<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998
Registration No. 333-66867
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------------
AUREAL SEMICONDUCTOR INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3117385
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4245 TECHNOLOGY DRIVE
FREMONT, CALIFORNIA 94538
(510) 252-4245
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
------------------------------
DAVID J. DOMEIER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
AUREAL SEMICONDUCTOR INC.
4245 TECHNOLOGY DRIVE
FREMONT, CALIFORNIA 94538
(510) 252-4245
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
JAMES M. KOSHLAND, ESQ.
DAVID A. HUBB, ESQ.
GRAY CARY WARE & FREIDENRICH LLP
400 HAMILTON AVENUE
PALO ALTO, CALIFORNIA 94301-1825
(650) 328-6561
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as described in the Prospectus after the effective date of this
Registration Statement.
------------------------------
If any of the securities being registered on this Form to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [ ]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legal facsimile thereof, pursuant to Item 11(a) of
this Form, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
<PAGE> 2
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE(2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($0.01 par value) 19,954,137 shares(3) $ 0.525 $10,475,922 $ 2,912
Common Stock ($0.01 par value) 13,387,449 shares(4) $ 0.525 7,028,411 1,954
-------------------- ----------- -----------
Total 33,341,586 shares $17,504,333 $ 4,867
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act and based on the average of the closing bid
and asked prices reported on the Over-the-Counter Electronic Bulletin Board on
October 30, 1998.
(2) This Registration Statement also includes 3,960,000 shares that were
previously registered on Registration Statement No. 333-39939 and for which the
Registrant previously paid an aggregate filing fee of $3,283. In addition, this
Registration Statement includes an additional 28,150,000 shares that were
previously registered on Registration Statement No. 333-62083 and for which the
Registrant previously paid an aggregate filing fee of $10,249.
(3) Represents additional shares of Common Stock issuable upon conversion of all
outstanding shares of Series C Preferred Stock as described in the Prospectus,
assuming that such conversion is as of October 30, 1998.
(4) Represents additional shares of Common Stock issuable upon conversion of all
outstanding shares of Series A Preferred Stock as described in the Prospectus,
assuming such conversion is as of October 30, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY
DETERMINE.
PURSUANT TO RULE 429, THE PROSPECTUS FORMING A PART OF THIS REGISTRATION
STATEMENT ALSO RELATES TO THE REGISTRANT'S EARLIER REGISTRATION STATEMENTS ON
FORM S-2/A-2 (NO. 333-39939) AND S-2/A-1 (NO. 333-62083) AND UPDATES THE
INFORMATION CONTAINED THEREIN. SUCH REGISTRATION STATEMENTS RELATE TO, AMONG
OTHER THINGS, SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SHARES OF THE
REGISTRANT'S SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK, SERIES C
PREFERRED STOCK, COMMON STOCK AND SHARES OF COMMON STOCK OF THE REGISTRANT
ISSUABLE UPON EXERCISE OF CERTAIN OUTSTANDING WARRANTS.
================================================================================
<PAGE> 3
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
SEC is effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1998
65,451,586 SHARES (ISSUABLE UPON (i) CONVERSION OF
SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK,
SERIES C PREFERRED STOCK AND (ii) EXERCISE OF
WARRANTS FOR COMMON STOCK)
AUREAL SEMICONDUCTOR INC.
COMMON STOCK
(PAR VALUE $0.001 PAR VALUE)
Our Common Stock is quoted on the Over-the-Counter Electronic Bulletin
Board under the symbol "AURL." On November 17, 1998, the average of the closing
bid and asking prices of our Common Stock was $0.575. The 65,451,586 shares of
Common Stock being offered by this prospectus represent approximately 53% of our
total equity securities. Registering such a large percentage of the Company's
total outstanding securities may have an adverse effect on the market price for
our Common Stock.
The selling stockholders are selling shares of Common Stock that are
issuable upon conversion of shares of Series A, Series B and Series C Preferred
Stock, and upon the exercise of warrants for Common Stock. The Company issued
shares of Series A, Series B, Series C Preferred Stock and certain warrants in a
series of private transactions between March 1998 and June 1998 to the selling
stockholders. The Company will not receive any of the proceeds from the sale of
shares by the selling stockholders but will receive the exercise price of the
warrants.
The shares have not been approved by the SEC or any state securities
commission, nor have these organizations determined that this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
THE DATE OF THIS PROSPECTUS IS ______________, 1998
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION..........................................................1
ABOUT AUREAL.................................................................................1
FORWARD LOOKING INFORMATION..................................................................3
RISK FACTORS.................................................................................3
USE OF PROCEEDS..............................................................................7
SELLING STOCKHOLDERS.........................................................................7
PLAN OF DISTRIBUTION........................................................................12
LEGAL MATTERS...............................................................................12
EXPERTS.....................................................................................12
</TABLE>
<PAGE> 5
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the public reference facilities of the SEC in Washington, D.C., Chicago,
Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http:\\www.sec.gov.
The SEC allows us to "incorporate by reference" the information we have
filed with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus. We incorporate by reference the
documents listed below. This prospectus is part of a registration statement we
filed with the SEC (Registration Statement No. 333-66867).
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997, as amended by Amendments No. 1 and No. 2.
(2) The Company's Report on Form 8-K filed on March 16, 1998, as amended by
Amendments No. 1 and No. 2.
(3) The Company's Definitive Proxy filed on May 6, 1998.
(4) The Company's Quarterly Report on Form 10-Q for the quarters ended March
29, 1998, June 30, 1998 and September 27, 1998.
(5) The Company's Current Report on Form 8-K filed on June 15, 1998, as
amended by Amendment No. 1.
(6) The Company's Current Report on Form 8-K filed on July 13, 1998.
(7) The Company's Registration Statement on Form S-2/A-1 (Registration No.
333-62083) filed on September 24, 1998.
(8) The Company's Definitive Proxy filed on November 18, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Stockholder Services
Aureal Semiconductor Inc.
4245 Technology Drive
Fremont, California 94538
(510) 252-4245
In addition, we will deliver a copy of our (i) Annual Report on Form
10-K/A-2 for the fiscal year ended December 28, 1997, and (ii) most recent Form
10-Q, without charge, to each person receiving a copy of this Prospectus.
ABOUT AUREAL
Aureal Semiconductor Inc. is a producer of audio semiconductor products
and advanced audio technologies for the PC and consumer electronics markets. We
contract with independent silicon foundries for production of our semiconductor
products, and thus is we are a "fabless" semiconductor company. The foundry that
manufactures the majority of our semiconductor products is one of the three
largest foundries in the world that manufactures products exclusively for third
parties. Our objective is to be a leading provider of advanced digital audio
solutions for the PC and consumer electronics markets.
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In May 1996, we acquired Crystal River Engineering, Inc., a leader in
the field of 3D audio technology. Crystal River Engineering is now our
wholly-owned subsidiary and offers hardware and software solutions optimized for
3D audio presentation.
We are headquartered in Fremont, California, in a leased 36,000 square
foot building. As of September 27, 1998, we employed 105 people. Of this total,
73 were engaged in engineering functions, 22 were in sales and marketing
activities, and 10 were engaged in administrative support.
Aureal, Aureal 3D, A3D and the A3D logo are trademarks of Aureal
Semiconductor Inc. Other trademarks referred to in this Prospectus belong to
their respective owners.
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FORWARD LOOKING INFORMATION
This Prospectus, including the information incorporated by reference,
contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those projected in the forward-looking statements as a
result of the risk factors set forth below and others detailed from time to time
in our periodic reports filed with the SEC.
RISK FACTORS
In addition to the other information in this prospectus or incorporated
herein by reference, you should consider carefully the following factors in
evaluating the Company and our business before purchasing the Shares offered by
the prospectus:
HISTORY OF LOSSES AND ACCUMULATED DEFICIT; EXPECTATION OF FUTURE LOSSES
We emerged from bankruptcy in December 1994. Since that time, we have
recorded an accumulated deficit of $168 million as of September 27, 1998,
comprised of $154 million of incurred losses and $14 million of accretion and
dividends on our preferred stock. We generated the majority of our revenues in
1997 and 1996 through technology licensing transactions. We anticipate that the
majority of our revenues will come from the sale of advanced audio products in
1998 and future years. However, our failure to sell significant volumes of our
advanced audio products in the future will mean we will not be profitable.
NEW TECHNOLOGIES AND PRODUCTS DEVELOPED WITH NEW TECHNOLOGIES
Our success depends on our ability to develop and market new
technologies aimed at advancing the level of audio quality in personal computers
and consumer electronics devices. To be successful, we must timely develop new
products that we can sell at competitive prices to our customers who will design
them into their products. In order for our customers to design our advanced
audio products into their personal computers and consumer electronic products,
we must:
1. anticipate market trends;
2. anticipate the performance and functionality requirements of our
current and potential customers;
3. develop and produce products that meet the timing and pricing
requirements of our current and potential customers; and
4. produce products that can be available in a timely manner
consistent with our current and potential customers' development
and production schedules.
A failure in any of these areas could materially adversely affect our
business, financial condition and results of operations.
We also face the risk that new generations of microprocessors that are
capable of performing the function of advanced audio products will greatly
reduce demand for our products. Each successive generation of microprocessors
has provided increased performance, which could in the future result in a
microprocessor capable of performing advanced audio functions to an extent that
diminishes or eliminates the need or preference for our products. In addition,
each new generation of technology, including digital audio technology, generally
requires increased processing power. The increased capabilities of
microprocessors in the future may lower demand for our products in which event
our business, financial condition and results of operations will be materially
adversely affected.
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PRODUCT CONCENTRATION AND EXPANSION OF BUSINESS MODEL
Substantially all of our revenues are related to advanced audio
solutions for the personal computer and consumer electronics markets, and we
expect this to continue for the foreseeable future. We are currently embarking
on an expansion of our semiconductor business model to provide for an increased
number of audio related products, including audiocards and audio communications
combination cards. We may require additional working capital funds for this
expansion to provide for incremental inventory as well as broader marketing
programs. A number of factors may limit the success of our expansion and could
each negatively impact our business and results of operations. These factors
include:
1. the failure of the market for advanced audio products to grow;
2. reduced demand for our products as a result of increased
competition in this market;
3. unexpected technological change; and
4. our potential failure to introduce new versions of products that
our customers and the market accept.
COMPETITION AND PRICING PRESSURES
The markets in which we compete are intensely competitive and are
characterized by evolving industry standards that result in:
1. short product life cycles;
2. significant pressure to improve price and performance; and
3. frequent new product introductions.
We expect competition to increase from existing competitors and from
other companies that may enter the markets for advanced audio products with
devices that may be less costly or provide higher performance or additional
features than the products we currently offer. However, we are unable to predict
the timing and nature of any such competitive product offerings. In addition,
product prices in the semiconductor industry generally decrease over the life of
particular products. The willingness of prospective customers to design our
products into their products depends to a significant extent upon our ability to
price our products at levels that are cost-effective for these customers. As the
markets for our products mature and competition increases, we anticipate that
prices for our products will generally decline over time. If we are unable to
reduce our costs sufficiently to offset declines in our product prices, or if we
are unable to introduce new, higher performance products with higher product
prices, our results of operations could be materially adversely affected.
We anticipate that we will compete for the development of new
technologies and for the sale of semiconductor products with a number of
companies who have more extensive resources, including financial, manufacturing,
technical, marketing and distribution. Furthermore, some of these competitors
have greater intellectual property rights, broader product lines and
longer-standing relationships with their customers than we do. In addition to
our established competitors, we may also face competition from a number of
emerging companies.
DEPENDENCE ON CREDIT FACILITY
Because we have not been profitable to date, we have had to fund our
losses through a combination of equity and debt financings. In June 1998, we
entered into a credit facility with Goldman Sachs Credit Partners LP and the
Technology Finance Division of Transamerica Business Credit Corporation. This
credit facility provides for an aggregate maximum borrowing of $40 million. The
interest rate on the credit facility is generally the prime rate plus 3% to 5%.
Accordingly, while the credit facility provides us with needed working capital,
the high cost of
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servicing any borrowing under it could negatively affect our liquidity. In
addition, the credit facility may not be sufficient to meet our working capital
requirements. In the event we must secure additional capital, there can be no
assurance that such capital will be available on acceptable terms or at all. Our
inability to secure such potential future financing, if necessary, would have a
material adverse affect on our business, financial condition and results of
operations.
FACTORS INHIBITING TAKEOVER
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. These provisions impose certain restrictions on the ability of
a third party to acquire us without our consent. In addition, our Amended and
Restated Certificate of Incorporation does not provide for cumulative voting in
the election of directors. Further, certain provisions of our Amended and
Restated Certificate of Incorporation and Bylaws, including the provision that
divides the Board into three separate classes, may have the effect of delaying
or preventing changes in control or changes of our management.
TRADING IN THE NON-NASDAQ OVER-THE-COUNTER MARKET; DISCLOSURE RELATING TO LOW
PRICED STOCK
Our Common Stock trades only on the Over-the-Counter Bulletin Board. We
do not currently meet the requirements for listing on the Nasdaq National Market
or any national stock exchange. Moreover, in the future we may still not meet
such listing requirements, or we may not ever be accepted for trading on any
national exchange. Because our Common Stock trades on the Bulletin Board, an
investor may find it more difficult to sell or to obtain accurate quotations as
to the market value of our Common Stock. Furthermore, because our Common Stock
is not listed on Nasdaq, trading in our Common Stock is also subject to certain
rules promulgated by the SEC under the Securities Exchange Act of 1934, as
amended. These rules require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, any non-Nasdaq listed equity security that has a market price of
less than $5.00 per share, subject to certain exceptions); our Common Stock
meets this definition. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from affecting transactions in
the our Common Stock and may limit the ability of purchasers of our Common Stock
to resell our stock in the secondary market.
RISK OF ADDITIONAL SHARES SOLD IN THE PUBLIC MARKET
Because the holders of shares of Series A and Series C Preferred Stock
may convert these securities into shares of our Common Stock at variable
conversion prices, we do not currently know the exact number of shares of our
Common Stock that we may be required to issue upon conversion of these shares of
Preferred Stock. Further, this number may fluctuate based on the market value of
our Common Stock. Because of the variable conversion price feature of the Series
A and Series C Preferred Stock, holders of such shares may have incentive to
take certain actions, including shorting our Common Stock, to decrease the
market price of our Common Stock. By decreasing the market price for our Common
Stock, the holders of shares of Series A and Series C Preferred Stock can
convert their shares at the lower variable conversion price and thereby receive
a greater number of shares of our Common Stock. Short selling is illegal if used
to manipulate the price of a company's securities for profit. We have no
knowledge that any holder of shares of Series A or Series C Preferred Stock
intends to take any action that may cause the price of our Common Stock to fall.
However, we can not assure you that holders of shares of Series A or Series C
Preferred Stock will refrain from short selling our Common Stock or will refrain
from taking other actions that would drive down the market price of our Common
Stock.
CONCENTRATION OF STOCK OWNERSHIP
Currently, three parties collectively control approximately 75% of our
outstanding Common Stock, each of whom controls at least 10% individually. We do
not know if the liquidity of the market for our Common Stock will maintain, or
increase from, its current levels. In addition, the volume and liquidity of the
market for our Common Stock may influence the trading price for our Common
Stock. Sales of a large percentage of our total outstanding Common Stock may
have an adverse affect on the market price for such securities.
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DEPENDENCE ON FOUNDRIES
We are a "fabless" semiconductor firm that depends on outside
manufacturing resources for production of all of our semiconductor products.
Currently, we utilize two semiconductor foundries, one domestic and one foreign,
for production of our existing products. Both of these foundries have indicated
to us that they have the manufacturing availability to provide for our planned
production of each of our products for the next 12 months; however our
production relationship with each foundry is based only upon purchase orders.
Consequently, either foundry may not continue to adequately provide
manufacturing capacity to us for our current level of production or any
potential increases in our production levels. In the event that either or both
foundries cease to manufacture our semiconductor products, we would have to
contract with alternative foundries. However, we may not be able to timely
contract with alternative foundries or to contract with them at all. Such a
situation could materially adversely affect our financial condition and results
of operations.
In addition, the manufacture of semiconductor products is a highly
complex and precise process. Minute levels of contaminants in the manufacturing
environment, defects in the masks used to print circuits on wafers, difficulties
in the fabrication process and other factors can cause a substantial percentage
of wafers to be rejected or a significant number of die on each wafer not to
function. Many of these problems are difficult to diagnose and potentially
time-consuming or expensive to remedy. The foundries that we employ may, in the
future, experience such irregularities or adverse yield fluctuations in the
manufacturing processes of our products. In such event, our business, financial
condition and results of operations may be materially adversely affected.
DEPENDENCE ON KEY PERSONNEL
Our success depends to a significant extent upon the continued services
of key engineering, marketing, sales and management personnel. Our employees may
voluntarily terminate their employment with us at any time. We recognize the
value of the contributions of each of our employees, and we have developed
compensation programs, including stock programs open to all employees, designed
to retain our employees. However, competition for such employees is intense, and
the loss of the services of such employees could have a material adverse affect
on the our business, financial condition and results of operations.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
Our ability to compete successfully will depend, in part, on our ability
to protect our proprietary technology. We rely on a combination of patents,
trade secrets, copyright and trademark laws, nondisclosure agreements and other
contractual provisions and technical measures to protect our proprietary rights.
Nevertheless, there can be no assurance that such measures will be adequate or
safeguard the proprietary technology underlying our advanced audio products. In
addition, employees, consultants and others who participate in the development
of our products may breach their agreements with us regarding our intellectual
property, and we may not have adequate remedies for any such breach. We also
realize that our proprietary information and trade secrets may become known
through other means not currently foreseen by us. Moreover, notwithstanding our
efforts to protect our intellectual property, our competitors may be able to
develop products that are equal or superior to our products without infringing
on any of our intellectual property rights. In addition, we may not be able to
effectively protect our intellectual property rights in certain countries.
Although we do not believe that our products infringe the proprietary
rights of any third parties, third parties may still assert infringement or
invalidity claims (or claims for indemnification resulting from infringement
claims) against us. Such assertions could materially adversely affect our
business, financial condition and results of operations. In addition,
irrespective of the validity or the successful assertion of such claims, we
could incur significant costs in defending against such claims. In defending
such claims we could incur expenses and waste resources that could have a
material adverse affect on our business, financial condition and results of
operations.
In February 1998, Creative Technology Ltd. and its subsidiary, E-MU
Systems, Inc., served us with a lawsuit for patent infringement that Creative
and E-MU had filed in the U.S. District Court, Northern District of California.
The lawsuit asserts that our original Vortex product infringes on a patent that
describes a specific
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implementation for an electronic musical instrument designed by E-MU. Creative
and E-MU seek, among other things, a preliminary and permanent injunction
against alleged continuing acts of infringement by us and an accounting of
damages plus interest. In response, we filed a motion for summary judgment. In
August 1998, E-MU and Creative filed a motion for a preliminary injunction with
respect to our original and updated Vortex product. In October 1998, the court
denied Creative's motion for preliminary injunction. In addition, our motion for
summary judgment was also denied. We believe that the actions that Creative and
E-MU filed are without merit, and we are vigorously defending against these
actions.
Additional litigation may be necessary to resolve the claims asserted by
Creative and E-MU and any other claims asserted in the future to defend against
claims of infringement or invalidity or to enforce and protect our intellectual
property rights. There can be no assurance that we will prevail in any such
litigation. Also, any such litigation, whether or not determined in our favor or
settled by us, would be costly and would divert the efforts and attention of our
management and technical personnel from normal business operations; this could
have a material adverse affect on our business, financial condition and results
of operations. Adverse determinations in litigation could result in the loss of
our proprietary rights, subject us to significant liabilities, require us to
seek licenses from third parties or prevent us from licensing our technology,
any of which could have a material adverse affect on our business, financial
condition and results of operations.
YEAR 2000 COMPLIANCE
We use a number of computer software programs and operating systems in
our internal operations, including applications used in financial business
systems and various administration functions. To the extent that these software
applications contain source code that is unable to appropriately interpret the
upcoming calendar year "2000," some level of modification or even possible
replacement of such source code or applications could be necessary. Given the
current information, we currently do not anticipate that such "Year 2000" costs
will have a material impact upon us. We have requested and obtained information
regarding "Year 2000" compliance from suppliers and providers of all of our
mission critical software systems. Based on the information we currently have,
all mission critical systems appear to be "Year 2000" compliant. We are
currently contacting major vendors and customers to obtain "Year 2000"
compliance certificates. The failure of any of our key suppliers or customers to
be "Year 2000" compliant could have a material adverse effect on our business,
financial condition and results of operations.
USE OF PROCEEDS
We will not receive any proceeds from sale of Common Stock by any of the
selling stockholders.
SELLING STOCKHOLDERS
The selling stockholders will hold the shares of Common Stock that are
issuable upon conversion of the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock and exercise of certain warrants, if any. The
table below lists the (i) selling stockholders, (ii) the number of shares that
each currently owns or will own, assuming the conversion of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock,
and the exercise of certain warrants to purchase Common Stock on October 30,
1998, (iii) the number of shares of our Common Stock subject to sale pursuant to
this registration statement by the selling stockholder and (iv) the number of
shares of Common Stock each selling stockholder would own assuming the sale by
such selling stockholders of all shares of our Common Stock registered by this
registration statement.
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<TABLE>
<CAPTION>
Beneficial Ownership Beneficial
Period to the Ownership After the
Offering(2) Shares to be offering
---------------------------- Sold in the ----------------------------
Selling Stockholder(1) Shares Percent Offering(3) Shares Percent
- ----------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
TCW Special Credits Trust(4) 7,326,739 8.4% 2,927,480 4,399,259 5.0%
TCW Special Credits Fund IIIb(4) 13,515,038 15.4% 5,716,164 7,798,874 8.9%
TCW Special Credits Fund IIIB(4) 10,621,892 12.1% 4,461,235 6,160,657 7.0%
TCW Special Credits, as Investment 2,011,340 2.3% 836,482 1,174,858 1.4%
Manager of Delaware State
Employees Retirement Fund(4)
DDJ Capital Management, LLC 23,445,998 26.8% 15,418,922 8,027,0076 9.2%
141 Linden Street, Suite S-4
Wellesley, MA 02482-7910
EP Opportunity Fund, LLC 1,955,547 2.3% 1,955,547 0 *
Eisenberg Partners, L.L.C
33 West Monroe Street, 21st Floor
Chicago, IL 60603
Queensway Financial Holding Limited 1,367,011 1.6% 1,367,011 0 *
90 Adelaide Street West, Suite 500
Toronto, Ontario M6E3A2 Canada
Banque Franck SA 1,033,932 1.2% 1,033,932 0 *
Faisal Finance SA
Colntrin
84 Avenue Louis-Casal
Geneva, Switzerland 1216
Oaktree Capital Management, LLC(5) 7,753,198 8.9% 5,402,865 2,350,333 2.7%
as investment manager of the
Weyerhouser Company Retirement
Trust Account
50 Hope Street, 22nd Floor
Los Angeles, Ca 90071
Cranshire Capital, L.P. 503,575 * 503,575 0 *
770 Frontage Road, Suite 134
Northfield, IL 60093
LaRoque Trading Group, LLC 2,861,840 3.1% 2,861,840 0 *
440 South LaSalle, Suite 701
Chicago, IL 60605
Keyway Investments, Ltd. 1,671,846 1.8% 1,674,846 0 *
Midland Walwyn Capital, Inc.
BCE Place
181 Bay Street, Suite 500
Toronto, Ontario, Canada M5J2V8
Transamerica Business Credit 506,250 * 506,250 0 *
Corporation
15260 Ventura Blvd., Suite 1240
Sherman Oaks, CA 91403
</TABLE>
8
<PAGE> 13
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial
Period to the Ownership After the
Offering(2) Shares to be offering
---------------------------- Sold in the ----------------------------
Selling Stockholder(1) Shares Percent Offering(3) Shares Percent
- ----------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Queensway Financial Holding Limited
Goldman Sachs & Co. 843,750 1.2% 843,750 0 *
One New York Plaza
New York, NY 10004
Banque Edouard Constant SA 36,600 * 36,600 0 *
Kernco Trust S.A
P.O. Box 6432
2, Rue Jargonant
Geneva, Switzerland 1211
Lakeshore International, Ltd. 94,842 * 94,842 0 *
EBF & Associates
601 Carlson Parkway, Suite 200
Minnetonka, MN 55305
Swartz Investments LLC (6) 70,000 * 70,000 0 *
1080 Holcomb Bridge Road
200 Roswell Summit, Suite 285
Roswell, Georgia 30076
Eric S. Swartz (7) 34,792 * 34,792 0 *
Kendrick Family Partnership, LP (7) 34,792 * 34,792 0 *
P. Bradford Hathorn (7) 3,500 * 3,500 0 *
Gerald David Harris (7) 10,324 * 10,324 0 *
Glenn R. Archer (7) 3,500 * 3,500 0 *
Carlton M. Johnson, Jr. (7) 2,500 * 2,500 0 *
Davis C. Holden (7) 2,000 * 2,000 0 *
Frank G. Mauro (7) 34,792 * 34,792 0 *
H. Nelson Logan (7) 1,000 * 1,000 0 *
Kelley E. Smith (7) 1,000 * 1,000 0 *
James David Mills (7) 1,000 * 1,000 0 *
Dwight B. Bronnum (8) 500 * 500 0 *
8309 Dunwoody Avenue
Atlanta, GA 30350
Robert L. Hopkins (8) 500 * 500 0 *
8309 Dunwoody Avenue
Atlanta, GA 30350
Enigma Investments, Ltd. (8) 5,600 * 5,600 0 *
P.O. Box 1894
Elizabethan Square
George Town
Grand Cayman
</TABLE>
9
<PAGE> 14
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial
Period to the Ownership After the
Offering(2) Shares to be offering
---------------------------- Sold in the ----------------------------
Selling Stockholder(1) Shares Percent Offering(3) Shares Percent
- ----------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Charles B. Krusen (8) 4,200 * 4,200 0 *
465 Park Avenue
New York, NY 10022
TOTAL 45,851,341
</TABLE>
- ----------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of the Company's Common
Stock subject to options and warrants held by that person that are
currently exercisable or become exercisable within 60 days of October 30,
1998 are deemed outstanding. However, such shares are not deemed
outstanding for purposes of computing the percentage ownership of any
other person. This table is based upon information supplied by officers,
directors and principal stockholders. Except as otherwise indicated, the
Company believes that the persons or entities named in the table have sole
voting and investment power with respect to all shares of the Company's
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
(2) The number of shares set forth in the table represents an estimate of the
number of shares to be offered by the selling stockholders. Pursuant to
the Company's agreements with the holders of Series A Preferred Stock and
Series C Preferred Stock, the number of shares of Common Stock registered
by this Registration Statement equals approximately 150% of the shares of
Common Stock that would be issued had the Series A Preferred Stock and
Series C Preferred Stock been converted on October 30, 1998. The actual
number of shares of Common Stock issuable upon conversion of Series A
Preferred Stock and Series C Preferred Stock is indeterminate, is subject
to adjustment and could be materially more than such estimated number
depending on factors that the Company cannot predict at this time,
including the future market price of the Common Stock. The actual number
of shares of Common Stock offered hereby, and included in the Registration
Statement of which this Prospectus is a part, includes such additional
number of shares of Common Stock as may be issued or issuable upon
conversion of the Series A Preferred Stock and Series C Preferred Stock by
reason of the floating rate conversion price mechanism or other adjustment
mechanisms described therein, or by reason of any stock split, stock
dividend or similar transaction involving the Common Stock, in order to
prevent dilution, in accordance with Rule 416 under the Securities Act.
(3) Assumes the sale of all shares of Common Stock offered hereby.
(4) This stockholder is affiliated with, and controlled by, The TCW Group,
Inc. ("TCW"). TCW and its related entities hold beneficial ownership (as
defined), in the aggregate, in 33.5 million shares of the Company's
outstanding Common Stock and Common Stock equivalents (consisting of
shares of Preferred Stock) (the "Equity Securities"), or approximately
37.4% of the Equity Securities. Mr. Masson, a director of the Company, was
a partner of TCW Special Credits and served as a managing director of
Trust Company of the West and TCW Asset Management Group ("TAMCO"), both
wholly-owned subsidiaries of TCW, from 1988 to May 1995. Mr. Smith, a
director of the Company, serves as an officer or authorized representative
of certain entities affiliated with, or related to, TCW. Mr. Smith has
voting and dispositive powers over an aggregate of 33.5 million shares of
the Equity Securities. Mr. Smith disclaims beneficial ownership of such
shares of the Equity Securities. The address of this stockholder is c/o
Oaktree Capital Management, LLC, 550 Hope Street, 22nd Floor, Los Angeles,
California 90071. See also note 6.
(5) Mr. Masson, a director of the Company, has been a principal of Oaktree
Capital Management, LLC ("Oaktree") since May 1995. Oaktree has voting and
dispositive powers over an aggregate of 41.2 million shares of the Equity
Securities including both the TCW holdings and 7.8 million shares of the
Equity
10
<PAGE> 15
Securities held by Oaktree as a fiduciary on behalf of a third party
separate account of which Mr. Masson may be deemed a beneficial owner to
the extent of any indirect pecuniary interest therein. Mr. Masson
disclaims beneficial ownership of such shares of the Equity Securities.
(6) The shares of Common Stock held by this stockholder were issued by the
Company as compensation for services rendered.
(7) The address for such stockholders is c/o Swartz Investment LLC, 1080
Holcomb Bridge Road, 200 Roswell Summit, Suite 285, Roswell, Georgia
30076. These stockholders are employees of, or otherwise affiliated with,
Swartz Investment LLC. All shares of Common Stock held by these
stockholders will be issued upon exercise of certain warrants, which were
issued to such stockholders as compensation for services rendered.
(8) These stockholders, who are not affiliates or employees of Swartz
Investments, LLC, performed services on behalf of Swartz in conjunction
with the sale of the Series A Preferred Stock. All shares of Common Stock
held by these stockholders will be issued upon exercise of certain
warrants, which were issued to such stockholders as compensation for
services rendered.
11
<PAGE> 16
PLAN OF DISTRIBUTION
The selling stockholders may sell their shares of Common Stock in one or
more transactions (which may involve block transactions) on the Bulletin Board
or on such other markets on which the Common Stock may from time to time be
trading, in privately-negotiated transactions, through the writing of options on
the shares of Common Stock, short sales or any combination thereof. They may
sell at market prices at the time of sale, at prices related to the market price
or at negotiated prices. It is possible that a selling stockholder will attempt
to sell shares of Common Stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. Some
or all of the shares of Common Stock offered hereby may not be issued to, or
sold by, the selling stockholders.
Aureal has agreed to indemnify in certain circumstances the selling
stockholders against certain liabilities, including liabilities under the
Securities Act. The selling stockholders have agreed to indemnify Aureal in
certain circumstances against certain liabilities, including liabilities under
the Securities Act.
The selling stockholders and any brokers, dealers or agents, upon
effecting the sale of any of the shares of Common Stock, may be deemed to be
"underwriters" as that term is defined under the Securities Act or the Exchange
Act, or the rules and regulations thereunder. In addition, the selling
stockholders and any other persons participating in the sale or distribution of
the shares of Common Stock will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of Common Stock by the selling
stockholders or any other such person. The foregoing may affect the
marketability of the shares of Common Stock.
We have agreed to use our best efforts to keep the Registration
Statement, of which this Prospectus constitutes a part, effective until the
earlier of (i) the date on which the selling stockholders can sell all of the
shares of Common Stock pursuant to Rule 144 of the Securities Act (without
regard to volume limitations) or (ii) when all of the shares of Common have been
resold pursuant to Rule 144 or an effective registration statement.
LEGAL MATTERS
Gray Cary Ware & Freidenrich LLP will issue an opinion about the
legality of the shares for us.
EXPERTS
Arthur Andersen LLP, independent public accountants, audited our
consolidated financial statements incorporated by reference in this prospectus
and elsewhere in the registration statement. These documents are referenced
herein in reliance upon the authority of Arthur Andersen, as experts in
accounting and auditing in giving the report.
12
<PAGE> 17
================================================================================
No one (including any salesman or broker) is authorized to provide oral
or written information about this offering that is not included in this
prospectus.
AUREAL SEMICONDUCTOR INC.
65,451,586 SHARES OF
COMMON STOCK
----------------------------
PROSPECTUS
----------------------------
November ___, 1998
================================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees.
<TABLE>
<CAPTION>
To be Paid
by the
Registrant
----------
<S> <C>
SEC registration ....................................... $ 4,867
Accounting fees and expenses ........................... 7,500
Legal fees and expenses ................................ 7,500
Miscellaneous expenses ................................. 5,133
-------
Total .................................................. $25,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), the Registrant's Certificate of Incorporation provides that each person
who is or was or who had agreed to become a director or officer of the
Registrant or who had agreed at the request of the Registrant's Board of
Directors or an officer of the Registrant to serve as an employee or agent of
the Registrant or as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified by the Registrant to the full extent permitted by the DGCL or any
other applicable laws. Such Certificate of Incorporation also provides that no
amendment or repeal of such Certificate of Incorporation shall apply to or have
any effect on the right to indemnification permitted or authorized thereunder
for or with respect to claims asserted before or after such amendment or repeal
arising from acts or omissions occurring in whole or in part before the
effective date of such amendment or repeal.
The Registrant's Bylaws provide that the Registrant shall indemnify to
the full extent authorized by law any person made or threatened to be made a
party to an action or a proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate was or
is a director, officer or employee of the Registrant or any predecessor of the
Registrant or serves or served any other enterprise as a director, officer or
employee at the request of the Registrant or an predecessor of the Registrant.
The Registrant's Bylaws also provide that the Registrant may enter into one or
more agreements with any person which provides for indemnification greater or
different than that provided in such Certificate of Incorporation.
The Registrant has entered into indemnification agreements with its
directors and its officers.
The Registrant intends to purchase and maintain insurance on behalf of
any person who is a director or officer against any loss arising from any claim
asserted against him and incurred by him in any such capacity, subject to
certain exclusions.
See also the undertakings set out in response to Item 17 herein.
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
II-1
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ------------------- ---------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization among the Company,
Aureal Acquisition Corporation, a wholly-owned subsidiary
of the Company and Crystal River Engineering, Inc., dated
as of May 7, 1996 (1)
2.2 Second Amended Joint Plan of Reorganization dated
November 10, 1994 (13)
4.1 Common Stock Purchase Agreement by and among the Company
and certain beneficial owners of 5% or more of the
Company's Common Stock, as amended (2)
4.2 Common Stock Purchase Agreement by and among the Company
and certain entities and individuals dated June 10, 1996
(3)
4.3 Common Stock Purchase Agreement by and among the Company
and certain entities and individuals dated August 6, 1997
(4)
4.4 Preferred Stock Regulation D Subscription Agreement (5)
4.5 Certificate of Designation of Series A Preferred Stock of
Aureal Semiconductor Inc. (5)
4.6 Preferred Stock Registration Rights Agreement (5)
4.7 Aureal Semiconductor Inc. Regulation D Subscription
Agreement for Series C Preferred Stock (6)
4.8 Certificate of Designation of Series C Preferred Stock of
Aureal Semiconductor Inc. (6)
4.9 Registration Rights Agreement (Common Stock underlying
Series C Preferred Stock) (6)
4.10 Loan and Security Agreement (Goldman and TBCC Credit
Facility) (7)
4.11 Form of Warrant (Goldman and TBCC Warrants) (7)
4.12 8% Series B Convertible Preferred Stock Purchase
Agreement (7)
4.13 Certificate of Designation of 8% Series B Convertible
Preferred Stock for Aureal Semiconductor Inc. (7)
4.14 Amendment Number 4 to Registration Rights Agreement (7)
10.1 Second Amended and Restated Loan Agreement between TCW
Special Credits and the Company dated August 6, 1997
increasing the loan commitment from $20 million to $31.5
million (8)
10.2 1995 Stock Option Plan (9)
10.3 Form of incentive option agreement and non-statutory
stock option agreement used under 1995 Stock Option Plan
(2)
10.4 1994 Stock Option Plan (13)
</TABLE>
II-2
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ------------------- ---------------------------------------------------------
<S> <C>
10.5 Form of incentive option agreement and non-statutory
stock option agreement used under 1994 Stock Option Plan
(13)
10.6 Industrial Space Sublease with Chemical Waste Management,
Inc. dated September 13, 1995 (2)
10.7 Form of Indemnity Agreement for Directors and Officers
(10)
10.8 1996 Outside Directors Stock Option Plan (11)
10.9 Manufacturing, Purchase and Distribution Agreement
between Diamond Multimedia Systems, Inc. and Aureal dated
July 3, 1998 (12)
5.1* Opinion of Gray Cary Ware & Freidenrich LLP
23.1 Consent of Arthur Andersen, LLP
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1)
24.1* Power of Attorney (see page II-4 of the Registration
Statement)
</TABLE>
- ----------
* Previously filed.
(1) Incorporated by reference to the exhibits filed with Form 8-K dated May
22, 1996.
(2) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 31, 1995.
(3) Incorporated by reference to the exhibits filed with Form S-3
(Registration number 333-3870) filed June 26, 1996.
(4) Incorporated by reference to the exhibits filed with Form S-3 (as amended
by Post-Effective Amendment No. 1, Registration number 333-3870) filed
September 12, 1997.
(5) Incorporated by reference to the exhibits filed with the Company's Form
8-K on March 16, 1998.
(6) Incorporated by reference to the exhibits filed with the Company's Form
8-K on June 15, 1998.
(7) Incorporated by reference to the exhibits filed with Form 8-K dated June
15, 1998.
(8) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended September 28, 1997.
(9) Incorporated by reference to the exhibits filed with the Company's
preliminary proxy on November 5, 1998.
(10) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended September 29, 1996.
(11) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 29, 1996.
(12) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended June 28, 1998.
(13) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 31, 1994.
II-3
<PAGE> 21
ITEM 17. UNDERTAKINGS.
I. The undersigned Registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
1. To include any prospectus required by section 10(a)(3) of
the Securities Act;
2. To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee
"table in the effective registration statement;
3. To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
B. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bonafide offering thereof.
C. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
III. The undersigned Registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
IV. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in The
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
II-4
<PAGE> 22
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
V. The undersigned Registrant hereby undertakes that:
A. For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)or
497(h) under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
B. For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Amendment No. 1 to Registration Statement on Form S-2 to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Fremont, State of California on the 20th day of November, 1998.
AUREAL SEMICONDUCTOR INC.
By: /s/ DAVID J. DOMEIER
-----------------------------------
David J. Domeier, Vice President,
Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Amendment No. 1
to Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
November 20, 1998
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/s/ KENNETH A. KOKINAKAS President, Chief Executive Officer
- ----------------------------------
Kenneth A. Kokinakas
/s/ DAVID J. DOMEIER Vice President, Chief Financial Officer and
- ---------------------------------- Chief Accounting Officer
David J. Domeier
/s/ L. WILLIAM KRAUSE* Director
- ----------------------------------
L. William Krause
/s/ D. RICHARD MASSON* Director
- ----------------------------------
D. Richard Masson
/s/ THOMAS K. SMITH, JR.* Director
- ----------------------------------
Thomas K. Smith, Jr.*
/s/ RICHARD E. CHRISTOPHER* Director
- ----------------------------------
Richard E. Christopher
*By: /s/ DAVID J. DOMEIER
------------------------------
David J. Domeier
(Attorney-in-fact)
</TABLE>
II-6
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ------------------- ---------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization among the Company,
Aureal Acquisition Corporation, a wholly-owned subsidiary
of the Company and Crystal River Engineering, Inc., dated
as of May 7, 1996 (1)
2.2 Second Amended Joint Plan of Reorganization dated
November 10, 1994 (13)
4.1 Common Stock Purchase Agreement by and among the Company
and certain beneficial owners of 5% or more of the
Company's Common Stock, as amended (2)
4.2 Common Stock Purchase Agreement by and among the Company
and certain entities and individuals dated June 10, 1996
(3)
4.3 Common Stock Purchase Agreement by and among the Company
and certain entities and individuals dated August 6, 1997
(4)
4.4 Preferred Stock Regulation D Subscription Agreement (5)
4.5 Certificate of Designation of Series A Preferred Stock of
Aureal Semiconductor Inc. (5)
4.6 Preferred Stock Registration Rights Agreement (5)
4.7 Aureal Semiconductor Inc. Regulation D Subscription
Agreement for Series C Preferred Stock (6)
4.8 Certificate of Designation of Series C Preferred Stock of
Aureal Semiconductor Inc. (6)
4.9 Registration Rights Agreement (Common Stock underlying
Series C Preferred Stock) (6)
4.10 Loan and Security Agreement (Goldman and TBCC Credit
Facility) (7)
4.11 Form of Warrant (Goldman and TBCC Warrants) (7)
4.12 8% Series B Convertible Preferred Stock Purchase
Agreement (7)
4.13 Certificate of Designation of 8% Series B Convertible
Preferred Stock for Aureal Semiconductor Inc. (7)
4.14 Amendment Number 4 to Registration Rights Agreement (7)
10.1 Second Amended and Restated Loan Agreement between TCW
Special Credits and the Company dated August 6, 1997
increasing the loan commitment from $20 million to $31.5
million (8)
10.2 1995 Stock Option Plan (9)
10.3 Form of incentive option agreement and non-statutory
stock option agreement used under 1995 Stock Option Plan
(2)
</TABLE>
II-7
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ------------------- ---------------------------------------------------------
<S> <C>
10.4 1994 Stock Option Plan (13)
10.5 Form of incentive option agreement and non-statutory
stock option agreement used under 1994 Stock Option Plan
(13)
10.6 Industrial Space Sublease with Chemical Waste Management,
Inc. dated September 13, 1995 (2)
10.7 Form of Indemnity Agreement for Directors and Officers
(10)
10.8 1996 Outside Directors Stock Option Plan (11)
10.9 Manufacturing, Purchase and Distribution Agreement
between Diamond Multimedia Systems, Inc. and Aureal dated
July 3, 1998 (12)
5.1* Opinion of Gray Cary Ware & Freidenrich LLP
23.1 Consent of Arthur Andersen, LLP
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1)
24.1* Power of Attorney (see page II-4 of the Registration
Statement)
</TABLE>
- ----------
* Previously filed.
(1) Incorporated by reference to the exhibits filed with Form 8-K dated May
22, 1996.
(2) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 31, 1995.
(3) Incorporated by reference to the exhibits filed with Form S-3
(Registration number 333-3870) filed June 26, 1996.
(4) Incorporated by reference to the exhibits filed with Form S-3 (as amended
by Post-Effective Amendment No. 1, Registration number 333-3870) filed
September 12, 1997.
(5) Incorporated by reference to the exhibits filed with the Company's Form
8-K on March 16, 1998.
(6) Incorporated by reference to the exhibits filed with the Company's Form
8-K on June 15, 1998.
(7) Incorporated by reference to the exhibits filed with Form 8-K dated June
15, 1998.
(8) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended September 28, 1997.
(9) Incorporated by reference to the exhibits filed with the Company's
preliminary proxy on November 5, 1998.
(10) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended September 29, 1996.
(11) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 29, 1996.
(12) Incorporated by reference to the exhibits filed with Form 10-Q for the
quarter ended June 28, 1998.
(13) Incorporated by reference to the exhibits filed with Form 10-K for the
year ended December 31, 1994.
II-8
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 12, 1998
included in Aureal Semiconductor Inc.'s Form 10-K/A-2 for the year end December
28, 1997 and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
-------------------------------
ARTHUR ANDERSEN LLP
San Jose, California
November 20, 1998
