UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )*
Aureal Semiconductor Inc.
(f/k/a Media Vision Technology Inc.)
(Name of Issuer)
Common Stock
(Title of Class of Securities)
58445Q 103
(CUSIP Number)
Jonathan Green, Esq.
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
(201) 376-5400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 6, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check
the following box .
Check the following box if a fee is being paid with
the statement . (A fee is not required only if the
reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five
percent of the class of securities described in Item
1; and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent or less
of such class.) (See Rule 13d-7)
Note: Six copies of this statement, including all
exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out
for a reporting person's initial filing on this form
with respect to the subject class of securities, and
for any subsequent amendment containing information
which would alter disclosure provided in a prior cover
page.
The information required on the remainder of this
cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act
of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however,
see the Notes).
Exhibit Index: Page 7
Page 1 of 30 Pages<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 103 Page 2 of 30 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Appaloosa Management L.P.
2 Check the Appropriate Box If a Member of a Group*
a.
b. X
3 SEC Use Only
4 Source of Funds*
N/A
5 Check Box If Disclosure of Legal Proceedings Is
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 5,752,097
Shares
Beneficially 8 Shared Voting Power
Owned By -0-
Each
Reporting 9 Sole Dispositive Power
Person 5,752,097
With
10 Shared Dispositive Power
-0-
11 Aggregate Amount Beneficially Owned by Each
Reporting Person
5,752,097
12 Check Box If the Aggregate Amount in Row (11)
Excludes Certain Shares*
13 Percent of Class Represented By Amount in Row
(11)
14.79%
14 Type of Reporting Person*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 103 Page 3 of 30 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
David A. Tepper
2 Check the Appropriate Box If a Member of a Group*
a.
b. X
3 SEC Use Only
4 Source of Funds*
N/A
5 Check Box If Disclosure of Legal Proceedings Is
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 5,752,097
Shares
Beneficially 8 Shared Voting Power
Owned By -0-
Each
Reporting 9 Sole Dispositive Power
Person 5,752,097
With
10 Shared Dispositive Power
-0-
11 Aggregate Amount Beneficially Owned by Each
Reporting Person
5,752,097
12 Check Box If the Aggregate Amount in Row (11)
Excludes Certain Shares*
13 Percent of Class Represented By Amount in Row
(11)
14.79%
14 Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer
This Amendment No. 2 to the statement on Schedule
13D filed on behalf of Appaloosa Management L.P. (the
"Manager") and David A. Tepper ("Mr. Tepper" and,
together with the Manager, collectively, the
"Reporting Persons") on August 1, 1995 (the "Schedule
13D") relates to the shares of common stock, par value
$0.001 per share (the "Shares"), of Aureal
Semiconductor Inc. (f/k/a Media Vision Technology
Inc.), a Delaware corporation (the "Company"). The
principal executive offices of the Company are located
at 47900 Bayside Parkway, Fremont, California 94538.
Item 2. Identity and Background
This Amendment No. 2 to the statement on Schedule
13D is being filed by the Reporting Persons. A copy
of the Joint Filing Agreement between the Reporting
Persons is filed as Exhibit A hereto.
The general partner of the Manager is Appaloosa
Partners Inc., a Delaware corporation, of which Mr.
Tepper is the sole stockholder and President.
The Manager is the general partner of Appaloosa
Investment Limited Partnership I, a Delaware limited
partnership (the "Partnership"). The Manager acts as
an investment adviser to Palomino Fund Ltd.
("Palomino"), Pinto Investment Limited Liability
Company ("Pinto"), Chestnut Investors III, Inc.
("Chestnut") and Reliance Standard Life Insurance
Company ("Reliance" and, together with the
Partnership, Palomino, Pinto and Chestnut,
collectively, the "Accounts"). Palomino, Chestnut and
Reliance are beneficially owned by Delphi Financial
Group ("Delphi"). The address of the principal
business and principal office of the Manager is 51
John F. Kennedy Parkway, Short Hills, New Jersey
07078. The business address of Mr. Tepper is 51 John
F. Kennedy Parkway, Short Hills, New Jersey 07078.
The present principal occupation or employment of Mr.
Tepper is as President of Appaloosa Partners Inc. The
address of the principal business and principal office
of Palomino is c/o Trident Trust Company (Cayman)
Ltd., 1 Capital Place, P.O. Box 847, Grand Cayman,
Cayman Islands. The address of the principal business
and principal office of Pinto is 51 John F. Kennedy
Parkway, Short Hills, New Jersey 07078. The address
of the principal business and principal office of
Reliance is 2501 Parkway, Philadelphia, Pennsylvania
19130. The address of the principal business and
principal office of Delphi is 1105 North Market
Street, Wilmington, Delaware 19899. The address of
the principal business and principal office of
Chestnut is 1105 North Market Street, Wilmington,
Delaware 19899.
During the last five years, none of the Reporting
Persons has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction
resulting in a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with respect
to such laws. Mr. Tepper is a citizen of the United
States.
Item 3. Source and Amount of Funds or Other
Consideration
Of the 5,752,097 Shares held by the Reporting
Persons, 3,963,131 Shares were purchased with the
personal funds of the Partnership, 222,084 Shares were
purchased with the working capital of Palomino,
632,917 Shares were purchased with the working capital
of Pinto, 690,000 Shares were purchased with the
working capital of Chestnut and 243,965 Shares were
purchased with the working capital of Reliance.
Item 4. Purpose of Transaction
The purpose of the acquisition by the Reporting
Persons of the Shares is for investment. The
Reporting Persons may consider making additional
purchases of Shares of the Company in open-market or
private transactions, the extent of which purchases
would depend upon prevailing market and other
conditions. Alternatively, the Reporting Persons may
sell all or a portion of their Shares in open-market
or private transactions, depending upon prevailing
market conditions and other factors.
Except as indicated above, the Reporting Persons
have no plans or proposals which relate to or would
result in any of the events, actions or conditions
specified in paragraphs (a) through (j) of Item 4 of
the form of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) This Amendment No. 2 to the Schedule 13D relates
to 5,752,097 Shares beneficially owned by the
Reporting Persons, which constitute approximately
14.79% of the issued and outstanding Shares.
Since the filing of Amendment No. 1 to the
Schedule 13D on February 28, 1996 and as of the
date hereof, the Reporting Persons have acquired
beneficial ownership of an additional 1,750,000
Shares.
(b) The Manager has sole voting and dispositive power
with respect to 5,752,097 Shares. Mr. Tepper has
sole voting and dispositive power with respect to
5,752,097 Shares.
(c) Pursuant to that certain Common Stock Purchase
Agreement, dated as of June 6, 1996 (the "Second
Purchase Agreement"), among the Manager (as agent
for, and on behalf of, the Partnership, Chestnut,
Palomino and Pinto), the Company and TCW Special
Credits (as agent for, and on behalf of, certain
accounts), on June 6, 1996, the Manager purchased
an additional 1,750,000 Shares from the Company
in a private placement at a purchase price of
$1.35 per Share.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer
As discussed in Item 2 above, the Manager acts as
the general partner of the Partnership, which owns
3,963,131 Shares. The Manager also acts as investment
adviser to Palomino, which owns 222,084 Shares, Pinto,
which owns 632,917 Shares, Chestnut, which owns
690,000 Shares and Reliance, which owns 243,965
Shares. Mr. Tepper is the President of Appaloosa
Partners Inc., which is the general partner of the
Manager.
On February 21, 1996, the Manager entered into
that certain Common Stock Purchase Agreement, dated as
of February 21, 1996 (the "First Purchase Agreement"),
among the Manager (as agent for, and on behalf of, the
Partnership, Chestnut, Palomino and Pinto), the
Company and TCW Special Credits (as agent for, and on
behalf of, certain accounts), pursuant to which the
Manager purchased 2,500,000 Shares from the Company in
a private placement at a purchase price of $1.00 per
Share. On February 21, 1996, the Manager (as agent
for, and on behalf of, the Partnership, Chestnut,
Palomino and Pinto) entered into that certain
Amendment Number 1 to Registration Rights Agreement,
dated as of February 21, 1996 (the "Amendment No. 1"),
among the Manager, the Company and TCW Special Credits
(as agent for, and on behalf of, certain accounts).
Pursuant to the Amendment No. 1, the Manager (i)
became party to and (ii) was granted certain
registration rights under, that certain Registration
Rights Agreement, dated as December 30, 1994 (the
"Registration Rights Agreement"), between the Company
and TCW Special Credits (as agent for, and on behalf
of, certain accounts).
On June 6, 1996, the Manager entered into the
Second Purchase Agreement with the Company. On June
6, 1996, the Manager (as agent for, and on behalf of,
the Partnership, Chestnut, Palomino and Pinto) entered
into that certain Amendment Number 2 to Registration
Rights Agreement, dated as of June 6, 1996 (the
"Amendment No. 2"), among the Manager, the Company and
TCW Special Credits (as agent for, and on behalf of,
certain accounts). Pursuant to the Amendment No. 2,
the Manager was granted certain registration rights
with respect to additional Shares purchased pursuant
to the Second Purchase Agreement under the
Registration Rights Agreement.
Except as set forth above, there exist no
contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons
named in Item 2 and between such persons and any
persons with respect to any securities of the Company,
including but not limited to transfer or voting of any
securities, finders' fees, joint ventures, loan or
option agreements, put or calls, guarantees of
profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit A: Joint Filing Agreement.
Exhibit B: First Purchase Agreement
Exhibit C: Registration Rights Agreement
Exhibit D: Amendment No. 1
Exhibit E: Second Purchase Agreement
Exhibit C: Amendment No. 2
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information
set forth in this statement is true, complete and
correct.
Dated: June 14, 1996
Appaloosa Management L.P.
By: Appaloosa Partners,
Inc.
Its general partner
By: /s/ David A. Tepper
David A. Tepper
President
David A. Tepper
/s/ David A. Tepper
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit Name Page
A Joint Filing Agreement 8
B First Purchase Agreement --
C Registration Rights Agreement --
D Amendment No. 1 --
E Second Purchase Agreement 9
F Amendment No. 2 25
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the
Securities Exchange Act of 1934, as amended, the
persons named below each hereby agrees that the
Schedule 13D filed herewith and any amendments thereto
relating to the acquisition of shares of beneficial
interest of Media Vision Technology Inc. is filed
jointly on behalf of each such person.
Dated: July 24, 1995
Appaloosa Management L.P.
By: Appaloosa Partners,
Inc.
Its general partner
By: /s/ David A. Tepper
David A. Tepper
President
David A. Tepper
/s/ David A. Tepper
<PAGE>
AUREAL SEMICONDUCTOR INC.
4245 Technology Drive
Fremont, California 94538
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT is made as
of June 10, 1996, by and among AUREAL SEMICONDUCTOR
INC., a Delaware corporation (the "Company"), and the
purchasers set forth on the Schedule of Purchasers
attached hereto as Exhibit A (the "Purchasers").
WHEREAS, the Company desires to issue and sell to
the Purchasers and the Purchasers desire to purchase
shares of the Common Stock of the Company.
NOW, THEREFORE, in consideration of the mutual
promises, covenants and conditions hereinafter set
forth, the parties hereby agree as follows:
1. Sale of the Securities.
1.1 Sale. Subject to the terms and
conditions hereof, the Company will issue and sell to
the Purchasers and the Purchasers will purchase up to
an aggregate of 8,888,888 shares of Common Stock (the
"Securities") at a price of $1.35 per share, or an
aggregate purchase price of $11,999,998.80.
2. Closing Dates; Delivery.
2.1 Closing Date. The closing of the
purchase and sale of the Securities (the "Closing")
shall be held at the offices of Gray Cary Ware &
Freidenrich, A Professional Corporation, 400 Hamilton
Avenue, Palo Alto, California 94301-1825 at 10:00 a.m.
on June 6, 1996, or at such other time and place as
the Company and a majority in interest of the
Purchasers shall agree upon, orally or in writing.
2.2 Delivery. Subject to the terms of
this Agreement, at the Closing the Company will
deliver to the Purchasers the certificates
representing the Securities to be purchased by the
Purchasers from the Company, against payment of the
purchase price therefor by delivery of a check or
checks, payable to the order of the Company, or by
wire transfer.
3. Representations and Warranties of the
Company. Except as set forth in Exhibit B attached
hereto, the Company hereby represents and warrants to
the Purchasers as follows:
3.1 Organization and Standing; Certificate
of Incorporation and Bylaws. The Company is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed
to be conducted. The Company is presently qualified,
licensed or domesticated as a foreign corporation or
partnership in all jurisdictions in which the failure
to be so qualified, licensed or domesticated would
result in material adverse consequences to the Company
or its business. Copies of the Company's Certificate
of Incorporation, Bylaws and minutes and consents of
its stockholders and Board of Directors will be
provided to the Purchasers or their special counsel
upon request.
3.2 Corporate Power. The Company has now,
or will have at the Closing Date, all requisite legal
and corporate power to enter into this Agreement and
all other agreements contemplated hereby, to sell the
Securities hereunder, and to carry out and perform its
obligations under the terms of this Agreement and all
other agreements contemplated hereby. This Agreement
and all other agreements contemplated hereby are valid
and binding obligations of the Company, except as the
same may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium, usury,
reorganization, and other laws of general application
affecting the enforcement of creditors' rights.
3.3 Capitalization. The authorized
capital stock of the Company is 100,000,000 shares of
Common Stock. The Company has reserved, up to twenty
percent (20%) of the then fully diluted Common Stock
(including outstanding shares and all options and
warrants to purchase Common Stock), for issuance under
the Plans (as such term is defined below). As of May
31, 1996, there are issued and outstanding 30,000,000
shares of the Company's Common Stock. All such issued
and outstanding shares have been duly authorized and
validly issued, are fully paid and nonassessable and
were issued in compliance with all applicable state
and federal laws concerning the issuance of
securities. Except for (i) 7,500,000 shares of Common
Stock which are currently reserved under the Company's
1994 Stock Option Plan and the Company's 1995 Stock
Option Plan (collectively, the "Plans") for future
issuance to key employees, consultants and members of
the Board of Directors of the Company (options for
approximately 6,005,162 shares are currently
outstanding under the Plan), (ii) options to purchase
2,644,845 shares of the Company's Common Stock which
were assumed pursuant to the acquisition of Crystal
River Engineering, Inc., (iii) an agreement between
the Company and Hambrecht & Quist LLC ("H&Q") to issue
to H&Q a warrant to purchase 50,000 shares of the
Company's Common Stock, and (iii) a warrant to
Financing For Science International to purchase 50,000
shares of the Company's Common Stock, there are no
outstanding rights, options, warrants, conversion
rights or agreements for the purchase or acquisition
from the Company of any shares of its capital stock.
The Company is not a party or subject to any agreement
or understanding between any persons or entities which
affects or relates to the voting or giving of written
consents with respect to any securities or by any
director of the Company.
3.4 Line of Credit. The Company has
agreed to reduce its line of credit with TCW from
$22.0 million to $20.0 million effective upon the
closing of this transaction. All net proceeds from
this transaction are anticipated to be used to pay
down the line of credit which will remain available
for further reborrowing through its current
termination date of March 31, 1998.
3.5 Authorization.
(a) All corporate, federal and state
action on the part of the Company, its officers,
directors and stockholders necessary for the sale and
issuance of the Securities pursuant hereto and the
performance of the Company's obligations hereunder or
contemplated hereby has been taken or will be taken
prior to the Closing.
(b) The Securities, when issued in
compliance with the provisions of this Agreement, will
be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances; provided,
however, that the Securities may be subject to
restrictions on transfer under state and/or federal
securities laws as set forth herein, and as may be
required by future changes in such laws.
(c) No person has any right of first
refusal or any preemptive rights in connection with
the issuance of the Securities.
3.6 Patents, Trademarks, etc. Except as
set forth in Exhibit B, the Company owns and possesses
or is licensed under all patents, patent applications,
licenses, trademarks, trade names, brand names,
inventions, processes, formulae and copyrights
necessary for the operation of the business of the
Company as now conducted 1,333,333 $1,799,999.55
Appaloosa Management, L.P.
Attn: Jim Bolin
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Appaloosa I L.P. 1,225,000 $1,653,750.00
Chestnut Investors III Inc. 280,000 $ 378,000.00
Palomino Fund Ltd. 43,750 $
59,062.50
Pinto Investment LLC 201,250 $
271,687.50
<PAGE>
Name and Address Shares Purchase Price
Heinz H. Steinman 185,185 $
249,999.75
5797 Cedar Street
Wrightwood, CA 92397
Leslie Alexander 1,000,000 $1,350,000.00
1200 North Federal Highway
Suite 307
Boca Raton, FL 33143
Seneca Capital
Attn: Stephen Hays
575 Lexington Avenue, 7th Floor
New York, NY 10022
Seneca Capital L.P. 169,400 $ 228,690.00
DFG Corporation 23,500 $
31,725.00
ZPG Securities, LLC 31,500 $ 42,525.00
Palamundo LDC
Camen Islands 13,700 $
18,495.00
Seneca Capital
International LTD 31,900 $ 43,065.00
TCW Special Credits,
as agent and on behalf of certain
funds and accounts set forth below:
Attn: Richard Masson
c/o Oaktree Capital Management
550 S. Hope Street, 22nd Floor
Los Angeles, CA 90071
TCW Special Credits Trust 350,300 $ 472,905.00
TCW Special Credits Fund 3b 684,000 $ 923,400.00
TCW Special Credits Trust 3b 533,800 $ 720,630.00
Delaware State Employees 100,085 $ 135,114.75
Pension Trust
Weyerhaeuser Company 1,580,333 $
2,133,449.55
Master Pension Trust
__________ _______________
Totals 8,888,888 $ 11,999,998.80 <PAGE>
EXHIBIT B
SCHEDULE OF EXCEPTIONS
AUREAL SEMICONDUCTOR INC.
Pursuant to Section 3 of the Common Stock
Purchase Agreement dated June , 1996 (the
"Agreement"), by and among Aureal Semiconductor Inc.,
a Delaware corporation (the "Company"), and the
Purchasers set forth on Exhibit A thereto, Company
hereby delivers this Schedule of Exceptions to the
Company's representations and warranties given in the
Agreement. The section numbers in this schedule
correspond to the section numbers in the Agreement.
Any information disclosed herein under any section,
however, shall be deemed to be disclosed and
incorporated in any other section of the Agreement
where such disclosure would be appropriate.
Capitalized terms used in this schedule unless
otherwise specified have the same meanings given them
in the Agreement.
Section 3.3. On May 7, 1996, the Company
entered into an Agreement and Plan of Reorganization
(the "Reorganization Agreement") with Aureal
Acquisition Corporation, a California corporation and
a wholly-owned subsidiary of the Company ("Sub") and
Crystal River Engineering, Inc., a California
corporation ("CRE") pursuant to which Sub was merged
with and into CRE (the "Merger"). As provided by the
Reorganization Agreement, the Company paid $8.30 for
each outstanding share of CRE and assumed all of the
outstanding options to acquire CRE securities. The
Merger closed on May 29, 1996, at which time the
Company assumed options to acquire, in the aggregate,
2,644,845 shares of the Company's common stock.
Section 3.6. As described in its 1995 Form 10-K, on August 23, 1995, the
Company announced it had
been named as a defendant in a lawsuit brought by
Creative Technology Ltd. ("Creative"). In its
lawsuit, Creative claims the Company breached a 1992
agreement between the companies settling previous
litigation. The suit seeks any revenues realized by
the Company from the sale of certain products.
As described in the Company's 1995 Form 10-K,
Yamaha has aggressively brought patent infringement
actions against other companies which have developed
certain replacement FM synthesis chips. There can be
no assurance that Yamaha will not pursue the Company
under similar theories.
The Company has sold its Media Vision retail
trade names to a third party.
The Company is in default of its agreement dated
December 23, 1994, with AT&T, its long distance
carrier. The Company is attempting to renegotiate the
terms of its agreement with AT&T. The Company is also
in default of the terms of its Replication and
Bundling Agreement with Compton's NewMedia. The
Company believes it has recorded adequate reserves for
any potential liability it may have under the AT&T and
Compton's agreements in its 1995 financial statements.
Section 3.9. See Section 3.6.
Section 3.13. The Company has entered into a
Registration Rights Agreement dated December 30, 1994
(the "Rights Agreement"), with TCW Special Credits, as
agent and nominee for the entities set forth on
Schedule I to such agreement. The Rights Agreement
was amended on February 21, 1996 (the "Amendment
Number 1"), to grant equal registration rights to the
purchasers of the Company's common stock set forth on
Exhibit A to the Common Stock Purchase Agreement dated
February 21, 1996 by and among the Company and such
purchasers (the "Purchasers"), and those holders of
warrants to purchase shares of the Company's common
stock set forth in Schedule A on the Amendment Number
1.
<PAGE>
EXHIBIT C
AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
<PAGE>
AMENDMENT NUMBER 2 TO
REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT NUMBER 2 (the "Amendment")
to the Registration Rights Agreement dated as of
December 30, 1994, and Amendment Number 1 dated
Febraury 21, 1996 (the "Rights Agreement"), is
made as of June 10, 1996, by and among Aureal
Semiconductor Inc., a Delaware corporation (the
"Company"), TCW Special Credits, a California
general partnership as agent and nominee for the
entities set forth on Schedule I to the Rights
Agreement, Appaloosa Management L.P., as agent
for the accounts listed on Schedule I hereto
("Appaloosa"), the Copernicus Fund, L.P.
("Copernicus"), the Galileo Fund, L.P.
("Galileo"), and the purchasers of Common Stock
set forth on Exhibit A to the Common Stock
Purchase Agreement dated June 10, 1996 (the
"Purchase Agreement"), by and among the Company
and such purchasers (the "Purchasers"). Unless
specifically designated otherwise, the
capitalized terms herein shall have the same
meanings given them in the Rights Agreement.
RECITALS
A. The Company and TCW are parties to the
Rights Agreement pursuant to which the Company
granted certain registration rights for the
benefit of TCW.
B. The Company, TCW, Appaloosa,
Copernicus, and Galileo (TCW, Appaloosa,
Copernicus, and Galileo are collectively
referred to herein as the "Prior Holders")
amended the Rights Agreement pursuant to
Amendment Number 1 to Registration Rights
Agreement dated February 21, 1996, to grant
equal registration rights to all the Prior
Holders and to make each of the Prior Holders a
party to the Rights Agreement.
C. The Company and the Prior Holders now
wish to amend the Rights Agreement, as amended,
in order to grant equal registration rights to
the Purchasers and to make each of the
Purchasers a party to the Rights Agreement, as
amended.
AGREEMENT
NOW THEREFORE, in consideration of the
mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree
to amend certain provisions of the Rights
Agreement as set forth below:
1. Section 1 of the Rights Agreement
shall be amended to define the following terms
as follows:
Registrable Shares shall mean (i) all
shares of New Common Stock originally issued to
or purchased in the future by TCW, (ii) all
shares of Common Stock issued to the Prior
Holders pursuant to the Common Stock Purchase
Agreement dated February 21, 1996, by and among
the Company, TCW, Appaloosa, Copernicus, and
Galileo, and (iii) all shares of Common Stock
issued to the Purchasers pursuant to the
Purchase Agreement. As to any particular
Registrable Shares, such shares shall cease to
be Registrable Shares when (A) such shares shall
have been transferred, new certificates for such
shares not bearing a legend restricting further
transfer shall have been delivered by the
Company and subsequent disposition of such
shares shall not require registration or
qualification under the Securities Act or any
similar state law then in force, or (B) such
shares shall have ceased to be outstanding.
2. Section 4(a) of the Rights
Agreement shall be amended and restated in its
entirety to provide as follows:
(a) On or prior to June 5, 1996,
the Company shall prepare and file with the SEC
a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415
covering all of the Registrable Shares (the
"Initial Shelf Registration"). The Initial
Shelf Registration shall be on a Form S-3 or
another appropriate form permitting registration
of such Registrable Shares for resale by such
holders in the manner or manners designated by
them (including, without limitation, one of more
underwritten offerings). The Company shall not
permit any securities other than the Registrable
Shares to be included in the Initial Shelf
Registration or any Subsequent Shelf
Registration. The Company shall use its best
efforts to cause the Initial Shelf Registration
to be declared effective under the Securities
Act on or prior to the 60th day following the
date on which the Initial Shelf Registration
Statement is filed and to keep the Initial Shelf
Registration continuously effective under the
Securities Act until (i) all Registrable Shares
covered by the Initial Shelf Registration have
been sold in the manner set forth and as
contemplated in the Initial Shelf Registration
or (ii) a Subsequent Shelf Registration covering
all of the Registrable Shares has been declared
effective under the Securities Act (the
"Effectiveness Period"). The Company shall use
its best efforts to include the Registrable
Shares purchased by the Purchasers pursuant to
the Purchase Agreement in the Initial Shelf
Registration.
3. Except as amended hereby, the
Rights Agreement dated November 30, 1994, as
amended on February 21, 1996, remains in full
force and effect.
4. By their signatures hereto, each
of the Purchasers becomes a party to the Rights
Agreement, as amended by this Amendment Number
2.
<PAGE>
IN WITNESS WHEREOF, the parties have
executed this Amendment Number 2 as of the day
and year first above written.
THE COMPANY:
AUREAL SEMICONDUCTOR
INC.
By:
Name:
Title:
TCW:
TCW SPECIAL CREDITS, as
agent and
nominee of the entities
set forth
on Schedule I
By:TCW Asset Management
Company, its
managing partner
By:
Name: Richard
Masson
Title: Authorized
Signatory
By:
Name: Kenneth Liang
Title: Authorized
Signatory
THE COPERNICUS FUND,
L.P.,
By:DDJ Copernicus, LLC,
its General Partner
By:
Name: Judy K.
Mencher
Title: Member
<PAGE>
The GALILEO FUND, L.P.
By:DDJ Galileo, LLC,
its General Partner
By:
Name: Judy K.
Mencher
Title: Member
<PAGE>
COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 2 TO THE
REGISTRATION RIGHTS AGREEMENT
PURCHASER:
By:
Name:
Title:
<PAGE>
SCHEDULE I
TCW Entities
TCW Special Credits Trust
TCW Special Credits Fund IIIb
TCW Special Credits Trust IIIb
The Board of Trustees of the Delaware State
Employees Retirement Fund
Appaloosa Accounts
Appaloosa I L.P.
Chestnut Investors III Inc.
Palomino Fund Ltd.
Pinto Investment LLC
