new location for any of the Collateral.
With respect to any new location (which in any event shall be within the
continental United States), Debtor shall execute such documents and take such
actions as Secured Party reasonably deems necessary to perfect and protect the
Security Interests.
(e) Bailees. No Collateral shall at any time be in the possession
or control of any warehouseman, bailee or Debtor's agents or processors without
Secured Party's prior written consent and unless Secured Party, if Secured Party
has so requested, has received warehouse receipts or bailee letters reasonably
satisfactory to Secured Party prior to the commencement of such storage. Debtor
shall, upon the request of Secured Party, notify any such warehouseman, bailee,
agent or processor of the Security Interests.
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(f) Insurance. Debtor currently does maintain and shall maintain
insurance with respect to the Collateral of types and in amounts that are
customary for similarly situated businesses. Debtor hereby direct all insurers
under such policies of insurance with respect to its assets to pay all material
proceeds of such insurance policies to Secured Party.
(g) Taxes and Claims. Debtor will pay (i) all taxes, assessments
and other governmental charges imposed upon the Collateral before any penalty
accrues thereon and (ii) all claims (including claims for labor, services,
materials and supplies) for sums that have become due and payable and that by
law have or may become a lien upon any of the Collateral before any penalty or
fine is incurred with respect thereto; provided that no such tax, charge or
claim need be paid if Debtor is contesting same in good faith by appropriate
proceedings promptly instituted and diligently conducted and if Debtor has
established such reserve or other appropriate provision, if any, as shall be
required in conformity with generally accepted accounting principles
consistently applied.
(h) Collateral Description. Debtor will furnish to Secured Party,
from time to time, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.
(i) Use of Collateral. Debtor will not use or permit any
Collateral to be used unlawfully or in violation of any provision of this
Agreement or any applicable statue, regulation or ordinance or any policy of
insurance covering any of the Collateral.
(j) Records of Collateral. Debtor shall keep full and accurate
books and records relating to the Collateral and shall stamp or otherwise xxxx
such books and records in such manner as Secured Party may reasonably request
indicating that the Collateral is subject to the Security Interests.
(k) Other Information. Debtor will, promptly upon request,
provide to Secured Party all information and evidence it may reasonably request
concerning the Collateral to enable Secured Party to enforce the provisions of
this Agreement.
(l) Maintenance. The Debtor will maintain the condition of the
Collateral in such condition as is customary in the businesses in which the
Debtor is engaged, and shall take any and all actions necessary for such
maintenance as are customary.
6. Secured Party Appointed Attorney-in-Fact. Debtor hereby irrevocably
appoints each Secured Party as its attorney-in-fact, with full authority in the
place and stead of Debtor and in the name of Debtor, Secured Party or otherwise,
from time to time in Secured Party's discretion to take any action and to
execute any instrument that Secured Party may deem necessary or advisable after
the occurrence and during the continuation of an Event of Default to accomplish
the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to Secured
Party;
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(b) to ask, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral;
(c) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(d) to pay or discharge taxes or liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, and such payments made by Secured Party to become obligations
of Debtor, due and payable immediately without demand and secured by the
Security Interests; and
(e) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Debtor's expense, at any time or from time to
time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral.
Neither Secured Party nor any Person designated by Secured Party shall
be liable for any acts or omissions or for any error of judgment or mistake of
fact or law other than as a result of Secured Party's or such Person's gross
negligence or willful misconduct. These powers, being coupled with an interest,
is irrevocable so long as this Agreement shall remain in force.
7. Transfers and Other Liens
Debtor shall not, without Secured Party's prior written consent:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral other
than (i) in the ordinary course of its business, (ii) in connection with the
replacement of any Collateral of equivalent use and value, or (iii) with respect
to the capital stock of Multidisc Technologies, Inc. (a wholly-owned inactive
subsidiary of Debtor) or any of the assets of such subsidiary.
(b) Create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral to
secure indebtedness of any Person except for the security interest created by
this Agreement.
8. Events of Default.
The occurrence of any one or more of the following events shall
constitute an Event of Default by Debtor under this Agreement:
(a) General Default. Debtor shall fail to observe or perform any
covenant, obligation, term or condition contained in the ARI, the Notes or this
Agreement.
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(b) Nonpayment. Debtor shall fail to pay any principal, interest
or other amount owing under the Notes when and as the same shall be due and
payable.
(c) Material Misrepresentations. Any representation or warranty
by the Debtor set forth herein shall prove to be false in any material respect.
(d) Going Concern. Debtor shall terminate its corporate existence
or shall cease to operate as a going concern.
(e) Judgments. A judgment shall be entered against Debtor or a
warrant of execution or similar process shall be issued or levied against its
property and within thirty (30) days after such judgment, warrant or process
shall not have been paid in full or proper appeal of the same made.
(f) Relief - Voluntary. Debtor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing.
(g) Relief - Involuntary. Any involuntary case or other
proceeding shall be commenced against Debtor seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of thirty (30) days; or an
order for relief shall be entered against Debtor under the federal bankruptcy
laws as now or hereafter in effect.
(h) Transfer. The Collateral is sold or transferred by the Debtor
in violation of Section 7.
(i) Other. The occurrence of any "Event of Default" as that term
is defined in the Notes.
9. Remedies
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may declare the entire outstanding principal amount of
the Notes immediately due and payable without any notice, demand or other action
on the part of Secured Party.
(b) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on
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default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may: (i) require Debtor to, and Debtor hereby agrees that
it will, at its expense and upon request of Secured Party forthwith, assemble
all or part of the Collateral as directed by Secured Party and make it available
to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties; (ii) without notice or demand or legal
process, enter upon any premises of Debtor and take possession of the Collateral
for sale pursuant to this Section 9; (iii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Secured Party's offices or elsewhere, at such time or
times, for cash, on credit or for future delivery, and at such price or prices
and upon such other terms as Secured Party may deem commercially reasonable;
(iv) notify the obligors on any Accounts or Instruments to make payments there
under directly to Secured Party; (v) without notice to Debtor, renew, modify or
extend any of the Accounts and Instruments or grant waivers or indulgences with
respect thereto or accept partial payment thereof, or substitute any obligor
thereon, in any manner as Secured Party may deem advisable, without affecting or
diminishing Debtor's continuing obligations hereunder; and (v) and shall have
all applicable remedies set forth in the UCC. Debtor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Debtor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. At any sale of the
Collateral, if permitted by law, Secured Party may bid (which bid may be, in
whole or in part, in the form of cancellation of indebtedness) for the purchase
of the Collateral or any portion thereof for the account of Secured Party.
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, Debtor
hereby specifically waives all rights of redemption, stay or appraisal, which it
has or may have under any law now existing or hereafter enacted.
(c) Upon the occurrence of an Event of Default hereunder, Secured
Party shall have the right to enter upon the premises of Debtor where the
Collateral is located (or is believed to be located) without any obligation to
pay rent to Debtor, or any other place or places where the Collateral is
believed to be located and kept, to render the Collateral useable or saleable,
to remove the Collateral therefrom to the premises of Secured Party or any agent
of Secured Party for such time as Secured Party may desire in order to
effectively collect or liquidate the Collateral, and/or to require Debtor to
assemble the Collateral and make it available to Secured Party at a place or
places to be designated by Secured Party. Upon the occurrence of an Event of
Default hereunder, Secured Party shall have the right to take possession of
Debtor's original books and records, to obtain access to Debtor's data
processing equipment, computer hardware and software relating to the Collateral
and to use all of the foregoing and the information contained therein in any
manner Secured Party deems appropriate; and Secured Party shall have the right
to notify postal authorities to change the address for delivery of Debtor's mail
to an address designated by Secured Party and to receive, open and dispose of
all mail addressed to Debtor.
10. Limitation on Duty of Secured Party with Respect to Collateral.
Beyond the safe custody thereof, Secured Party shall have no duty with respect
to any Collateral in its possession or control (or in the possession or control
of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto.
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Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property. Secured Party shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by Secured Party in good faith.
11. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default as set forth herein, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral shall be
applied (pro rata among each participant in the Secured Party based on the
indebtedness then owing): first, to all fees, costs and expenses incurred by
Secured Party with respect to the Collateral; and second, to the Secured
Obligations. Secured Party shall pay over to Debtor any surplus and Debtor shall
remain liable for any deficiency.
12. Expenses. Debtor agrees to pay all insurance expenses and all
expenses of protecting, storing, warehousing, appraising, insuring, handling,
maintaining and shipping the Collateral and any and all excise, property, sales
and use taxes imposed by any state, federal or local authority on any of the
Collateral, or with respect to periodic appraisals and inspections of the
Collateral, or with respect to the sale or other disposition thereof. If Debtor
fails promptly to pay any portion of the above expenses when due or to perform
any other obligation of Debtor under this Agreement, Secured Party may, at its
option, but shall not be required to, pay or perform the same, and Debtor agree
to reimburse Secured Party therefor on demand, or the Secured Party may deem it
to be an Event of Default. All sums so paid or incurred by Secured Party for any
of the foregoing, any and all other sums for which Debtor may become liable
hereunder and all costs and expenses (including attorneys' fees, legal expenses
and court costs) incurred by Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies under this Agreement shall
be payable on demand, shall constitute Secured Obligations, shall bear interest
until paid at the rate provided in the Notes and shall be secured by the
Collateral.
13. Termination of Security Interests; Release of Collateral. Upon
payment in full of all Secured Obligations or upon the conversion of all
principal outstanding under the Notes and all interest accrued thereon into
shares of common stock, par value $0.01 per share, of the Debtor, the Security
Interests shall terminate and all rights to the Collateral shall revert to
Debtor. Upon such termination of the Security Interests or release of any
Collateral, Secured Party will, at the expense of, and preparation by, the
Debtor, execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.
14. Notices. Each notice, communication and delivery under this
Agreement: (a) shall be made in writing signed by the party giving it; (b) shall
specify the section of this Agreement pursuant to which given; (c) shall either
be delivered in person or by telecopier, a nationally recognized next business
day courier service or Express Mail; (d) unless delivered in person, shall be
given to the address specified below; (e) shall be deemed to be given (i) if
delivered in person, on the date delivered, (ii) if sent by telecopier, on the
date of telephonic confirmation of receipt, (iii) if sent by a nationally
recognized next business day courier service with all costs paid, on the next
business day after it is delivered to such courier, or (iv) if sent by
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Express Mail (with postage and other fees paid), on the next business day after
it is mailed. Such notice shall not be effective unless copies are provided
contemporaneously as specified below, but neither the manner nor the time of
giving notice to those to whom copies are to be given (which need not be the
same as the addressee) shall control the date notice is given or received. The
addresses and requirements for copies are as follows:
If to Debtor: at the address set forth in Section 4(d) above.
If to Secured Party at their respective addresses set forth in the
Notes. Except as otherwise expressly set forth in any particular provision of
this Agreement, any consent or approval required or permitted by this Agreement
to be given by Secured Party may be given, and any term of this Agreement or of
any other instrument related hereto or mentioned herein may be amended, and the
performance or observance by Debtor of any term of this Agreement, the ARI or
the Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written specific
consent of Secured Party. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of Secured Party in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon Debtor shall entitle Debtor to other or further notice or demand in
similar or other circumstances. The rights in this Agreement, the ARI and the
Notes are cumulative and are not exclusive of any other remedies provided by
law. The invalidity, illegality or unenforceability of any provision in or
obligation under this Agreement shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under this
Agreement.
15. Successors and Assigns. This Agreement is for the benefit of Secured
Party and its successors and assigns, and in the event of an assignment of all
or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the Secured Obligations so assigned, may be transferred with such
Secured Obligations. This Agreement shall be binding on Debtor and its
successors and assigns, provided that Debtor shall not assign this Agreement
without Secured Party's prior written consent.
16. Changes in Writing. No amendment, modification, termination or
waiver of any provision of this Agreement or consent to any departure by Debtor
therefrom, shall in any event be effective without the written concurrence of
Secured Party and Debtor.
17. Governing Law/Venue/Jurisdiction. This Agreement shall be
exclusively governed by and construed in accordance with the laws of the State
of New York, without giving effect to the conflicts of law principles thereof.
Each of the parties consents to the exclusive jurisdiction of the U.S. District
Court sitting in the Southern District of the State of New York sitting in
Manhattan 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 the other 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
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
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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. Each party waives
its right to a trial by jury.
18. Headings. Cross reference pages and headings contained herein are
for convenience of reference only, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the provisions hereof.
19. Counterparts. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of all of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be an
original, and each of which shall constitute one and the same agreement. Any
party may deliver an executed copy of this Agreement and of any documents
contemplated hereby by facsimile transmission to another party and such delivery
shall have the same force and effect as any other delivery of a manually signed
copy of this Agreement or of such other documents.
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DULY EXECUTED and delivered by the parties on the date first written
above.
SPATIALIZER AUDIO LABORATORIES, INC.
By: /S/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: Interim Chief Executive Officer
----------------------------------
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
------------------------------
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ATTACHMENT A
DESCRIPTION OF COLLATERAL
The Collateral consists of all Assets (as such term is defined in
Section 1(a) of this Agreement) of the Debtor.
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