UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 24, 1996
SPATIALIZER AUDIO LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-90532 95-4484725
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
20700 VENTURA BOULEVARD, SUITE 134
WOODLAND HILLS, CALIFORNIA 91364-2357
(Address of principal executive offices)
TELEPHONE NUMBER: (818) 227-3370
(Registrant's telephone number, including area code)
<PAGE>
ITEM 1. NOT APPLICABLE
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As described in the Agreement in Principle and Press Release attached
hereto as Exhibits 1 and 2, effective June 24, 1996, the Registrant, through
a newly formed subsidiary, MultiDisc Assets Acquisition, Inc. ("MAA"), a
Delaware corporation, acquired for $950,000 in cash, certain assets of
Home Theater Products, Inc. ("HTP") a debtor in possession based in
Anaheim, California. Concurrently with this transaction, MAA changed it's
name to MultiDisc Technologies, Inc. ("MDT").
The assets consist principally of technology, patent applications,
inventions, and works in progress related to the MultiDisc technology
that had been developed by HTP through one of it's divisions . The assets
include works in progress, equipment, patent applications and office
equipment related to the development efforts. The sale was undertaken
by HTP through a Motion for the Sale of Assets Free and Clear of Liens
and Encumbrances and Satisfaction of Secured Claims ("Motion") submitted
to and approved by the Bankruptcy Court. Court filings submitted in
connection with the Motion valued the hard assets in the transaction at
approximately $150,000 and the balance was attributed to intellectual
property, the products in development, and the underlying technologies.
The Registrant funded the acquisition from its internal cash resources.
In establishing its offer, the Registrant consulted with its financial
advisors and negotiated with HTP and its secured creditor. No parties
submitted overbids in the Bankruptcy Court.
The value of the transaction constitute 16% of Registrant's Assets at
May 31, 1996, and did not involve the acquisition of a business as
described in Item 2 of Form 8-K. The final order approving the transaction
was filed by the Court on June 20, 1996 and the transaction closed on
June 24, 1996.
In connection with the transaction Irwin Zucker, acting president of
HTP, and E. Rene Bos and Robert Montelius, the principal developers of
the MultiDisc technology, entered into 18 month employment contracts with
MDT, at annual salaries of $140,000, $120,000, and $120,000 respectively,
were granted 50,000, 25,000 and 25,000 options, respectively, under the
Registrant's 1995 Stock Option Plan and will be entitled to certain profit
participation rights based on the performance of the MDT pursuant to the
pending MultiDisc 1996 Equity Incentive Plan.
To fund the costs of further development of the technologies and
products, the Registrant will use internally generated cash and additional
monies raised in pending private placements of equity, and possibly,
through convertible or other debt.
ITEMS 3 - 6. NOT APPLICABLE
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) and (b) Not applicable
(c) Documents filed as part of this report are as follows:
10.7 Agreement in Principle, between Spatializer Audio Laboratories,
Inc. and Bank of America / Home Theater Products, International
-- Acquisition of Multidisc Assets
10.8 Employment Agreement for Irwin Zucker
99.1 Press Release regarding formation of new Delaware Corporation
(MultiDisc Technologies, Inc.) and acquisition of assets from Home
Theater Products, International
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 15, 1996 SPATIALIZER AUDIO LABORATORIES, INC.
(Registrant)
/s/STEVEN D. GERSHICK
----------------------------------
Steven D. Gershick
President, CEO, and Chairman
/s/KATHY PARTCH
----------------------------------
Kathy Partch
Director of Accounting
<PAGE>
Exhibit 10.7
FINAL EXECUTION COPY
AGREEMENT IN PRINCIPLE
SPATIALIZER AUDIO LABORATORIES, INC. --
BANK OF AMERICA/HOME THEATER PRODUCTS, INTERNATIONAL
-- ACQUISITION OF MULTIDISC ASSETS
In accordance with our discussion, when signed by all parties, the
following constitutes the agreement upon which Spatializer Audio
Laboratories, Inc. ("SPAZ") or, at its election, a designated wholly-owned
subsidiary of SPAZ will acquire from Home Theater Products International,
Inc. and its subsidiaries and affiliates, as applicable ("HTP"), the assets,
including all technology, assets, work-in-progress and intellectual
property, including all patents, patent applications, trademark and
tradenames, related to the compact disc changer products, storage magazines
and player systems owned or being developed by HTP or its affiliates
commonly known as the multidisc assets (collectively, "Multidisc Assets").
Acquisition. SPAZ hereby agrees to purchase and HTP
hereby agrees to sell to SPAZ the Multidisc Assets on the
terms set forth herein.
Purchase Price. At Closing, in full payment for the
Multidisc Assets SPAZ will deliver to the Bank of America
NT&SA (the "Bank") the sum of $950,000, via cashier's check,
including the Deposit of $100,000 which is being delivered
to HTP on the date this Agreement is signed by all parties
hereto.
Title. At Closing of the sale of the Multidisc Assets,
HTP will deliver to SPAZ the Multidisc Assets free and clear
of any and all liens, claims or encumbrances of any kind
whatsoever and will obtain a release from the Bank of any
and all security interests it has in the Multidisc Assets.
At or prior to Closing, HTP shall deliver to the Bank and
SPAZ a detailed schedule and description of the Multidisc
Assets in such form as the Bank may reasonably request to
allow it to release the Multidisc Assets from its liens at
Closing.
Employment Agreements. As a condition precedent of
Closing, SPAZ shall conclude employment agreements
acceptable in form and content acceptable to it with Irwin
Zucker ("Zucker") Eric R. Bos ("Bos") and Robert L.
Montelius ("Montelius"). HTP recognizes, acknowledges and
agrees that a material inducement for SPAZ to enter into
this agreement and close the transaction contemplated hereby
is the entry into new arrangements with Zucker, Bos and
Montelius. To the extent that the same occurs as a result
of the transaction contemplated hereby, HTP agrees and
acknowledges it does not have and will not have any rights,
claims or causes of action of any kind or nature against
SPAZ or against Zucker, Bos and/or Montelius for or on
account of the termination of the employment relationships
of Zucker, Bos and/or Montelius with HTP or the creation and
continuation of their employment relationships with SPAZ or
its affiliate.
<PAGE>
Indemnity. HTP indemnifies and holds SPAZ harmless
from any and all claims existing with respect to the
Multidisc Assets at or prior to the acquisition of the same
by SPAZ, including any and all claims, known or unknown, of
any nature whatsoever which have or might be asserted by
stockholders, creditors or other claimants of HTP or its
affiliates with respect to the Multidisc Assets or the
transactions described herein. Such indemnity shall include
attorneys' fees and costs.
Closing. The closing ("Closing") for the acquisition
of the Multidisc Assets shall be scheduled as promptly as
possible and, in any event, on a mutually agreeable date not
more than sixty (60) days after acceptance of this proposal
by HTP and consent to the same by the Bank.
Bankruptcy Proceeding. SPAZ acknowledges that the
Closing of this transaction may be subject to a Chapter 11
proceeding filed by HTP. In this regard, SPAZ further
acknowledges that, in the event of such a bankruptcy
proceeding, Closing will be subject to HTP obtaining an
order of the Bankruptcy Court authorizing this transaction
which order shall specifically include a finding of the
Bankruptcy Court that SPAZ is purchasing the Multidisc
Assets in good faith as provided in Bankruptcy Code 363(m).
HTP will use its best efforts to promptly obtain such court
order. SPAZ acknowledges that all sales of the type which
are the subject of this Agreement are subject to overbid,
notice to creditors and other terms which might be imposed
by the Bankruptcy Judge.
<PAGE>
Deposit. SPAZ will deliver to HTP an earnest money
deposit of $100,000 (the "Deposit") upon execution of this
Agreement by all parties. SPAZ agrees that the same shall
be considered liquidated damages and retained by HTP in the
event that SPAZ fails to close the transaction contemplated
hereby after all conditions precedent to SPAZ's performance
have been fully satisfied. SPAZ agrees and acknowledges
that such amount constitutes a reasonable amount of damages
as of the date hereof in accordance with California Civil
Code 1671(b). In all other respects, in the event the
transaction does not close, the deposit shall be fully
refundable.
Confidentiality and Announcements. The parties will
take all reasonable steps to ensure that all matters
relating to the proposed transaction and the information
provided hereunder will remain confidential, except for
disclosures to employees, attorneys, accountants and others,
on a need to know basis, with a duty of confidentiality to
the parties, and the parties will inform each of such
persons as to the need to keep such matters confidential.
Each party agrees to make no public announcement concerning
the proposed acquisition without the consent of the other
party, such consent not to be unreasonably withheld.
Expenses. Each party shall bear its own legal,
accounting and administrative expenses in connection with
the investigation, negotiation and consummation of the
transactions contemplated hereby. No one party shall have
responsibility for the fees or expenses of any broker or
advisor retained by the others.
Binding Nature. This Agreement sets forth the
agreement between the SPAZ and HTP on all material terms and
conditions regarding the purchase and sale of the Multidisc
Assets. Such agreement is intended to be and shall be
construed as binding upon the parties with respect to the
business terms addressed herein and is not subject to
further negotiation.
Acceptance of Proposal. If the foregoing is acceptable
to you, please sign and return the enclosed copy of this
Agreement on or before the close of business on April 4,
1996. If the proposal has not been accepted by HTP and
consented to by the Bank by such date, it shall be deemed
withdrawn in all respects without any further action by
SPAZ, the Bank or HTP.
<PAGE>
Executed this 3rd day of April, 1996,
SPATIALIZER AUDIO LABORATORIES, INC.
By: /s/ STEVEN D. GERSHICK
--------------------------------
Steven D. Gershick
Chief Executive Officer
ACCEPTED AND AGREED TO: THE UNDERSIGNED CONSENTS TO
THE FOREGOING:
HOME THEATER PRODUCTS BANK OF AMERICA NATIONAL TRUST
INTERNATIONAL, INC. AND SAVINGS ASSOCIATION
By: /S/IRWIN ZUCKER By:
--------------------------- --------------------------
Name: IRWIN ZUCKER Name:
Title: Acting CEO Title:
Dated: April 15, 1996 Dated:
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
FOR
IRWIN ZUCKER
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and
entered into as of this 24th day of June, 1996, by and among
MultiDisc Technologies, Inc., ("MDT") the successor by name
change to MultiDisc Assets Acquisition, Inc., a Delaware
corporation, a wholly owned subsidiary of Spatializer Audio
Laboratories, Inc., a Delaware corporation ("Company"), and
Irwin Zucker, an individual ("Executive"), in light of the
circumstances recited herein and in consideration of the
mutual covenants and agreements contained herein, to become
effective at the time and upon the conditions set forth
herein. This Agreement is joined in by the Company, but
only to the extent of obligations specifically undertaken by
the Company hereunder.
RECITALS
A. Executive has heretofore been associated with the
MultiDisc division of Home Theater Products International,
Inc. ("HTP"). HTP has heretofore participated in certain
research and development of patent applications and the
exploitation of assets and related technology in the field
of Compact Disc Changers, hereinafter referred to as the
"MultiDisc Assets."
B. HTP is currently debtor in possession in a
proceeding under Chapter 11 of the United States Bankruptcy
Code now pending in United States Bankruptcy Court for the
Central District of California, USBC CDC #SA 96-13754-JR.
MDT is acquiring the MultiDisc Assets from HTP pursuant to
an Order of the Court confirming the sale of the MultiDisc
Assets by HTP to the Company or its assignee. The Company
has caused the formation of MDT under the name of MultiDisc
Assets Acquisition, Inc. and the name change to MDT is
pending, as a vehicle for the acquisition of the MultiDisc
Assets, to hold and exploit such assets and conduct business
activities related thereto and to employ or cause such
subsidiary to employ Executive on the terms and conditions
set forth herein, and Executive is willing and desires to be
so employed upon such terms and conditions.
<PAGE>
AGREEMENTS
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL TERMS,
COVENANTS AND CONDITIONS HEREINAFTER SET FORTH, THE PARTIES
HERETO DO AGREE AS FOLLOWS:
1. CONDITION TO EFFECTIVENESS AND EFFECTIVE DATE.
This Agreement is conditioned upon and will become
effective upon the entry of an order in the Bankruptcy Court
transferring or authorizing and directing the transfer of
the MultiDisc Assets to the Company and the formal closing
of such asset acquisition. This Agreement is intended to be
a part of the closing documents in connection with such
acquisition.
2. EMPLOYMENT AND DUTIES.
2.1 Position.
MDT hereby employs Executive as President of MDT and
Executive agrees to serve in such further offices and
capacities with the Company and/or its affiliates and
subsidiaries as may be determined by the Boards of Directors
of MDT or the Company (collectively the "Boards", and
individually the "MDT Board" or the "Board of the Company"),
with the concurrence of Executive.
2.2 Appointment as Director of MultiDisc
Executive shall be nominated to and serve as a director
of MDT so long as Executive is employed by MDT or by the
Company, and Executive agrees to serve in that capacity,
without additional compensation unless general policies
applicable to all such directors and calling for
compensation may hereafter be adopted by the Board. Robert
L. Montelius, Jr. and Eric Rene Bos shall also be nominated
to serve as directors of MDT so long as each is respectively
employed by MDT or by the Company. MDT may consider
adoption of an advisory board arrangement to parallel
certain action intended to be taken with respect to Desper
Products, Inc., ("DPI") also a subsidiary of Company, and
Executive will consider participation in such advisory board
in lieu of participation in the MultiDisc Board itself.
<PAGE>
2.3 Duties and Diligence.
Executive shall have such duties as may be assigned to
him from time to time by the MDT Board or such person(s) as
may be designated by such Board for such purpose. Such
duties shall be exercised subject to the control and
supervision of the MDT Board, or such person(s) designated
by such Board for that purpose. Unless restricted by the
MDT Board or its designee, Executive's duties shall be those
normally carried out by a person holding such designated
office, including such duties as are set forth in the
Articles of Incorporation and Bylaws of MDT.
Executive shall be subject to such Company wide
policies and procedures as may be adopted from time to time
and made of general application to all or any class of
employees employed by the Company or any of its
subsidiaries. References herein to obligations owed the
Company shall be deemed also to refer to obligations owed to
MDT unless the context otherwise requires, and references
herein to rights afforded to MDT shall be deemed also to
refer to the Company unless the context otherwise requires.
Throughout the term of this Agreement, the Executive
shall diligently, faithfully and to the utmost of his
ability devote such time, attention and energy to the
business and affairs of MDT and the Company as is reasonably
necessary for the performance of his duties, and the
promotion and development of all business affairs and
opportunities that come to his attention relating to current
or anticipated future business of MDT or the Company in a
manner consistent with the best interests of MDT and the
Company.
2.4 Outside Activities Limited.
Executive shall be permitted to maintain such
directorships and other positions in other companies only as
are or may be approved from time to time by the MDT Board.
Executive may engage in business activities separate and
apart from MDT only to the extent set forth in this
Agreement or MDT separately approves such activities in
writing.
<PAGE>
2.5 Permitted Passive Investments.
Executive may make or retain passive investments in
business entities which are not in competition with MDT, the
Company or their respective affiliates.
2.6 Permitted Ongoing Commitment to HTP.
The Company acknowledges that HTP has asked and
Executive has agreed to remain a member of the HTP Board and
as a consultant for a period of time while HTP attempts a
successful sale, recapitalization or other reorganization of
its business. Executive agrees to use his best effort to
minimize the amount of time he devotes to HTP, and to
disengage fully from this involvement as soon as practical
and in no case later than six (6) months from the date of
this Agreement. Executive agrees to disengage sooner if
permitted under closing documents in connection with the
MultiDisc acquisition or otherwise permitted by HTP and or
controlling creditors thereof. The Company approves such
outside activity as so limited.
2.7 Permitted Unrelated Business Opportunities.
Should Executive discover a business opportunity that
does not relate to the current or anticipated future
business of MDT or the Company, he shall first offer such
opportunity to the Company, and shall not be entitled to any
compensation in connection with any such referral above and
beyond the salary and benefits set forth in this Agreement.
Should the Board of the Company not exercise its right to
pursue this business opportunity within a reasonable period
of time, not to exceed sixty (60) days, the Executive may,
on written notice to the Company, develop the business
opportunity for himself; provided, however, that (i) such
development may in no way conflict or interfere with the
duties owed by Executive to the Company and MDT under this
Agreement, (ii) Executive will on request keep the Company
reasonably informed as to the general scope and status of
any such development, and (iii) Executive may develop such
business opportunities only on his own time, and may not use
any service, personnel, equipment, supplies, facility, or
trade secrets of the Company or MDT in their development.
<PAGE>
3 TERM AND AUTOMATIC EXTENSION.
Unless sooner terminated or extended as provided
herein, this Agreement shall terminate on December 31, 1997.
The term of this Agreement shall automatically be extended
year to year for one additional year if Executive remains
employed as of the July 1 preceding the termination date,
commencing with July 1, 1997. An automatic extension may be
canceled by either party issuing written notice to the other
party not less than thirty (30) days prior to the automatic
extension date.
4.1 COMPENSATION AND BENEFITS.
Base Salary.
Executive shall be paid a base salary ("Base-Salary") in an
amount determined annually by the Board of MDT, it being
understood and agreed by the parties that such Base Salary
shall not be less than One Hundred Forty Thousand Dollars
($140,000) annually, with such compensation to be payable at
the times and in the manner dictated by MDT's standard
payroll policy. Such remuneration is inclusive of payment
for statutory holidays and all other public holidays
proclaimed by United States federal, state or municipal
governments.
4.2 General Benefits.
Executive shall be provided with medical, optical and
dental benefits covering self and dependents, short and long
term disability benefits and group life insurance as is
available to other similarly compensated executives of the
Company and its subsidiaries.
<PAGE>
4.3 Vacation.
Executive shall be entitled to such number of days of
paid vacation in each calendar year as is available to other
similarly compensated executives of the Company and its
subsidiaries and shall be taken at such time as MDT and the
Executive may mutually determine. If Executive does not
take all or any portion of the vacation time to which he is
entitled, he shall be subject to policies of the Company and
its subsidiaries generally applicable to similarly
compensated executives as to deferral or lapse thereof.
4.4 Reimbursed Expenses.
MDT shall reimburse the Executive for all reasonable
expenses properly incurred by the Executive in the
performance of his duties hereunder, including but not
limited to cellular telephone, radio pager, telephone, modem
and fax charges for lines installed in Executive's home and
subscription and time for computer on-line services employed
by Executive, but only to the extent such expenses do not
exceed amounts allocable for such expense in budgets that
are approved from time to time by MDT. Any such expenses
must be duly vouchered by written evidence. Executive
shall also be entitled to an allowance of the difference, if
any, between vouchered automobile operating expenses and the
sum of $750.00 per month, which should be regarded as
compensation taxable to Executive. Timing of reimbursement
shall be in accordance with MDT policy generally applicable
to similarly compensated executives.
4.5 Other Benefits.
Executive shall be entitled to such other benefits as
may from time to time be determined by the MDT Board or by
the Company, including bonuses, participation in stock
option plans, pension plans and other benefit plans on terms
generally commensurate with those applicable to other
similarly compensated executives of the Company and its
subsidiaries or as may be further specifically set forth
herein.
4.6 General Bonuses.
Bonuses may be paid to Executive in the discretion of
the MDT Board. This provision should not be construed as
creating any duty on the part of such Board to declare or
pay any bonuses to Executive other than as further
specifically set forth herein.
<PAGE>
4.7 MultiDisc Integration Bonus - Offset by HTP Income.
As an inducement to Executive to join the Company, and
in consideration of Executive's acknowledged and anticipated
special efforts to preserve intact the assets, staff, and
opportunities related to the MultiDisc Assets, and to
integrate the same into the Company's business activities,
the Company shall award Executive a bonus as follows:
The bonus shall be in the sum of Fifty Thousand Dollars
($50,000), payable in four equal quarterly installments and
payable only while Executive is employed by the Company,
provided however that the amount of the bonus (or any
installment thereof) may at the election of the Company be
reduced dollar for dollar by compensation received by
Executive in any capacity in connection with his ongoing
commitment to HTP for services performed commencing sixty
days after the date of this Agreement, excluding however any
bonuses that Executive may receive, and excluding any
proceeds of sale of intellectual property by Executive.
The first installment shall be due and payable upon the
later of (a) the execution of this document by both parties
or (b) the consummation of the acquisition of the MultiDisc
Assets by the Company; subsequent installments shall be due
and payable on October 1, 1996, January 1, 1997, and April
1, 1997.
4.8 Patent Application Bonuses.
Executive, while employed by Company or any of its
subsidiaries, shall receive a bonus for each new patent
application which MDT or the Company chooses to prosecute in
which Executive is an inventor, at date of filing, or at
date of termination if accepted by MDT or the Company and in
process for filing in any case where Executive's employment
with MDT or the Company has been terminated for any reason.
The Patent application bonus shall be awarded whether
Executive is sole inventor of the subject patent, or if
filed jointly with another Spatializer, DPI, or MultiDisc
employee. The bonus to each inventor shall be in the amount
<PAGE>
of Five Thousand Dollars ($5,000), unless there are more
than three inventors, in which case the bonus shall be
limited to Fifteen Thousand Dollars ($15,000) and shall be
divided ratably among the inventors. The bonus shall be
payable in two equal parts, the first installment payable at
date of filing, or at date of termination if accepted by the
Company and in process for filing in any case where
Executive's employment with the company has been terminated
for any reason. The second installment shall be payable
when the patent issues, but only if the Executive is then
employed by the Company.
4.9 Stock Options - General.
During the period for which Executive is employed by
MDT, options to purchase Company stock may be awarded to
Executive at any time and from time to time by the Board of
Directors of the Company. Price, vesting and other
conditions of any such options shall be established in
accordance with plans heretofore or hereafter adopted by the
Company.
4.10 Stock Options - Special Inducement.
As an inducement to Executive to become employed by MDT
and in consideration of Executive's acknowledged and
anticipated special efforts to preserve intact the assets,
staff, and opportunities implied in the MultiDisc Assets,
and to integrate the same into the Company's business
activities, Company shall within 60 days following the
effective date of this Agreement award to Executive options
to purchase fifty thousand (50,000) shares of Company common
stock at the lowest price permitted under the Stock Option
Plans presently or hereafter adopted by the Company and
applicable law and stock exchange rules as of the date of
this Agreement, with such Options to vest over three (3)
years after award, in three (3) equal installments, with
remaining conditions to be established in accordance with
the Company's 1995 Stock Option Plan. Executive
acknowledges that his agreement to serve as an officer of
the Company as well as an officer of the MultiDisc
subsidiary is regarded as significant and material by the
Board in determining the number of such options to be
granted.
<PAGE>
5 LEGAL SUPPORT.
Executive has been instrumental in preserving and
protecting the MultiDisc Assets, so as to make them
available for acquisition by Company. Executive has, either
directly or indirectly, been placed in a position whereby he
may be sued or threatened with lawsuits or other legal
actions as a result of his position with HTP. While it is
not clear as of the date of this Agreement whether such
legal actions may be forthcoming, both Company and Executive
agree that it is in the best interest of both parties to
provide for the legal defense against such suits, be they
based in law or of a harassing nature. Company agrees to
pay Executive's legal costs where it is in the mutual
interest of the Company and Executive to do so, should such
actions arise. Company and Executive agree to evaluate each
need for legal support on a case-by-case basis, and agree
that the Company is not bound to defend Executive as
described above.
6 EQUITY PURCHASE OPTION.
Executive shall have the option to purchase an interest
in MDT (the "Equity Purchase Option") for a price equal to
one percent (1%) of MDT's Capitalized Cost, as defined in
the Company's MultiDisc 1996 Equity Incentive Plan,
determined at the time of exercise, for each percentage
point of interest purchased. The Option shall be evidenced
and reflected in a form of agreement implementing the terms
and conditions as set forth in the MultiDisc 1996 Equity
Incentive Plan (the "Plan"), a true and correct copy of
which has heretofore been provided to Executive. The Equity
Purchase Option shall be subject to compliance with all
applicable securities laws and all applicable stock exchange
rules, and will terminate in ten years or as earlier
provided in the Plan and/or such agreement.
6.1 Dilution Shared.
The maximum interest that may be purchased shall be Two
Percent (2%) of MDT as capitalized at the effective date of
this Agreement, and such interest shall suffer dilution pari
passu with the Company in the case of additional share
issuances to new investors.
<PAGE>
6.2 Ten Percent Reserved Including This Option.
The Company has agreed to regard ten percent of MDT as
capitalized at the effective date of this Agreement as
reserved for issuance of options under the Plan to MultiDisc
executives as selected by the Company's Board of Directors
or appropriate Committee thereof, and the percentage
interests covered hereby shall be included in such ten
percent. If any portion of the reserved ten percent remains
uncommitted at the time a Trigger Event, as defined in the
Plan, occurs, the Board shall have the discretion to award
the uncommitted amount to Irwin Zucker, Eric Rene Bos, and
Robert L. Montelius, Jr., or such thereof who are employed
by the Company, in such portions as the Board sees fit.
7 TERMINATION.
7.1 Termination By Agreement.
Executive's employment hereunder may be terminated at
any time by mutual agreement of the parties, or by
expiration of the term hereof through cancellation of the
automatic extension as provided in Section 3 hereof.
7.2 Termination by Executive.
Executive may terminate his employment hereunder by
giving MDT ninety (90) days prior written notice, which
termination shall be effective on the ninetieth (90th) day
following such notice.
7.3 Termination Through Death or Incapacity.
This Agreement shall automatically terminate on the
last day of the month in which Executive dies or becomes
permanently incapacitated. "Permanent incapacity" as used
herein shall mean either (i) mental or physical incapacity,
or both, reasonably determined by MDT's Board of Directors
based upon a certification of such incapacity by, in the
discretion of such Board, either Executive's regularly
attending physician or a duly licensed physician selected by
such Board, rendering Executive unable to perform
substantially all of his duties hereunder and which appears
reasonably certain to continue for at least three (3)
consecutive months without substantial improvement, or (ii)
<PAGE>
Executive is unable to perform his duties hereunder for any
ninety (90) consecutive days in any three hundred and sixty-
five (365) day period or one hundred and twenty days (120)
in the aggregate in any two (2) year period. Executive
shall be deemed to have "become permanently incapacitated"
on the date the MDT Board has determined that Executive is
permanently incapacitated and so notifies Executive.
Notwithstanding the foregoing, the Company may elect
upon written notice to Executive to modify the foregoing
definition of permanent incapacity so as to conform the same
from time to time to the provisions of any Long Term
Disability insurance policy or policies the Company may
carry.
7.4 Termination by Company for Cause.
Executive's employment may be terminated by MDT "with
cause" effective upon delivery of written notice to
Executive given at any time (without any necessity for prior
notice) if any of the following shall occur:
(a) a material breach of this Agreement by Executive,
which breach has not been cured within thirty (30) days
after a written demand for such performance is delivered to
Executive by MDT that specifically identifies the manner in
which the Company believes that Executive has breached this
Agreement;
(b) any material acts or events which inhibit
Executive from fully performing his responsibilities to MDT
and the Company in good faith, such as (i) a felony criminal
conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or Executive's moral turpitude;
(iii) drug or alcohol abuse; or (iv) acts of dishonesty,
gross carelessness or gross misconduct.
(c) any material breach of any written warranty or
representation given by Executive or on his behalf with his
permission, express or implied, in connection with the
acquisition of the MultiDisc Assets and technology by the
Company.
<PAGE>
7.5 Termination by Company Without Cause - Severance
Pay.
Executive's employment may be terminated by MDT
"without cause" (for any reason or no reason at all) at any
time, with or without notice. In such event, in recognition
of the inconvenience to executive occasioned thereby and in
consideration of Executive's agreement contained herein to
refrain from certain competitive activities for a period of
one year following termination of employment with the
Company, MDT shall pay to Executive a sum equal to the
Executive's Base Salary for one year, in equal quarterly
installments, (a "severance payment"), in addition to the
payments set forth under "Payment Upon Termination -
General". In addition, Executive shall be entitled to any
guaranteed bonus payments specified herein and not
heretofore paid.
7.6 Payment Upon Termination - General.
Upon termination for any reason MDT shall pay to
Executive (or his estate) an amount equal to the sum of (a)
Executive's Base Salary accrued to the date of termination;
and (b) unreimbursed expenses accrued to the date of
termination. After any such termination, neither MDT nor
the Company shall be obligated to compensate Executive, his
estate or representatives except for the foregoing
compensation then due and owing, nor provide any further
payments or benefits except as may be prescribed by law or
otherwise specifically set forth herein. Executive
acknowledges that if he decides to terminate his employment
with MDT at his instance he has agreed herein to refrain
from certain competitive activities for a period of one year
following termination of such employment, without additional
compensation.
MDT may elect to make certain additional payments to
extend the period during which an Executive whose employment
has been terminated will refrain from certain competitive
activities, as set forth later in this Agreement (See
"Restrictions on Competition After Termination -
Restrictions").
<PAGE>
7.7 Dismissal from Premises.
At MDT's option, Executive shall immediately leave
the MDT premises on the date notice of termination is given
by either Executive or MDT.
7.8 Right of Set-Off.
Upon termination or expiration of this Agreement,
MDT shall have the right to set-off the amount of any
outstanding loan or advance from the Company to Executive
against any amounts otherwise due Executive.
8 CONFIDENTIALITY AND TRADE SECRET OBLIGATIONS.
8.1 Trade Secret Definition.
The term "trade secrets" as used in this Agreement
shall include the meanings ascribed to such term in
California Penal Code Section 499c and California Civil Code
Section 3426.1 which are, respectively:
"(9) 'Trade secret' means the whole or any
portion or phase of any scientific or technical
information, design, process, procedure, formula,
computer program or information stored in a computer,
information in transit, or improvement which is secret
and is not generally available to the public, and which
gives one who uses it an advantage over competitors who
do not know of or use the trade secret; and a trade
secret shall be presumed to be secret when the owner
thereof takes measures to prevent it from becoming
available to persons other than those selected by the
owner to have access thereto for limited purposes."
[Cal Penal Code Section 499c]
and
"(d) 'Trade secret' means information, including
a formula, pattern, compilation, program, device,
method, technique, or process, that:
"(1) Derives independent economic value, actual
or potential, from not being generally known to the
public or to other persons who can obtain economic
value from its disclosure or use; and
"(2) Is the subject of efforts that are
reasonable under the circumstances to maintain its
secrecy." [Cal Civil Code Section 3426.1(d)]
<PAGE>
8.2 Nondisclosure.
Executive will not at any time, whether during or after
the termination of Executive's employment, reveal to any
person, association or company any of the trade secrets or
confidential information concerning the organization,
business or finances of the Company so far as they have come
or may come to Executive's knowledge, except as may be
required in the ordinary course of performing Executive's
duties as an Executive of the Company or may be compelled by
judicial process, or except as may be in the public domain
through no fault of Executive, and Executive shall keep
secret all matters entrusted to Executive and shall not use
or attempt to use any such information in any manner which
may injure or cause loss or may be calculated to injure or
cause loss directly or indirectly to the Company.
8.3 Materials.
During Executive's employment, Executive shall not
make, use or permit to be used any notes, memoranda,
drawings, specifications, programs, data or other materials
of any nature relating to any matter within the scope of the
business of the Company or concerning any of its dealings or
affairs other than for the benefit of the Company.
Executive further agrees that Executive shall not, after the
termination of Executive's employment, use or permit to be
used any such notes, memoranda, drawings, specifications,
programs, data or other materials, it being agreed that any
of the foregoing shall be and remain the sole and exclusive
property of the Company.
8.4 Return of Materials.
Immediately upon the termination of Executive's
employment, Executive shall deliver all of the materials
described in the preceding paragraph, and all copies
thereof, to MDT, at its main office, or as otherwise
directed by MDT.
<PAGE>
8.5 Prior Obligations.
Executive further represents that Executive's
performance of all of the terms of this Agreement does not
and will not breach any agreement to keep in confidence
proprietary information acquired by Executive in confidence
or in trust prior to Executive's employment by the Company.
Executive has not entered into, and agrees Executive will
not enter into, any agreement either written or oral in
conflict herewith.
9 OWNERSHIP OF DISCOVERIES AND INVENTIONS.
9.1 Definition.
The term "Invention" or "Inventions", as used in this
Agreement, means any modification, discovery, design,
development, improvement, process, formula, data, technique,
know-how, secret or intellectual property right whatsoever
or any interest therein, whether or not patentable or re-
gistrable under copyright or similar statutes or subject to
analogous protection.
9.2 Company Ownership.
Unless otherwise specifically agreed to in a writing
making reference to this Agreement, if at any time or times
during Executive's employment, Executive shall (either alone
or with others) make, conceive, discover, reduce to practice
or become possessed of any Invention, as defined in this
Agreement, that:
(a) relates to the business of the Company or any
customer of the Company or any of the products or services
being developed, manufactured or sold by the Company or
which may conveniently be used in relation therewith, or
(b) results from tasks assigned Executive by the
Company, or
(c) results from the use of premises or equipment
owned, leased or contracted for by the Company, such Invention
and the benefits thereof shall immediately become the sole
and absolute property of the Company.
<PAGE>
9.3 Disclosure to Company.
Executive will promptly disclose to the Company or its
authorized representatives, and the Company hereby agrees to
receive all such disclosures in confidence, any Invention
(as defined herein) made, conceived, discovered, reduced to
practice or possessed by Executive (either alone or with
others) at any time or times during Executive's employment
for the purpose of determining whether it is the property of
the Company under this Agreement. If Executive and Company
disagree as to any such determination, the issue will be
settled by binding arbitration under the rules of the
American Arbitration Association, with the parties to
jointly advance filing fees, and with the arbitrator or
panel empowered to award costs, including reasonable
attorneys fees, to the prevailing party.
9.4 Assignment.
Except for the Patent Application Bonus rights
contained in this Agreement (See "Compensation and Benefits
- - Patent Application Bonuses"), Executive hereby assigns to
MDT and its assigns, without any further compensation or
consideration, any rights Executive may have or acquire in
Inventions that are the property of MDT or the Company
pursuant to this Agreement and benefits and/or rights
resulting therefrom; Executive shall communicate to the
Company, without cost or delay, and without publishing the
same, all available information relating thereto, with all
necessary plans and models.
9.5 Assistance to Company.
Upon disclosure of each Invention to MDT that is the
property of the Company or MDT pursuant to this Agreement,
during Executive's employment and at any time thereafter,
Executive will, at the request and cost of MDT, sign,
execute, make and do all such deeds, documents, acts and
things as MDT and its duly authorized agents may reasonably
require:
(a) to apply for, obtain and vest in the name of the
Company alone (unless the Company otherwise directs) letters
patent, copyrights or other analogous protection in any
country throughout the world and when so obtained or vested
to renew and restore the same; and
(b) to defend any opposition proceedings in respect of
such applications and any opposition proceedings or
petitions or applications for revocation of such letters
patent, copyright or other analogous protection, for which
Executive shall be entitled to reimbursement of reasonable
time and expenses after termination necessitated thereby.
<PAGE>
9.6 Power of Attorney.
In the event MDT is unable, after reasonable effort, to
secure Executive's signature on any letters patent,
copyright or other analogous protection relating to an
Invention, whether because of Executive's physical or mental
incapacity or for any other reason whatsoever, Executive
hereby irrevocably designates and appoints MDT and the
Company and its duly authorized officers and agents as
Executive's agent and attorney in-fact, to act for and in
Executive's behalf and stead to execute and file any such
application or applications and to do all other lawfully
permitted acts to further the prosecution and issuance of
letters patent, copyright or other analogous protection
thereon with the same legal force and effect as if executed
by Executive.
9.7 Excluded Inventions.
Executive represents that the Inventions identified on
the pages, if any, attached hereto comprise all the
unpatented Inventions which Executive has made or conceived
prior to Executive's employment by MDT, which Inventions are
excluded from this Agreement (but are not precluded from
being assigned to MDT or the Company by way of independent
agreement between the parties). Executive understands that
it is only necessary to list the title of such Inventions
and the purpose thereof but not details of the Invention
itself. IF THERE ARE NO SUCH UNPATENTED INVENTIONS TO BE
EXCLUDED, THE UNDERSIGNED SHOULD INITIAL HERE. _____
_____
<PAGE>
10 RESTRICTIONS ON COMPETITION AFTER TERMINATION.
10.1 Reason for Restrictions.
Executive acknowledges that California Business and
Professions Code Section 16600 provides:
"[E]very contract by which anyone is restrained from
engaging in a lawful profession, trade, or business of
any kind is to that extent void . . ."
and further acknowledges that the nature of the Company's
business is such that it would be extremely difficult for
Executive to honor and comply with Executive's obligation
hereunder to keep secret and confidential the Company's
trade secrets if Executive were to become employed by or
substantially interested in the business of a competitor of
the Company soon following the termination of Executive's
employment with the Company, and it would also be extremely
difficult to determine in any reasonably available forum the
extent to which Executive was or was not complying with
Executive's obligations under such circumstances.
10.2 Restriction - One Year.
In light of the foregoing, Employee agrees that for a
period of one (1) year after the termination of Employee's
employment for any reason, and in the geographical area of
the United States, Employee will not, directly or
indirectly, alone or as a partner, officer, director,
employee or stockholder of any company or business
organization, engage in any business activity which is
directly or indirectly in competition with the products or
services being developed, manufactured or sold by MDT or the
Company, provided that during any such relevant time period,
MDT or the Company or any successor in interest remains
actively involved in pursuit of the foregoing described
business, products or services.
<PAGE>
Executive understands and agrees that direct
competition means the design, development, production,
promotion or sale of products or services competitive with
those of MDT or the Company. Indirect competition means the
employment by any competitor or third party providing
products competing with MDT or the Company's products, for
whom Executive will perform the same or similar function as
he performs for MDT or the Company.
10.3 Extension of Restriction Period.
In the event of the termination of this Agreement for
any reason, MDT shall have the option to commit to pay
Executive a sum equal to fifty percent (50%) of his annual
Base Salary at the date of termination and in consideration
of such payment Executive shall and does agree to extend the
non-competition covenant set forth herein for one additional
year. Such sum shall be payable in equal quarterly
installments during such additional year.
10.4 Good Faith Post-Termination Negotiations.
Executive and MDT agree to consider in good faith
agreeing to permit Executive access to trade secrets,
patents, confidential information and technology for the
purpose of Executive selling products or services based on
these data to customers and markets to which the Company and
MDT do not sell, and to which they do not plan to sell for
two (2) years following termination, in which case Executive
may choose to waive some or all of any monetary compensation
payable upon or after termination in connection with any
non-competition obligations in exchange for access to these
data and their use in the marketplace upon license terms
agreeable to the parties.
<PAGE>
10.5 Acknowledgment.
Executive further agrees that the restriction set forth
and agreed herein does not, shall not and shall not be
deemed to bar Executive from carrying on and engaging in
Executive's trade, profession or business, but merely limits
the manner in which Executive may do so in a reasonable
fashion so as to permit the actual enforcement of the
provisions otherwise agreed herein with respect to
maintaining the secrecy and confidentiality of Company's
trade secrets.
Executive agrees that the Company's requirement that
Executive enter into this Agreement as a condition of
Executive's employment represents a reasonable effort and
measure undertaken by the Company, under the circumstances,
to maintain the secrecy and confidentiality of the Company's
trade secrets.
11 REPRESENTATIONS AS TO FAIRNESS
11.1 Reasonableness of Restrictions.
The parties hereto agree that all restrictions in this
Agreement are necessary and fundamental to the protection or
the business of the Company and are reasonable and valid,
and all defenses to the strict enforcement thereof by the
Executive are hereby waived by the Executive.
11.2 Agreement Voluntary and Equitable.
The Company and MDT and the Executive acknowledge and
declare that in executing this Agreement they are each
relying wholly on their own judgment and knowledge and have
not been influenced to any extent whatsoever by any
representations or statements made by or on behalf of the
other party regarding any matters dealt with herein or
incidental hereto. The Company and the Executive further
acknowledge and declare that they each have carefully
considered and understand the terms of employment contained
in this Agreement including, but without limiting the
generality of the foregoing, the Executive's rights upon
termination and the restrictions on the Executive after
termination, and acknowledge and agree that the said terms
of employment and rights and restrictions upon termination
are mutually fair and equitable, and that they executed this
Agreement voluntarily and of their own free will.
<PAGE>
11.3 Agreement Jointly Drafted.
Each of the parties has participated in the drafting of
this agreement, directly or by way of representative. In
construing this Agreement, none of the parties hereto shall
have any term or provision construed against such party
solely by reason of such party having drafted the same.
11.4 Independent Advice.
Each of the parties has been afforded the opportunity
to obtain independent legal advice before signing this
Agreement and the Executive represents by signing this
Agreement that he has obtained such advice or has freely and
voluntarily determined not to do so.
12 TRANSFER AND ASSIGNMENT.
The Company and MDT shall have the right to assign this
Agreement and all of its rights and obligations hereunder to
its successors and assigns.
13 MISCELLANEOUS.
13.1 Entire Agreement.
This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject
matter hereof and supersedes all prior oral or written
agreements, arrangements, and understandings with respect
thereto. Each of the parties hereto hereby releases and
forever discharges the other of and from all manner of
actions, causes of action, claims and demands whatsoever
under or in respect of any such prior agreements,
arrangements and or understandings. No representation,
promise, inducement, statement or intention has been made by
any party hereto that is not embodied herein, and no party
shall be bound by or liable for any alleged representation,
promise, inducement, or statement not so set forth herein.
13.2 Conflict with Future Law.
Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be
any conflict between any provision hereof and any present or
future statute, law, ordinance, regulation, or other
pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected
thereby shall be curtailed by and limited only to the extent
necessary to bring it within the requirements of the law,
and the remaining provisions of this Agreement shall remain
in full force and effect.
<PAGE>
13.3 Severability - Separate Covenants.
Each provision of this Agreement is declared to
constitute a separate and distinct covenant and to be
severable from all other such separate and distinct
covenants. If any covenant or agreement herein is
determined to be void or unenforceable, in whole or in part,
it shall not be deemed to affect or impair the
enforceability or validity of any other covenant or
agreement of this Agreement or any part thereof, and any
such covenant or agreement may be severed from this
Agreement without affecting the remainder of this Agreement.
If any of the capacities, activities, periods or areas
specified in this Agreement are considered by a court of
competent jurisdiction as being unreasonable, the parties
agree that the said court shall have authority to limit such
capacities, activities, periods or areas to such capacities,
activities, periods or areas as the court deems proper in
the circumstances.
13.4 Modification.
This Agreement may be modified, amended, superseded, or
canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a
written instrument executed by the party or parties to be
bound by any such modification, amendment, supersession,
cancellation, or waiver.
13.5 Attorneys' Fees and Costs.
In the event either party hereto finds it necessary to
employ legal counsel or to bring an action at law or other
proceeding against the other party to enforce any of the
terms, covenants, or conditions hereof, the party prevailing
in any such action or other proceeding shall be entitled to
recover its reasonable attorneys' fees occasioned thereby.
13.6 Waiver.
The waiver by either of the parties, express or
implied, of any right under this Agreement or any failure to
perform under this Agreement by the other party, shall not
constitute or be
deemed as a waiver of any other right under this Agreement
or of any other failure to perform under this Agreement by
the other party, whether of a similar or dissimilar nature.
<PAGE>
13.7 Cumulative Remedies - Injunctive Relief.
Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any
other right or remedy, and the exercise of any one or such
rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy. The
parties hereto recognize that a breach by the Executive of
any of the covenants herein contained would result in
damages to the Company and that the Company could not
adequately be compensated for such damages by monetary
award. Accordingly, the Executive agrees that in the event
of any such breach, In addition to all other remedies
available to the Company at law or in equity, the Company
shall be entitled as a matter of right to apply to a court
of competent jurisdiction, in California, for such relief by
way of restraining order, injunction, decree or otherwise,
as may be appropriate to ensure compliance by the Executive
with the provisions of this Agreement.
13.8 Headings.
The section and other headings contained in this
Agreement are for reference purposes and as an aid in
comprehension and shall be accorded such weight in the
interpretation of this Agreement as is reasonable.
13.9 Survival.
Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement
shall survive the termination or expiration of this
Agreement and be binding on Executive and the Company.
<PAGE>
13.10 Notices.
Any notice under this Agreement must be in writing, may
be telecopied, sent by express 24-hour guaranteed courier,
or hand-delivered, or may be served by depositing the same
in the United States mail, addressed to the party to be
notified, postage-prepaid and registered or certified with a
return receipt requested. The addresses of the parties for
the receipt of notice shall be as follows:
PARTY ADDRESS
Company Spatializer Audio Laboratories, Inc.
Executive Office
20700 Ventura Boulevard, Suite 134
Woodland Hills, CA 91364-2357
Attn.: Steven Gershick, Chairman
Telecopier No.: 818-227-9750
Telephone No.: 818-227-3370
Executive Irwin Zucker
1717 Tubbs Street
Thousand Oaks, CA 91362
Telephone No.: (805) 494-9523
Telecopier No.: (805) 496-8135
Each notice given by registered or certified mail shall
be deemed delivered and effective on the date of delivery as
shown on the return receipt, and each notice delivered in
any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its
address for notice by giving notice thereof in the manner
provided above.
13.11 Governing Law.
This Agreement is made under and shall be construed
pursuant to the laws of the State of California.
13.12 Attornment to California Jurisdiction -
Arbitration.
<PAGE>
Each of the parties hereto by their execution of this
Agreement irrevocably attorn to the jurisdiction of the
Courts of the State of California. Any controversy between
the Parties involving the construction or application of any
of the terms, covenants, or conditions of the Agreement
shall be submitted to arbitration in Los Angeles,
California, on the request of any party, and the arbitration
shall comply with and be governed by the provisions of the
arbitration rules of the American Arbitration Association.
IN WITNESS WHEREOF, the parties hereto have caused
this Employment Agreement to be executed as of the date
first set forth above.
SPATIALIZER AUDIO LABORATORIES, INC. EXECUTIVE
By: /s/Steven Gershick /s/Irwin Zucker
--------------------------- -------------------------
Steven Gershick, Chairman Irwin Zucker
MULTIDISC TECHNOLOGIES, INC.
By: /s/Steven Gershick
---------------------------
Steven Gershick, Director
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
Spatializer Audio Laboratories, Inc.
Corporate Contact: Angela Johnson
(818) 227-3370
E-MAIL: [email protected]
Media Contact: Marilyn Ritchie, TSI
(408) 280-6000
E-MAIL: [email protected]
WWW Site: http://www.spatializer.com/
Spatializer Audio Laboratories, Inc. Expands
Licensing Base With Strategic Acquisition of New
Technologies
New subsidiary formed to commercialize innovative compact disc
server technologies and position Company for long-term growth
Woodland Hills, CA, June 26, 1996 -- Spatializer Audio
Laboratories, Inc. (NASDAQ: SPAZ), a leading developer and
licensor of audio signal processing technologies for
entertainment, consumer electronics, and multimedia computing
markets, has acquired the assets of the MultiDisc Technologies
division from Home Theater Products International, Inc. (HTP) for
$950,000 in cash. The acquisition, which includes an array of
development-stage compact disc server technologies, substantially
broadens Spatializer's technology portfolio, capitalizes on the
company's strong manufacturing and OEM licensing relationships,
and positions Spatializer for long-term growth in significant new
markets.
Spatializer has formed a new MultiDisc Technologies, Inc.
subsidiary to be headed by Irwin Zucker as President. Zucker was
Sr. Vice President, Engineering and Product Development for the
consumer products group of Harman International, a preeminent
worldwide manufacturer of consumer and professional audio
products, before joining the MultiDisc Technologies division of
HTP in March, 1995.
-MORE-
<PAGE>
The MultiDisc acquisition brings to Spatializer a unique
combination of proprietary electromechanical designs, robotics,
operating software, firmware and intellectual property, all based
on original technology developed by industry veterans Rene Bos and
Robert Montelius Jr., both of whom will join Irwin Zucker at the
MultiDisc subsidiary.
Key competitive advantages of MulitDisc's compact disc
server technology include its flexible modular design, which
allows extremely high-density and expandable disc storage, and
the ability to quickly support all future CD and Digital
Versatile Disc (DVD) formats. Since MultiDisc's technology is
fully configurable, scaleable, and drive independent, any new
improvements in CD drive speed, format, optics or media capacity
can be easily accommodated. The net result is expected to be a
new class of devices significantly faster, smaller and more
capable than existing solutions at a fraction of their current
cost. Devices built on MultiDisc technology are expected to have
applications in nascent global markets where on-line, near real-
time data access, storage and retrieval are demanded.
"Upon election as Chairman of the Board last December, my
goal was to expand Spatializer's technology base and product
offerings into new market opportunities," said Steve Gershick,
Chairman, CEO, and President of Spatializer Audio Laboratories,
Inc. "This acquisition builds squarely on our existing licensing
and manufacturing relationships, and brings us both strong
licensing and product development potential. This move directly
reflects our strategy of becoming a firmly established,
comprehensive technology content provider."
-MORE-
<PAGE>
According to Gershick, "Spatializer instituted a systematic
search for synergistic new technologies well over a year ago to
provide us with new growth opportunities for our licensing
operations and to serve as a springboard for new and more
extensive strategic relationships. After surveying a number of
potential technologies, MultiDisc was selected because of the
compelling global business opportunities and anticipated quick
time to market of the technology."
With the explosive forecasted growth in business networking,
Internet and Intranet servers demanding on-line access to ever
growing data stores, market demand for network-capable compact
disc-based storage and archiving technologies are expected to
rise sharply through the end of the century. The recent adoption
by consumer electronics manufacturers and entertainment companies
of a universal DVD standard establishes the 12cm compact disc as
the de facto world-wide form factor for audio, video, and data
applications. DVD's tremendous increase in storage capacity
combined with rapid advancements in compact disc writing
capability, creates a substantial global market opportunity.
Technology research companies such as Freeman Associates, Disk Trend,
Inc., and Link Resources estimate that annual sales of CD-ROM drives
will exceed 65 million units by the turn of the century. Other
industry estimates indicate that total sales for home audio CD
changers alone should exceed 25 million units. Spatializer estimates
the potential global market for CD/DVD based server products to
approach $30 billion through the year 2000.
MultiDisc will focus on the following markets:
Internet and Intranet _ MultiDisc servers to meet the enormous
on-line data storage and retrieval requirements.
Home Entertainment _ MultiDisc technology can store any
combination of CD and DVD formats in a single enclosure for
retrieval and playback through a home stereo, home theater
system, and personal computer.
Data Services _ MultiDisc technology can be used as storage
devices for network computer users.
Corporate Archiving _ Combined with writeable CD technologies,
MultiDisc technology can provide a very cost-effective near-on-
line component for data backup and warehousing.
Commercial Entertainment _ In addition to being used for
professional film and record production, MultiDisc technology can
function as automated music servers for radio stations and cable-
delivered music systems, as well as video-on-demand servers for
cable systems, in-room movies in hotels, airplanes, and cruise
ships.
Other Markets _ Additional markets include applications in
medical imaging, banks, libraries, schools, insurance, real
estate, industry, and government.
-MORE-
<PAGE>
The inventors of MultiDisc's technology, as well as their
entire design and engineering team, will join Spatializer's new
MultiDisc Technologies subsidiary to permit Spatializer to remain
focused on its core audio signal processing business without
straining current resources. Conversely, Spatializer's licensing
skills, marketing expertise, and strategic relationships should
enable MultiDisc to accelerate prototype development and marketing
of its products.
MultiDisc will be operated as a wholly owned subsidiary of
Spatializer to increase efficiency through the sharing of
corporate resources and costs. Spatializer's core audio signal
processing business will continue to be operated through its
Desper Products, Inc. subsidiary.
"We are very glad to be a part of Spatializer, not only
because of its strong financial resources, licensing expertise
and corporate organization, but also because of what MultiDisc
brings to Spatializer," said Irwin Zucker. "The potential
licensees, users, and manufacturers we have spoken with about our
technology are enthusiastic about our plans. The symbiotic
relationship between Spatializer and MultiDisc will be very
productive."
Following eight years of research and development, proof of
concept for the MultiDisc core technologies is expected early
this autumn; prototypes embodying the full suite of compact disc
server technologies are expected to be previewed at Fall COMDEX
in Las Vegas in November.
-MORE-
<PAGE>
Spatializer Audio Laboratories, Inc. is a leading developer,
licensor, and marketer of next-generation technologies for the
consumer electronics, computing, and entertainment industries.
The company's patented 3-D audio processing technology, which
will be used in the production of the worldwide Olympics
broadcast, is incorporated into over 100 different consumer
electronics and computer multimedia products produced by more
than thirty companies including Compaq, Hewlett-Packard, Seiko-
Epson, Samsung, Everex, Labtec, Orchid, Panasonic, Hitachi,
Sharp, and Proton. Spatializer's new subsidiary, MultiDisc
Technologies, Inc., is developing a family of products based on
innovative and scaleable CD-ROM server technology for network
computing (including Inter/Intranet), home entertainment,
corporate archiving and specialized markets. A public company
listed on NASDAQ, Spatializer is headquartered in Los Angeles and has
marketing, engineering, and R&D facilities in Anaheim, Boston,
Silicon Valley and Tokyo.
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NOTE TO EDITORS: Spatializer press releases are available for retrieval
through the company's Web site at http:/www.spatializer.com/.
Desper Products, Inc. and MultiDisc Technologies, Inc. are wholly owned
subsidiaries of Spatializer Audio Laboratories, Inc.
Spatializer is a registered trademark of Desper Products, Inc.
MultiDisc is a trademark of MultiDisc Technologies, Inc.
Copyright 1996 Spatializer Audio Laboratories, Inc. All other corporate
and product names are trademarks of their respective owners.
Safe Harbor Act Statement Under the Private Securities Litigation Reform
Act of 1995: The information contained in this news release is forward
looking and involves uncertainties that could significantly impact the
results. While it is impossible to itemize all factors and events that
could affect the results of the transaction, the statements in this news
release are based on information available to the company, its advisors
and from third parties and public filings, among other things.
