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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JULY 8, 1998
AUREAL SEMICONDUCTOR INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 0-20684 94-3117385
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
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4245 TECHNOLOGY DRIVE
FREMONT, CA 94538
(510) 252-4245
(Address and phone number
of Registrant's principal executive offices)
This report consists of 3 pages. The exhibit index is located on page 3.
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ITEM 5. OTHER EVENTS
On June 26, 1998, Aureal Semiconductor Inc. (the "Company")
completed a private placement transaction for the sale of $1.0 million of the
Company's three-year 8% Series C Convertible Preferred Stock, par value $0.001
per share (the "Preferred Stock"). The sale of the Preferred Stock was not
registered under the Securities Act of 1933, as amended (the "1933 Act") nor
will the Common Stock issuable upon conversion of the Preferred Stock be
registered under the 1933 Act, in reliance upon the exemptions provided by
Sections 4(2) of the 1933 Act and Regulation D promulgated thereunder as a
transaction by an issuer not involving a public offering. The purchasers of the
Preferred Stock were all accredited investors, as defined in Rule 501 of
Regulation D.
This sale of $1.0 million of the Preferred Stock follows the sale on
June 5, 1998 of $5.0 million of the Preferred Stock as originally disclosed on
Form 8-K dated June 12, 1998. The June 26, 1998 transaction is anticipated to be
the final sale ("Last Closing") of the Preferred Stock.
The Preferred Stock is convertible at the lesser of the fixed
conversion price ("Fixed Conversion Price") of $2.50 face value of the Preferred
Stock per share of the Company's Common Stock, or at varying discounts from the
then-current market price of the Common Stock if the Common Stock is trading at
prices below $2.50 per share over certain periods of time ("Variable Conversion
Price"). Conversion of the Preferred Stock can commence four months after the
Last Closing of the Preferred Stock. The holders of the Preferred Stock may
convert, at the Variable Conversion Price, at the rate of 15% of the originally
issued Preferred Stock per month. All of the Preferred Stock may be converted
into Common Stock at the Variable Conversion Price as of June 1999. No such
limitations apply to conversions of the Preferred Stock at the Fixed Conversion
Price.
Accretion at the 8% rate on the outstanding Preferred Stock is
terminated if at any time the Common Stock trades at a price in excess of 150%
of the Fixed Conversion Price for twenty consecutive trading days. At such time
as accretion is terminated, if ever, all restrictions related to the conversion
of the Preferred Stock are eliminated. If not converted earlier, all outstanding
Preferred Stock will convert into Common Stock three years from issue date.
The net proceeds from the sale of the Preferred Stock were used to pay
down the outstanding balance under the Company's line of credit.
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ITEM 7. EXHIBITS
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Exhibit No. Description
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4.7 (1) Aureal Semiconductor Inc. Regulation D Subscription Agreement for Series C
Preferred Stock
4.8 (1) Certificate of Designation of Series C Preferred Stock of Aureal Semiconductor
Inc.
4.9 (1) Registration Rights Agreement (Common Stock underlying Series C Preferred
Stock)
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(1) Incorporated by reference to the exhibits filed with Form 8-K dated
June 12, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 8, 1998
AUREAL SEMICONDUCTOR INC.
/s/ David J. Domeier
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David J. Domeier
Vice President, Finance and
Chief Financial Officer
