<PAGE>
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, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
58445Q 10 3
(CUSIP Number)
Michael E. Cahill, Esq. Kenneth Liang
Managing Director & Managing Director and
General Counsel General Counsel
The TCW Group, Inc. Oaktree Capital Management, LLC
865 South Figueroa Street, 550 South Hope Street,
Ste. 1800 22nd Floor
Los Angeles, California 90017 Los Angeles, California 90071
(213) 244-0000 (213) 614-0900
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
JUNE 5, 1998 (1)
----------------------
(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-l(f) or
240.13d-1(g), check the following box./ /
NOTE: schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7
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 disclosures provided in a prior cover page.
- - -------------------
(1) Also reflects transactions on March 8, 1996, June 10, 1996,
February 20, 1997, August 6, 1997, September 1, 1997 and
December 1, 1997, described in Item 3 herein.
<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).
-2-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 3 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
The TCW Group, Inc.
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 33,033,648
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
33,033,648
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,033,648
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.8%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
HC, CO
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-17
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 4 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Robert A. Day
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 33,033,648
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
33,033,648
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,033,648
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.8%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN, HC
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-4-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 5 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Trust Company of the West
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 17,714,716
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
17,714,716
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,714,716
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.4%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-5-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 6 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TCW Asset Management Company
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 15,318,933
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
15,318,933
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,318,933
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES* / /
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.3%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO, IA
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-6-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 7 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TCW Special Credits
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 15,318,933
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
15,318,933
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,318,933
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.3%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
PN, IA
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-7-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 8 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TCW Special Credits Fund IIIb
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
OO.WC
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 13,334,074
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
13,334,074
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,334,074
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.9%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
PN
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-8-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 9 of 22 Pages
----------- --- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TCW Special Credits Trust
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
OO.WC
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 7,234,059
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
7,234,059
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,234,059
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.6%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-9-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 10 of 22 Pages
----------- ---- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TCW Special Credits Trust IIIb
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
OO.WC
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 10,480,657
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
10,480,657
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,480,657
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.8%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-10-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 11 of 22 Pages
----------- ---- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Weyerhaeuser Company Master Retirement Trust (Managed Accout)
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 2,330,333
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
2,330,333
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,330,333
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
EP
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-11-
<PAGE>
SCHEDULE 13D
CUSIP No. 58445Q 10 3 Page 12 of 22 Pages
----------- ---- ---
- - -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Oaktree Capital Management, LLC
- - -------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- - -------------------------------------------------------------------------------
(3) SEC USE ONLY
- - -------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not applicable.
- - -------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
- - -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- - -------------------------------------------------------------------------------
NUMBER OF SHARES (7) Sole Voting Power
BY EACH REPORTING 2,330,333
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
2,330,333
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- - -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,330,333
- - -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
- - -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
- - -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IA, OO
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-12-
<PAGE>
ITEM 1. SECURITY AND ISSUER
This Statement relates to the Common Stock, par value $0.001 per share
("Common Stock"), of Aureal Semiconductor Inc. (f/k/a Media Vision
Technology, Inc.), a Delaware corporation (the "Issuer"). The address of the
principal executive office of the Issuer is 4245 Technology Drive, Fremont,
California 94538.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed on behalf of
(1) The TCW Group, Inc., a Nevada corporation ("TCWG");
(2) Robert Day, an individual;
(3) Trust Company of the West, a California corporation and wholly-owned
subsidiary of TCWG ("TCW");
(4) TCW Asset Management Company, a California corporation and
wholly-owned subsidiary of TCWG ("TAMCO");
(5) TCW Special Credits, a California general partnership of which TAMCO
is the managing general partner ("Special Credits");
(6) TCW Special Credits Fund IIIb, a California limited partnership,
(hereinafter referred to as the "Special Credits Limited Partnership")
of which Special Credits is the general partner;
(7) Two California collective investment trusts, TCW Special Credits Trust
("Trust I") and TCW Special Credits Trust IIIb ("Trust
IIIb")(hereinafter referred to as the "Special Credits Trusts") of
which TCW is the trustee; and
(8) A managed account of which Oaktree is investment manager on behalf of
its client, the Weyerhaeuser Company Master Retirement Trust (the
"Oaktree Account").
(9) Oaktree Capital Management, LLC, a California limited liability
company ("Oaktree");
Special Credits, Trust I, Trust IIIb and the Special Credits Limited
Partnership are hereinafter collectively referred to as the "Special Credits
Entities." TCWG, TCW, TAMCO, and the Special Credits Entities are hereinafter
collectively referred to as the "TCW Related Entities." Special Credits is
also the investment manager of a third party account which invests in similar
securities as the Special Credits Entities (the "Special Credits Account").
Oaktree is the investment manager of the Oaktree Account, which invests in
financially distressed entities. The principal business of Oaktree is
providing investment advice and management services to institutional and
individual investors. The address of the principal business and principal
office for Oaktree is 550 South Hope Street, 22nd floor, Los Angeles,
California 90071.
Mr. Day acts as Chairman of the Board and Chief Executive Officer of TCWG.
Additionally, Mr. Day may be deemed to control TCWG, although he disclaims
control and disclaims beneficial ownership of any securities owned by the TCW
Related Entities.
TCWG is a holding company of entities involved in the principal business of
providing investment advice and management services. TCW is a trust company
which provides investment management services, including to the Special
Credits Trusts. TAMCO is an investment adviser and provides investment
advice and management services to institutional and individual investors.
Special Credits provides investment advice and management services to the
Special Credits Limited Partnership and the Special Credits Account. The
Special Credits Limited Partnership is an investment partnership which
invests in financially distressed entities. The Special Credits Trusts are
collective investment trusts which invest in financially distressed entities.
The address of the principal business and principal office for the TCW
Related Entities is 865 South Figueroa Street, Suite 1800, Los Angeles,
California 90017.
-13-
<PAGE>
(a)-(c) & (f)
(i) The executive officers of TCWG are listed below. The principal business
address for each executive officer is 865 South Figueroa Street, Suite 1800, Los
Angeles, California 90017. Each executive officer is a citizen of the United
States of America unless otherwise specified below:
Executive Officers
- - ------------------
Robert A. Day Chairman of the Board & Chief Executive Officer
Ernest O. Ellison Vice Chairman of the Board
Marc I. Stern President
Alvin R. Albe, Jr. Executive Vice President, Finance & Administration
Thomas E. Larkin, Jr. Executive Vice President & Group Managing Director
Michael E. Cahill Managing Director, General Counsel & Secretary
William C. Sonneborn Managing Director, Chief Financial Officer & Assistant
Secretary
Schedule I attached hereto and incorporated herein sets forth with respect to
each director of TCWG his name, residence or business address, citizenship,
present principal occupation or employment and the name, principal business
and address of any corporation or other organization in which such employment
is conducted.
(ii) The executive officers and directors of TCW are listed below. The
principal business address for each executive officer and director is 865
South Figueroa Street, Suite 1800, Los Angeles, California 90017. Each
executive officer is a citizen of the United States of America unless
otherwise specified below:
Executive Officers & Directors
- - ------------------------------
Robert A. Day Chairman of the Board & Chief Executive Officer
Ernest O. Ellison Director & Vice Chairman
Thomas E. Larkin, Jr. Director & President
Alvin R. Albe, Jr. Director & Executive Vice President, Finance &
Administration
Marc I. Stern Director, Executive Vice President,
Group Managing Director
Michael E. Cahill Managing Director, General Counsel & Secretary
William C. Sonneborn Managing Director, Chief Financial Officer &
Assistant Secretary
(iii) The executive officers and directors of TAMCO are listed below. The
principal business address for each executive officer, director and portfolio
manager is 865 South Figueroa Street, Suite 1800, Los Angeles, California,
90017. Each executive officer and director is a citizen of the United States of
America unless otherwise specified below:
Executive Officers & Directors
- - ------------------------------
Robert A. Day Chairman of the Board & Chief Executive Officer
Thomas E. Larkin, Jr. Director & Vice Chairman of the Board
Marc I. Stern Director & Vice Chairman of the Board
Alvin R. Albe, Jr. Director, Executive Vice President, Finance &
Administration
Michael E. Cahill Director, Managing Director, General Counsel &
Secretary
William C. Sonneborn Managing Director, Chief Financial Officer & Assistant
Secretary
Mark L. Attanasio Director, Group Managing Director & Chief Investment
Officer - Below Investment Grade Fixed Income
Philip A. Barach Director, Group Managing Director & Chief Investment
Officer - Investment Grade Fixed Income
Javier Baz Director, Managing Director & Chief Investment
Officer - International
Robert D. Beyer Director & Group Managing Director
Nicola F. Galluccio Director & Managing Director
Arthur R. Carlson Director & Managing Director
Gerard B. Finneran Director & Managing Director
Douglas S. Foreman Director, Group Managing Director &
Chief Investment Officer - U.S. Equities
(iv) The following sets forth with respect to each general partner of Special
Credits his name, residence or business address, present principal occupation or
employment and the name, principal business and address of any corporation or
other organization
-14-
<PAGE>
in which such employment is conducted. Each general partner who is a natural
person is a citizen of the United States of America unless otherwise
specified below.
TAMCO is the Managing General Partner. See information in paragraph (iii)
above.
Bruce A. Karsh
President and Principal
Oaktree Capital Management, LLC
550 South Hope Street
22nd Floor
Los Angeles, California 90071
Howard S. Marks
Chairman and Principal
Oaktree Capital Management, LLC
550 South Hope Street
22nd Floor
Los Angeles, California 90071
Sheldon M. Stone
Principal
Oaktree Capital Management, LLC
550 South Hope Street
22nd Floor
Los Angeles, California 90071
David Richard Masson
Principal
Oaktree Capital Management, LLC
550 South Hope Street
22nd Floor
Los Angeles, California 90071
(v) Special Credits is the sole general partner of the Special Credits
Limited Partnership. See information in paragraph (iv) above regarding Special
Credits and its general partners.
(vi) The portfolio managers of the Special Credits Limited Partnership and
the Special Credits Account are listed below. The principal address for each
Portfolio Manager of the Fund is 550 S. Hope Street, Los Angeles, California
90071. Each individual listed below is a citizen of the United States of
America.
Portfolio Managers
- - ------------------
Bruce A. Karsh
David Richard Masson
(vii) Oaktree is the investment manager of the Oaktree Account. See
information in paragraph (viii) below regarding Oaktree and its general
partners.
(viii) The members and executive officers of Oaktree and the investment
manager of the Oaktree Account are listed below. The principal address for
each member and executive officer of Oaktree is 550 South Hope Street, Los
Angeles, California 90071. Each individual listed below is a citizen of the
United States of America.
Executive Officers & Members
- - ----------------------------
Bruce A. Karsh President and Principal
Howard S. Marks Chairman and Principal
Sheldon M. Stone Principal
David Richard Masson Principal
-15-
<PAGE>
Larry W. Keele Principal
Stephen A. Kaplan Principal
Russel S. Barnard Principal
David Kirchheimer Managing Director and Chief Financial and
Administrative Officer
Kenneth Liang Managing Director and General Counsel
Portfolio Managers
- - ------------------
Bruce A. Karsh President and Principal
David Richard Masson Principal
(d)-(e) During the last five years, neither TCWG, TCW, TAMCO, the Special
Credits Entities, Oaktree nor, to the best of their knowledge, any of their
respective executive officers, directors and general partners (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); or (ii) has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceedings was or is subject to 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.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Special Credits Account, Trust I, Trust IIIb and the Special Credits
Limited Partnership agreed pursuant to a 8% Series B Convertible Preferred
Stock Purchase Agreement dated June 5, 1998, among the Issuer, B III Capital
Partners, L.P.,Special Credits (as agent and on behalf of the Special Credits
Account), Special Credits Limited Partnership, Trust I and Trust IIIb to
acquire, respectively, 2,025, 7,087, 10,800 and 13,838 shares of the Issuer's
8% Series B Convertible Preferred Stock ("Preferred Stock") in consideration
of cancellation of, respectively, $1,620,000, $5,670,000, $8,640,000, and
$11,070,000 of indebtedness owed to such entities pursuant to the Second
Amended and Restated Loan Agreement dated August 7, 1997, among the Issuer,
and Special Credits, as agent and on behalf of the Special Credits Account,
Trust I, Trust IIIb and the Special Credits Limited Partnership. Holders of
shares of Preferred Stock have the right to convert such shares at any time
according to the terms of the Issuer's Certificate of Designation of 8%
Series B Convertible Preferred Stock. Accordingly, at the currently effective
conversion price, the Special Credits Account, Trust I, Trust IIIB and the
Special Credits Limited Partnership have the right to acquire, 810,000,
2,834,800, 4,320,000, and 5,535,200 shares of Common Stock pursuant to the
conversion feature of the shares of Preferred Stock held by such entities.
The Special Credits Account, Trust 1, Trust IIIb and the Special Credits
Limited Partnership on December 1, 1997 received, respectively, an additional
5,685, 19,898, 30,320, and 38,848 shares of the Issuer's Common Stock in
connection with the Issuer's bankruptcy restructuring pursuant to a
prepackaged plan of reorganization which was declared effective on December
31, 1995 (the "Plan of Reorganization").
The Special Credits Account, Trust I, Trust IIIb and the Special Credits
Limited Partnership on September 1, 1997 received, respectively, an
additional 223, 781, 1,191, and 1,526 shares of the Issuer's Common Stock in
connection with the Issuer's Plan of Reorganization.
On August 6, 1997, the Oaktree Account, the Special Credits Account, Trust I,
Trust IIIb and the Special Credits Limited Partnership purchased,
respectively, 500,000, 30,000, 105,000, 160,000, and 205,000 units, each
consisting of one share of the Common Stock and an immediately exercisable
warrant to purchase one-half a share of Common Stock (the "Units"). The
purchase price for the Units was $2.00 per Unit. The Units were acquired
pursuant to that certain Unit Purchase Agreement dated August 6, 1997, among
the Issuer, IT Investment Management, B III Capital Partners, L.P., Pequod
Investments L.P., Oaktree, as investment manager on behalf of the Oaktree
Account, and TCW Special Credits, as agent and on behalf of the Special
Credits Limited Partnership, the Special Credits Trusts and the Special
Credits Account. The Oaktree Account, the Special Credits Account, Trust I,
Trust IIIb and the Special Credits Limited Partnership paid, respectively,
$1,000,000, $60,000, $210,000, $320,000, and $410,000 from the working
capital of such entities to acquire such Units.
In addition, on August 6, 1997, the Special Credits Account, Trust I, Trust
IIIb and the Special Credits Limited Partnership acquired, respectively (i)
120,000, 420,000, 640,000, and 820,000 warrants which became exercisable
March 31, 1998 for one
-16-
<PAGE>
share of Common Stock per warrant (the "Tranche A Warrants"), and (ii)
42,000, 147,000, 224,000, and 287,000 warrants which were immediately
exercisable for one share of Common Stock per warrant (the "Tranche B
Warrants", and, together with the Tranche A Warrants and the warrant portion
of the Units, the "Warrants"). The Tranche A Warrants and the Tranche B
Warrants were received as consideration for the renewal and extension of
credit pursuant to that certain Second Amended and Restated Loan Agreement
dated August 6, 1997, between the Issuer and Special Credits, as agent and on
behalf of the Special Credits Account, Trust I, Trust IIIb and the Special
Credits Limited Partnership.
The Special Credits Account Trust I, Trust IIIb and the Special Credits
Limited Partnership acquired 35,604, 124,615, 189,890 and 243,297 shares,
respectively, of the Issuer's Common Stock on February 20, 1997 pursuant to
the Stipulation Regarding Letter of Credit Claim and Toyota-Tsusho Claim
filed with the United States Bankruptcy Court for the Northern District of
California (the "Bankruptcy Court") on February 20, 1997 by and among Media
Vision Technology Inc. ("Debtor"), the Official Unsecured Creditors'
Committee and Special Credits, as Agent and Nominee for the Special Credits
Trusts, the Special Credits Limited Partnership and the Special Credits
Account (the "Stipulation") which was deemed effective on March 20, 1995.
Pursuant to a transfer of claim, Special Credits was the holder of the
secured Letter of Credit Claim (the "Letter of Credit Claim"), as defined in
Debtor's Second Amended Joint Plan of Reorganization (the "Plan"). Pursuant
to terms of the Stipulation, the Letter of Credit Claim was allowed as a
secured claim under the Plan in the total amount of $2,300,000 and the
Special Credits Entities and the Special Credits Account received 575,000
shares of New Common Stock, as defined in the Plan, based on a price of $4.00
per share. Due to the proposed issuance of new Common Stock pursuant to the
Stipulation and Plan, the Special Credits Entities (including the Special
Credits Account) increased their ownership percentage in the Issuer's Common
Stock and, as a result, the number of shares of the Issuer's new Common Stock
actually issued pursuant to the Stipulation, as evidenced by the stock
certificates dated May 28, 1997, increased to a total of 593,406 shares under
the terms of the Plan of which the Special Credits Account, Trust I, Trust
IIIb and the Special Credits Limited Partnership acquired 35,604, 124,615,
189,890 and 243,297 shares, respectively.
The Oaktree Account, the Special Credits Account, Trust I, Trust IIIb and the
Special Credits Limited Partnership acquired 1,580,333, 100,085, 350,300,
533,800 and 684,000 shares, respectively, of the Issuer's Common Stock on
June 10, 1996 pursuant to the Common Stock Purchase Agreement dated as of
February 21, 1996 (as amended) by and among the Issuer, Special Credits, as
agent and on behalf of the Special Credits Partnership, Special Credits
Account and Special Credits Trusts, and certain other purchasers, including
Oaktree as the manager of the Oaktree Account. Approximately $2,133,450,
$135,115, $472,905, $720,630 and $923,400 of funds were used respectively by
the Special Credits Account, Trust I, Trust IIIb and the Oaktree Account,
Special Credits Limited Partnership for the acquisition of such shares of the
Issuer's Common Stock which was obtained from the working capital of such
accounts, trusts and limited partnership.
The Special Credits Account, Trust I, Trust IIIb and the Special Credits
Limited Partnership acquired 150,000, 525,000, 800,000, and 1,025,000 shares,
respectively, of the Issuer's Common Stock on March 8, 1996 pursuant to the
Common Stock Purchase Agreement dated as of February 21, 1996 (as amended) by
and among the Issuer, Special Credits, as agent and on behalf of the Special
Credits Partnership, Special Credits Account and Special Credits Trusts, and
certain other purchasers. Approximately $150,000, $525,000, $800,000, and
$1,025,000 of funds were used respectively by the Special Credits Account,
Trust I, Trust IIIb and the Special Credits Limited Partnership for the
acquisition of such shares of the Issuer's Common Stock which was obtained
from the working capital of such accounts, trusts and limited partnership.
ITEM 4. PURPOSE OF TRANSACTION
The shares of the Issuer's Common Stock described herein were acquired for
investment purposes. Based on continuing evaluation of the Issuer's
businesses and prospects, alternative investment opportunities and all other
factors deemed relevant, additional shares of the Issuer's Common Stock may
be acquired in the open market or in privately negotiated transactions, or
some or all of the shares of the Issuer's Common Stock may be sold. Except
as set forth above and in Item 3 herein, Special Credits, the other TCW
Related Entities and Oaktree have made no proposals and have entered into no
agreements other than the Registration Rights Agreement by and among the
Issuer and Special Credits dated as of December 30, 1994, and amended as of
February 21, 1996, June 10, 1996, August 8, 1997 and June 5, 1998 described
below in Item 6 which would be related to or would result in any of the
matters described in Items 4(a)-(j) of Schedule 13D; however, as part of
their ongoing review of investment alternatives, Special Credits, the other
TCW Related Entities and Oaktree have not excluded the possibility of
considering such matters in the future or formulating a plan with respect to
such matters subject to applicable law, and, from time to time, Special
Credits, such other TCW Related Entities, or Oaktree may hold discussions
with or make formal proposals to management or the Board of Directors of the
Issuer, other stockholders of the Issuer or other third parties regarding
such matters.
-17-
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date of this Schedule 13D, Special Credits Limited Partnership
beneficially owns 13,334,074 shares of Common Stock of the Issuer (approximately
26.9% of the Issuer's shares of Common Stock), 6,589,374 of which are issued and
outstanding and 6,744,700 of which the Special Credits Limited Partnership has
the right to acquire within 60 days following the date hereof pursuant to the
exercise of the Warrants and the conversion of the Preferred Stock; and Special
Credits, as the general partner of the Special Credits Limited Partnership, and
as the investment manager of the Special Credits Account may be deemed to
beneficially own 15,318,933 (13,334,074 shares of the Issuer's Common Stock in
the Special Credits Limited Partnership plus 1,984,859 shares of the Issuer's
Common Stock in the Special Credits Account) shares of Common Stock of the
Issuer (approximately 30.3% of the Issuer's shares of Common Stock), 7,587,233
of which are issued and outstanding and 7,731,700 of which Special Credits has
the right to acquire within 60 days following the date hereof pursuant to the
exercise of the Warrants and the conversion of the Preferred Stock.
As of the date of this Schedule 13D, Trust I beneficially owns 7,234,059
shares of Common Stock of the Issuer (approximately 15.6% of the Issuer's
shares of Common Stock), 3,779,759 of which are issued and outstanding and
3,454,300 of which Trust I has the right to acquire within 60 days following
the date hereof pursuant to the exercise of the Warrants and the conversion
of the Preferred Stock; and Trust IIIb beneficially owns 10,480,657 shares of
Common Stock of the Issuer (approximately 21.8% of the Issuer's shares of
Common Stock), 5,216,657 of which are issued and outstanding and 5,264,000 of
which Trust IIIb has the right to acquire within 60 days following the date
hereof pursuant to the exercise of the Warrants and the conversion of the
Preferred Stock. TCW, as the trustee of the Special Credits Trusts may be
deemed to beneficially own 17,714,716 shares of Common Stock of the Issuer
(approximately 34.4% of the Issuer's shares of Common Stock), 8,996,416 of
which are issued and outstanding and 8,718,300 of which TCW has the right to
acquire within 60 days following the date hereof pursuant to the exercise of
the Warrants and the conversion of the Preferred Stock.
TAMCO, as the managing partner of Special Credits may be deemed to
beneficially own the shares of the Issuer's Common Stock held by the Special
Credits Entities and the Special Credits Account as set forth above, all of
which constitute 15,318,933 shares of Common Stock of the Issuer
(approximately 30.3% of the Issuer's shares of Common Stock).
TCWG, as the parent corporation of TCW and TAMCO (as set forth above), may be
deemed to beneficially own shares of the Issuer's Common Stock deemed to be
owned by the other TCW Related Entities, all of which constitutes 33,033,648
shares of the Issuer's Common Stock (approximately 55.8% of the Issuer's
shares of Common Stock). TCWG, TCW and TAMCO each disclaims beneficial
ownership of the shares of the Issuer's Common Stock reported herein and the
filing of this Statement shall not be construed as an admission that any such
entity is the beneficial owner of any securities covered by this Statement.
Mr. Day may be deemed to beneficially own shares of the Issuer's Common Stock
deemed to be owned by the other TCW Related Entities (as set forth above),
all of which constitute 33,033,648 shares of the Issuer's Common Stock
(approximately 55.8% of the Issuer's shares of Common Stock). Mr. Day
disclaims beneficial ownership of the Issuer's Common Stock reported herein
and the filing of this Statement shall not be construed as an admission that
Mr. Day is the beneficial owner of any securities covered by this Statement.
Oaktree, as investment manager of the Oaktree Account, may be deemed to be
beneficially own 2,330,333 shares of Common Stock of the Issuer
(approximately 5.4% of the Issuer's shares of Common Stock), 2,080,333 of
which are issued and outstanding and 250,000 of which Oaktree has the right
to acquire within 60 days following the date hereof pursuant to the exercise
of the Warrants.
The Oaktree Account beneficially owns 2,330,333 shares of Common Stock of the
Issuer (approximately 5.4% of the Issuer's shares of Common Stock), 2,080,333
of which are issued and outstanding and 250,000 of which the Oaktree Account
has the right to acquire within 60 days following the date hereof pursuant to
the exercise of the Warrants.
(b) Special Credits, as the sole general partner of the Special Credits
Limited Partnership, has discretionary authority and control over all of the
assets of the Special Credits Limited Partnership pursuant to the limited
partnership agreement for such limited partnership including the power to
vote and dispose of the Issuer's Common Stock held by the Special Credits
Limited Partnership. In addition, Special Credits, as the investment manager
of the Special Credits Account has the discretionary authority and control
over all of the assets of such account pursuant to the investment management
agreement relating to such account including the power to vote and dispose of
the Issuer's Common Stock held in the name of the Special Credits Account.
Therefore, Special Credits has the power to vote and dispose of 15,318,933
shares of the Issuer's Common Stock.
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<PAGE>
TAMCO, as the managing general partner of Special Credits also has the power
to vote and dispose the shares of Issuer's Common Stock held by Special
Credits referenced above. Therefore, TAMCO has the power to vote and dispose
of 15,318,933 shares of the Issuer's Common Stock.
TCW, as the trustee of the Special Credits Trusts, has discretionary
authority and control over all the assets of the Special Credits Trusts
pursuant to the trust agreement for such trust including the power to vote
and dispose of the Issuer's Common Stock held by the Special Credits Trusts.
Therefore, TCW has the power to vote and dispose of 17,714,716 shares of the
Issuer's Common Stock.
TCWG, as the parent of TCW and TAMCO, may be deemed to have the power to vote
and dispose of the shares of the Issuer's Common Stock that the other TCW
Related Entities have power to vote and dispose, all of which constitutes
33,033,648 shares of the Issuer's Common Stock.
Oaktree, as the investment manager of the Oaktree Account, has discretionary
authority and control over all of the assets of such account pursuant to the
investment management agreement relating to such account, including the power
to vote and dispose of the Issuer's Common Stock held in the name of the
Oaktree Account. Therefore, Oaktree has the power to vote and dispose of
2,330,033 shares of the Issuer's Common Stock.
(c) Except for the purchases by the Special Credits Account, the Special
Credits Trusts and the Special Credits Partnership described herein, none of
the TCW Related Entities, and to the best of their knowledge, none of their
respective executive officers, directors, or general partners has effected
transactions involving the issuer's Common Stock during the last 60 days.
Neither Oaktree, nor, to the best of its knowledge, any of its executive
officers or members, have effected transactions involving the Issuer's Common
Stock during the last 60 days.
(d) None
(e) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Special Credits, as general partner of the Special Credits Limited
Partnership, receives a fee for managing all the assets of the Special
Credits Limited Partnership. In addition, Special Credits, as investment
manager of the Special Credits Account, receives a management fee for
managing the assets of the Special Credits Account. The Special Credits
Limited Partnership and the Special Credits Account have similar investment
strategies of investing in financially distressed entities; however, the
implementation of these strategies may differ from partnership to account and
account to account.
TCW, as trustee of the Special Credits Trusts, receives a management fee for
managing all the assets of the Special Credits Trusts. The Special Credits
Trusts each have an investment strategy similar to the Special Credits
Limited Partnership and Special Credits Account in investing in financially
distressed entities. However, the implementation of this strategy may differ
from entity to entity and account to account.
Oaktree, as investment manager of the Oaktree Account, receives a management
fee for managing the assets of the Oaktree Account. The Oaktree Account has
an investment strategy of investing in financially distressed entities. The
implementation of that strategy may differ from the implementation of similar
strategies by the Special Credits Entities and the Special Credits Account.
Except to the extent the securities referred to in this Statement constitute
assets of the Special Credits Entities, the Special Credits Account and the
Oaktree Account and except as provided in the Registration Rights Agreement
among the Issuer and Special Credits, as agent and on behalf of the Special
Credits Partnership, Special Credits Account and Special Credits Trusts, by
TAMCO, its managing general partner dated as of December 30, 1994 and amended
by and among the (i) Issuer, (ii) Special Credits, as agent and on behalf of
the Special Credits Partnership, Special Credits Account and Special Credits
Trusts, by TAMCO, its managing general partner, (iii) The Copernicus Fund,
L.P. by DDJ Capital Management, LLC, its general partner and (iv) The Galileo
Fund, L.P. by DDJ Capital Management, LLC, its general partner as of February
21, 1996 and as further amended June 10, 1996, August 6, 1997 and June 5,
1998 providing that the Special Credits Entities, the Special Credits Account
and the Oaktree Account have demand registration rights, "piggy-back"
registration rights and shelf registration rights with respect to all of the
shares of the Issuer's Common Stock currently held by such entities; the
Common Stock Purchase Agreement
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<PAGE>
dated as of February 21, 1996 (as amended) as more fully described in Item 3
above; the Unit Purchase Agreement dated August 6, 1997 as more fully
described in Item 3 above and the 8% Series B Convertible Preferred Stock
Purchase Agreement dated June 5, 1998 as more fully described in Item 3
above, there are no contracts, understandings or relationships (legal or
otherwise) among or between any member of the TCW Related Entities, Oaktree,
or, to the best of their knowledge, their respective executive officers,
directors or general partners, or between or among any of such persons and
with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following are filed herewith as Exhibits to this Schedule 13D:
Exhibit 1- Common Stock Purchase Agreement dated as of February 21, 1996 by
and among Special Credits, Appaloosa Management L.P. and the
Issuer (as filed as Exhibit 1 to the Amendment No. 1 to Schedule
13D filed on March 22, 1996 and incorporated herein by
reference).
Exhibit 2- Registration Rights Agreement by and among the Issuer and Special
Credits dated as of December 30, 1994 and as amended by and among
the Issuer, Special Credits, The Copernicus Fund, and The Galileo
Fund dated as of February 21, 1996 (as filed as 1 to Schedule 13D
filed on March 22, 1996 and incorporated herein by reference).
Exhibit 3- Amendment Number One to Common Stock Purchase Agreement dated as
of March 8, 1996 by and among Special Credits, The Copernicus
Fund, The Galileo Fund and the Issuer (as filed as Exhibit 3 to
the Amendment No. 1 to Schedule 13D filed on March 22, 1996 and
incorporated herein by reference).
Exhibit 4 - Amendment Number Two to Common Stock Purchase Agreement dated
June 10, 1996 by and among the (i) Issuer, (ii) Special Credits
(iii) Appaloosa Management L.P. (iv) the Palomino Fund Ltd., (v)
the Pinto Investment LLC by Appaloosa Management L.P., (vi)
Seneca Capital, (vii) IT Technologies Investment, (viii) Cerberus
Partners, L.P., (ix) Pequod Investments, L.P., (x) Cerberus
International, (xi) Ultra Cerberus, Ltd, (xii) the Copernicus
Fund, L.P., (xiii) the Galileo Fund, (xiv) Chestnut Investors
III, (xv) Heinz H. Steinmann, (xvi) Leslie L. Alexander, and
(xvii) Weyerhaeuser Company Master Pension Trust.
Exhibit 5 - Stipulation Regarding Letter of Credit Claim and Toyota-Tsusho
Claim filed with the United States Bankruptcy Court for the
Northern District of California on February 20, 1997 by and among
Media Vision Technology Inc., the Official Unsecured Creditors'
Committee and Special Credits, as Agent and Nominee for the
Special Credits Trusts, the Special Credits Limited Partnership
and the Delaware State Employees Retirement Fund.
Exhibit 6 - Amendment Number Two to the Registration Rights Agreement dated
June 10, 1996 by and among the Issuer, IT Technology Investment,
Cerberus Partners, L.P., Pequod Investments, L.P., Cerberus
International, Ltd., Ultra Cerberus, Ltd., the Copernicus Fund,
L.P., The Galileo Fund, L.P., Appaloosa Management, L.P.,
Appaloosa I L.P., Chestnut Investors III Inc., Palomino Fund
Ltd., Pinto Investment LLC, Heinz H. Steinman, Leslie Alexander,
Seneca Capital, L.P., DFG Corporation, ZPG Securities, LLC,
Palamundo LDC, Seneca Capital International LTD, Special Credits,
and Weyerhaeuser Company Master Pension Trust.
Exhibit 7 - Unit Purchase Agreement dated August 6, 1997, among the Issuer,
IT Investment Management, B III Capital Partners, L.P., Pequod
Investments L.P., Oaktree, as investment manager on behalf of the
Oaktree Account, and TCW Special Credits, as agent and on behalf
of the Special Credits Limited Partnership, the Special Credits
Trusts and the Special Credits Account.
Exhibit 8 - Amendment Number Three to the Registration Rights Agreement dated
August 6, 1997 by and among the Issuer, IT Technology Investment,
Cerberus Partners, L.P., Pequod Investments, L.P., Cerberus
International, Ltd., Ultra Cerberus, Ltd., the Copernicus Fund,
L.P., The Galileo Fund, L.P., Appaloosa
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<PAGE>
Management, L.P., Appaloosa I L.P., Chestnut Investors III Inc.,
Palomino Fund Ltd., Pinto Investment LLC, Heinz H. Steinman,
Leslie Alexander, Seneca Capital, L.P., DFG Corporation,
ZPG Securities, LLC, Palamundo LDC, Seneca Capital International
LTD, Special Credits, and Weyerhaeuser Company Master Pension
Trust.
Exhibit 9 - Amendment Number Four to the Registration Rights Agreement dated
June 5, 1998 by and among the Issuer, IT Technology Investment,
Cerberus Partners, L.P., Pequod Investments, L.P., Cerberus
International, Ltd., Ultra Cerberus, Ltd., the Copernicus Fund,
L.P., The Galileo Fund, L.P., Appaloosa Management, L.P.,
Appaloosa I L.P., Chestnut Investors III Inc., Palomino Fund
Ltd., Pinto Investment LLC, Heinz H. Steinman, Leslie Alexander,
Seneca Capital, L.P., DFG Corporation, ZPG Securities, LLC,
Palamundo LDC, Seneca Capital International LTD, Special Credits,
and Weyerhaeuser Company Master Pension Trust.
Exhibit 10 - 8% Series B Convertible Preferred Stock Purchase Agreement dated
June 5, 1998, among the Issuer, B III Capital Partners,
L.P.,Special Credits, Special Credits Limited Partnership, Trust
I and Trust IIIb.
Exhibit 11 - A written agreement relating to the filing of the joint
acquisition statement as required by Rule 13d-1(k)(1) under the
Securities Exchange Act of 1934, as amended.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certify that the information set forth in this Statement is true,
complete and correct.
Dated as of this 17th day of June, 1998.
THE TCW GROUP, INC.
By: /S/ Mohan V. Phansalkar
- - ------------------------------------------
Mohan V. Phansalkar
Authorized Signatory
TRUST COMPANY OF THE WEST
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory
TCW ASSET MANAGEMENT COMPANY
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory
TCW SPECIAL CREDITS
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory of
TCW Asset Management Company, the
Managing General Partner of TCW
Special Credits
TCW SPECIAL CREDITS FUND IIIb
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory
of TCW Asset Management Company, the Managing
General Partner of TCW Special Credits, the
General Partner of TCW Special Credits Fund IIIb
TCW SPECIAL CREDITS TRUST
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory of
Trust Company of the West, the trustee of
TCW Special Credits Trust
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<PAGE>
TCW SPECIAL CREDITS TRUST IIIb
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson, Authorized Signatory of
Trust Company of the West, the trustee of
TCW Special Credits Trust IIIb
ROBERT A. DAY
By: /s/ Mohan V. Phansalkar
- - ------------------------------------------
Mohan V. Phansalkar
Under Power of Attorney dated January 30, 1996,
on file with Schedule 13G Amendment No. 1 for
Matrix Service Co., dated January 30, 1996
OAKTREE CAPITAL MANAGEMENT, LLC
By: /s/ D. Richard Masson
- - ------------------------------------------
D. Richard Masson
Principal
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SCHEDULE I
BOARD OF DIRECTORS
OF
TCW GROUP, INC.
All of the following individuals are directors of TCW Group, Inc. Each
director is a citizen of the United States of America unless otherwise
specified below:
HOWARD P. ALLEN CARLA A. HILLS
- - --------------------------- ---------------------------
Former Chairman & CEO 1200 19th Street, N.W.
Southern California Edison 5th Floor
2244 Walnut Grove Blvd. Washington, DC 20036
Rosemead, CA 91770
DR. HENRY A. KISSINGER
JOHN M. BRYAN ---------------------------
- - --------------------------- Chairman
Partner Kissinger Associates, Inc.
Bryan & Edwards 350 Park Ave., 26th Floor
600 Montgomery St., 35th Floor New York, NY 10022
San Francisco, CA 94111
THOMAS E. LARKIN, JR.
ROBERT A. DAY ---------------------------
- - --------------------------- President
Chairman of the Board, Trust Company of the West
Chairman and Chief Executive Officer 865 S. Figueroa St., Ste 1800
Trust Company of the West Los Angeles, CA 90017
200 Park Avenue, Suite 2200
New York, New York 10166 KENNETH L. LAY
---------------------------
DAMON P. DE LASZLO, ESQ. Enron Corp.
- - --------------------------- 1400 Smith Street
Managing Director of Harwin Houston, TX 77002-7369
Engineers S.A., Chairman & D.P.
Advisers Holdings Limited MICHAEL T. MASIN, ESQ.
Byron's Chambers ---------------------------
A2 Albany, Piccadilly Vice Chairman
London W1V 9RD - England GTE Corporation
(Citizen of United Kingdom) One Stamford Forum
Stamford, CT 06904
WILLIAM C. EDWARDS
- - --------------------------- EDFRED L. SHANNON, JR.
Partner - Bryan & Edwards ---------------------------
3000 Sand Hill Road, Suite 190 Investor/Rancher
Menlo Park, CA 94025 1000 S. Fremont Ave.
Alhambra, CA 91804
ERNEST O. ELLISON ROBERT G. SIMS
- - --------------------------- ---------------------------
Vice Chairman Private Investor
Trust Company of the West 11828 Rancho Bernardo, Box 1236
865 South Figueroa St., Suite 1800 San Diego, CA 92128
Los Angeles, California 90017
HAROLD R. FRANK MARC I. STERN
- - --------------------------- ---------------------------
Chairman of the Board President
Applied Magnetics Corporation The TCW Group, Inc.
75 Robin Hill Rd. 865 South Figueroa St.,
Goleta, CA 93017 Suite 1800
Los Angeles, CA 90017
-24-
<PAGE>
EXHIBIT 4
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 10, 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
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<PAGE>
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.
2
<PAGE>
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 and as proposed to be conducted with
no infringement of or conflict with the rights of others. Except as
contemplated in this Agreement, there are no outstanding options, licenses,
or agreements of any kind relating to the foregoing, nor is the Company bound
by or a party to any other options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. The Company has not received any communications
alleging that it has violated or, by conducting its business as proposed,
would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or entity. The Company is not aware that any of its employees are obligated
under any contract (including licenses, covenants or commitments of any
nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his
or her best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted or that
would prevent any such employee from assigning inventions to the Company.
Neither the execution nor delivery of this Agreement, nor the carrying on of
the Company's business as proposed, will, to the best of the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company
does not believe that it is or will be necessary for the Company to utilize
any inventions of any of its employees (or people it currently intends to
hire) made prior to their employment by the Company.
3.7 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Except as set forth in EXHIBIT B, the Company is not in violation of any term
of its Certificate of Incorporation or Bylaws, nor is the Company in
violation in any material respect of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, and to the
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best of the Company's knowledge, the Company is not in violation of any
order, statute, rule or regulation applicable to the Company. The execution,
delivery and performance of and compliance with this Agreement and the other
agreements contemplated hereby, and the issuance and sale of the Securities
pursuant hereto, will not result in (a) any such violation, or (b) be in
conflict with or constitute a default under any such term, or (c) result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any such term. In
addition, the execution, delivery and performance of and compliance with this
Agreement and the other agreements contemplated hereby, and the issuance and
sale of the Securities pursuant hereto, will not result in a violation of any
law, statute or regulation applicable to the Company.
3.8 EMPLOYEES. Each officer and key employee of the Company has
executed an Employee Proprietary and Confidential Information Agreement, the
form of which has been provided to the Purchasers or their special counsel.
The Company, after reasonable investigation, is not aware that any of its
employees are in violation thereof, and the Company will use its best efforts
to prevent any such violation.
3.9 LITIGATION, ETC. Except as set forth on EXHIBIT B, there are
no actions, proceedings or investigations pending against the Company or its
officers, directors, or shareholders, or to the best of the Company's
knowledge, against employees or consultants of the Company (or, to the best
of the Company's knowledge, any basis therefor or threat thereof): (1) which
might result in (a) any material adverse change in the business, prospects,
conditions, affairs or operations of the Company, or in any of their
properties or assets, or (b) any material impairment of the right or ability
of the Company to carry on its business as now conducted or as proposed to be
conducted, or (c) any material liability on the part of the Company; or (2)
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith. The Company does not currently plan to
initiate any litigation.
3.10 GOVERNMENTAL CONSENT, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with: (a) the
valid execution and delivery of this Agreement; or (b) the offer, sale or
issuance of the Securities; or (c) the obtaining of the consents, permits and
waivers specified in subsection 5.1(c) hereof; or (d) the consummation of any
other transaction contemplated hereby; except, if required, filings or
qualifications under the Securities Act of 1933, as amended (the "Securities
Act") and California Corporate Securities Law of 1968, as amended (the
"Law"), which filings or qualifications, if required, will have been timely
filed or obtained.
3.11 OFFERING. In reliance on the representations and warranties
of the Purchasers in Section 4 hereof, the offer, sale and issuance of the
Securities in conformity with the terms of this Agreement will not result in
a violation of the requirements of Section 5 of the Securities Act or the
qualification requirements of the Law.
3.12 TAXES. The Company has timely filed all tax returns that are
required to have been filed with appropriate federal, state, county and local
4
<PAGE>
governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise and other taxes due as
reflected on said returns. There is no pending dispute with any taxing
authority relating to any of such returns and the Company has no knowledge of
any proposed liability for any tax to be imposed upon the properties or
assets of the Company for which there is not an adequate reserve reflected in
the Financial Statements (as defined below).
3.13 REGISTRATION RIGHTS. Other than as set forth on EXHIBIT B, the
Company is not obligated to register any of its presently outstanding securities
or any of its securities which may hereafter be issued.
3.14 DISCLOSURE. Neither this Agreement and the exhibits hereto,
nor any of the other statements or certificates furnished or to be furnished
to the Purchasers pursuant hereto or in connection with the transactions
contemplated hereby, including the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, and any amendments to date thereto,
the Company's Proxy Statement for the 1996 Annual Meeting of Stockholders,
and the Company's first quarter 1996 Report on Form 10-Q, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein and therein not misleading in
light of the circumstances under which such statements were made.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS AND
RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933.
4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PURCHASERS.
Each Purchaser represents, warrants and covenants to the Company as follows:
(a) The Securities to be received by the Purchaser will be
acquired for investment for the Purchaser's own account, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act and the Law.
The Purchaser has the full right, power and authority to enter into and
perform this Agreement and all other agreements contemplated hereby, and this
Agreement and all other agreements contemplated hereby constitute valid and
binding obligations of the Purchaser. The Purchaser acknowledges and
understands that the Securities must be held indefinitely unless the
Securities are subsequently registered under the Securities Act and qualified
under the Law or an exemption from such registration and such qualification
is available.
(b) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Act) in the
United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership
or other entity created or organized therein) unless and until (i) the
Purchaser shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition, and (ii) the Purchaser shall have
furnished the Company with an opinion of counsel
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<PAGE>
satisfactory in form and substance to the Company to the effect that such
disposition will not require registration under the Securities Act.
(c) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the Purchaser's prospective investment in the Securities. The
Purchaser has the ability to bear the economic risks of the Purchaser's
prospective investment. The Purchaser has been furnished with and has had
access to such information as the Purchaser has considered necessary to make
a determination as to the purchase of the Securities together with such
additional information as is necessary to verify the accuracy of the
information supplied. The Purchaser has had all questions which have been
asked by the Purchaser satisfactorily answered by the Company. The Purchaser
has not been offered the Securities by any form of advertisement, article,
notice or other communication published in any newspaper, magazine, or
similar media or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any such media.
4.2 LEGENDS. Each certificate representing the Securities may be
endorsed with the following legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES IN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS OR ANY AREA SUBJECT TO ITS JURISDICTION, OR TO
ANY PERSON WHO IS A NATIONAL OR RESIDENT OF THE UNITED STATES (INCLUDING ANY
ESTATE OF SUCH PERSON OR ANY CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED
OR ORGANIZED THEREIN) UNLESS SUCH SHARES HAVE BEEN EITHER REGISTERED UNDER
THE SECURITIES ACT OR ARE EXEMPT, IN THE OPINION OF THE COMPANY'S COUNSEL,
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(c) Any other legends required by the Law.
The Company need not register a transfer of legended Securities, and may also
instruct its transfer agent not to register the transfer of the Securities,
unless the conditions specified in each of the foregoing legends are
satisfied.
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<PAGE>
4.3 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. Any legend
endorsed on a certificate pursuant to subsection 4.2(a) and 4.2(b) and the
stop transfer instructions with respect to such legended Securities shall be
removed, and the Company shall issue a certificate without such legend to the
holder of such Securities if such Securities are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available or if such holder satisfies the requirements of
Rule 144(k) and, where reasonably deemed necessary by the Company, the holder
provides the Company with an opinion of counsel for such holder of the
Securities, reasonably satisfactory to the Company, to the effect that (i)
such holder meets the requirements of Rule 144(k) or (ii) a public sale,
transfer or assignment of such Securities may be made without registration.
4.4 RULE 144. The Purchaser is aware of the adoption of Rule 144
by the SEC promulgated under the Securities Act, which permits limited public
resales of securities acquired in a nonpublic offering, subject to the
satisfaction of certain conditions. The Purchaser understands that under
Rule 144, the conditions include, among other things: the availability,
under certain conditions, of certain current public information about the
issuer and the resale occurring not less than two years after the party has
purchased and paid for the securities to be sold. The Company covenants that
(i) the Company will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Securities Act; and (ii)
at all such times as Rule 144 is available for use by the Purchaser, the
Company will furnish the Purchaser upon request with all information within
the possession of the Company required for the preparation and filing of Form
144.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligation of
the Purchasers to purchase the Securities at the Closing is subject to the
fulfillment to their satisfaction, on or prior to the Closing Date, of the
following conditions, any of which may be waived in accordance with the
provisions of subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Company's
business and assets shall not have been adversely affected in any material
way prior to the Closing Date. The Company shall have performed in all
material respects all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b) OPINION OF COMPANY'S COUNSEL. Gray Cary Ware &
Freidenrich, A Professional Corporation, counsel to the Company, shall have
delivered an opinion addressed to the Purchasers, dated the Closing Date,
substantially in the form as that attached hereto as EXHIBIT D.
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(c) CONSENTS AND WAIVERS. The Company shall have obtained in
a timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this
Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the
purchase of the Securities hereunder shall be legally permitted by all laws
and regulations to which the Purchasers and the Company are subject.
(e) EXECUTION OF AMENDMENT TO RIGHTS AGREEMENT. The Company
and the Purchasers shall have executed an Amendment to the Registration
Rights Agreement dated December 30, 1994, in the form attached hereto as
EXHIBIT C.
(f) COMPLIANCE CERTIFICATE. The Company shall have delivered
a Certificate, executed by the President and the Chief Financial Officer of
the Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (c), (d) and (e) of this Section 5.1.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to sell and issue the Securities at the Closing is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing Date of
the following conditions, any of which may be waived by the Company in
accordance with the provisions of subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 4 hereof
shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) CONSENTS AND WAIVERS. Each of the Purchasers shall have
obtained in a timely fashion any and all consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
this Agreement.
(c) SATISFACTION OF CONDITIONS. The conditions set forth in
subsections (c), (d) and (e) of Section 5.1 shall have been fulfilled.
6. USE OF PROCEEDS. The Company shall use the proceeds from this
financing to temporarily paydown its line of credit with TCW. $20 million
will remain available to the Company under its line of credit with TCW
through March 31, 1998.
7. MISCELLANEOUS.
7.1 WAIVERS AND AMENDMENTS. This Agreement or any provision
hereof may be amended, waived, discharged or terminated only by a statement
in writing signed by the party against which enforcement of the amendment,
waiver, discharge or termination is sought.
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7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California.
7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the
Purchasers. All statements as to factual matters contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties by the Company hereunder as of the date of
such certificate or instrument.
7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto.
7.5 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto.
7.6 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be delivered personally
or mailed by first class mail, postage prepaid, or via facsimile or
TWX/Telex, addressed (a) if to the Purchasers at the address set forth on
EXHIBIT A to this Agreement, or at such other address as the Purchasers shall
have furnished to the Company in writing, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other
address as the Company shall have furnished to the Purchasers in writing,
with a copy of any said notice to be sent to Gray Cary Ware & Freidenrich,
400 Hamilton Avenue, Palo Alto, California 94301-1825, Attention: James M.
Koshland, Esq. Notices that are mailed shall be deemed received ten (10)
days after deposit in the mail. In the event that the notice is sent by
facsimile or TWX/Telex, notice shall be deemed to have been received when
sent and confirmed as to receipt.
7.7 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
7.8 EXPENSES. The Company and the Purchasers shall each bear
their own expenses and legal fees in connection with this Agreement and the
transactions contemplated hereby.
7.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
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7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to the Company or to the Purchasers shall
impair any such right, power or remedy of the Company or the Purchasers, nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any delay or omission to exercise any
right, power or remedy or any waiver of any single breach or default be
deemed a waiver of any other right, power or remedy or breach or default
theretofore or thereafter occurring. All remedies, either under this
Agreement, or by law otherwise afforded to the Company or the Purchasers,
shall be cumulative and not alternative.
AUREAL SEMICONDUCTOR INC.
By:
------------------------------------
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COUNTERPART SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JUNE ____, 1996
"PURCHASER"
If you are an individual, Name (Please Print)
please sign and print your name
to the right ----------------------------------
----------------------------------
Signature
If you are signing on behalf of Name of Organization
an entity, please print the legal
name of the entity and sign to the ----------------------------------
right, indicating your title
Name (Please Print)
----------------------------------
Title:
---------------------------
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EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PURCHASE PRICE
<S> <C> <C>
IT Asset Management
Attn: Muriel Faure
14 Rue de Berri
75008 Paris France
IT Technology Investment 185,185 $ 249,999.75
Cerberus Partners, L.P.
Attn: Jonathen Gallen
950 Third Avenue, 20th Floor
New York, NY 10022
Cerberus Partners, L.P. 165,000 $ 222,750.00
Pequod Investments, L.P. 40,000 $ 54,000.00
Cerberus International, Ltd. 40,000 $ 54,000.00
Ultra Cerberus, Ltd. 5,000 $ 6,750.00
DDJ Capital Management, LLC
Attn: Dan Harmetz
141 Linden Street, Suite S-4
Wellesley, MA 02181
The Copernicus Fund, L.P. 666,667 $ 900,000.45
The Galileo Fund, L.P. 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
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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PURCHASE PRICE
<S> <C> <C>
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
</TABLE>
13
<PAGE>
EXHIBIT B
SCHEDULE OF EXCEPTIONS
AUREAL SEMICONDUCTOR INC.
Pursuant to Section 3 of the Common Stock Purchase Agreement dated
June 10, 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
14
<PAGE>
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.
15
<PAGE>
EXHIBIT C
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
16
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
17
<PAGE>
EXHIBIT 5
MICHAEL H. AHRENS (State Bar No. 447766)
CARL R. GOLDBERG (State Bar No. 154881)
BRONSON, BRONSON & MCKINNON LLP
505 Montgomery Street
San Francisco, CA 94111-2514
Telephone: (415) 986-4200
Fax: (415) 982-1394
Attorneys for Plaintiff
MEDIA VISION TECHNOLOGY INC., now known
as AUREAL SEMICONDUCTOR, INC.
JAMES L. LOPES (State Bar No. 63678)
GARY M. KAPLAN (State Bar No. 155530)
HOWARD, RICE, NEMEROVSKI, CANADY,
FALK & RABIN
3 Embarcadero Center, Suite 700
San Francisco, CA 94111-4065
Telephone: (415) 434-1600
Fax: (415) 399-3041
Attorneys for Official Unsecured
Creditors' Committee
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In Re MEDIA VISION TECHNOLOGY INC., ) Case No. No. 94 45107 J
)
Debtor. ) STIPULATION REGARDING
) LETTER OF CREDIT CLAIM
- - --------------------------------------------- ) AND TOYOTA-TSUSHO CLAIM
Media Vision Technology Inc. ("Debtor"), the Official Unsecured
Creditors' Committee (the "Committee") and TCW Special Credits, as Agent and
Nominee for the entities listed on Exhibit A ("TCW"), through their
respective counsel of record, stipulate as follows with respect to the
bankruptcy case of the Debtor:
1. Pursuant to a transfer of claim, TCW is the holder of the secured
Letter of Credit Claim ("Letter of Credit Claim") as defined in Debtor's
Second Amended Joint Plan of
<PAGE>
Reorganization ("Plan"). The Letter of Credit Claim is comprised of the
Debtor's obligations to reimburse the holder of the Letter of Credit Claim
for any payment the holder of such claim may make under letters of credit
issued by Comerica in favor of Toyota-Tsusho Corporation ("Toyota-Tsusho")
for the account of the Debtor under a pre-petition credit agreement. The Plan
provided that the Letter of Credit Claim may not exceed the amount of
$2,300,000, and sufficient shares were reserved in the Class 2 and Class 6
Reserves (as defined in the Plan) to satisfy the Letter of Credit Claim.
However, because the Fee Claim of TCW (as defined in the Plan) was allowed in
an amount less than the amount for which shares were reserved for the Fee
Claim, an additional 33,137 shares were reserved for the Letter of Credit Claim.
2. Pursuant to the terms of the Plan, the Letter of Credit Claim is
contingent, and will not be allowed until such claim becomes noncontingent. A
judgment was entered in state court litigation regarding the letter of credit
in favor of Toyota-Tsusho in the full amount of the claim plus interest,
which Toyota-Tsusho calculated to be in excess of $2,650,000 as of October
1996. Comerica and TCW satisfied the judgment in accordance with a settlement
agreement with Toyota-Tsusho.
3. Toyota-Tsusho filed Proof of Claim No. 694, an unsecured claim in
the amount of $1,995,756.00 ("Claim No. 694"). Claim No. 694 arises in
connection with amounts owed to Toyota-Tsusho from Debtor relating to the
Letter of Credit Claim. Claim No. 694 was transferred to TCW.
-2-
<PAGE>
4. The Debtor and the Committee believe that they can have certain
objections to the Letter of Credit Claim and Claim No. 694, and, therefore,
filed an objection to Claim No. 694 ("Objection"). The Letter of Credit
Claim could not be allowed so long as such claim was contingent. In the
interest of resolving their differences with TCW, both Debtor and the
Committee are willing to stipulate that the Letter of Credit Claim should be
allowed in a certain specified amount, Claim No. 694 shall be disallowed in
its entirety, and the Objection withdrawn, and TCW is willing to release any
claim to the 33,137 additional shares reserved for the Letter of Credit Claim.
5. Debtor, the Committee and TCW hereby stipulate as follows: a) The
Letter of Credit Claim is allowed as a secured claim under the Plan in the
total amount of $2,300,000.00, and shall receive New Common Stock, as defined
in the Plan, based on a price of $4.00 per share for a total of 575,000
shares of New Common Stock from the Class 2 and Class 6 Reserves, as defined
in the Plan; (b) Claim No. 694 shall be disallowed in its entirety; c) The
Objection shall be withdrawn; d) TCW hereby releases all claims to the 33,137
shares reserved for the Letter of Credit Claim; and e) Except as set forth
herein, TCW shall not be entitled to any shares of New Common Stock on
account of the Letter of Credit Claim or Claim No. 694. All parties shall
bear their own costs.
6. Pursuant to paragraph 28 of the Order Confirming Debtor's Second
Amended Joint Plan of Reorganization, objections to claim must be filed by
January 18, 1995, or such later date as the Court may order. Such date has
passed, and no objections
-3-
<PAGE>
have been filed to the claim by any third parties. Hence, it is appropriate
the Debtor, the Committee and TCW are able to effectively stipulate to the
allowed amount of the Letter of Credit Claim and Claim No. 694.
7. Pursuant to the Bankruptcy Court's Order Granting Application of
Debtor and Committee for Authority to Compromise and Settle Controversies
Regarding Objections to Certain Claims entered on March 20, 1995, this
Stipulation will be deemed effective upon its execution by the parties and
filing with the Court, without further hearing, notice, approval or order by
the Court.
Dated: ________________________, 1997 BRONSON, BRONSON & MCKINNON LLP
By: ______________________
CARL L. GOLDBERG
Attorneys for Plaintiff AUREAL
SEMICONDUCTOR, formerly known
as MEDIA VISION TECHNOLOGY INC.
Dated: ________________________, 1997 HOWARD, RICE, NEMEROVSKI,
CANADY, FALK & RABKIN
By: _______________________
GARY M. KAPLAN
Attorney for OFFICIAL UNSECURED
CREDITORS' COMMITTEE
Dated: ________________________, 1997 O'MELVENY & MYERS LLP
By ______________________
SUZZANE UHLAND
Attorneys for TCW SPECIAL CREDITS, as
Agent and Nominee for the entities
listed on Exhibit A.
-4-
<PAGE>
Exhibit A
<TABLE>
<CAPTION>
Percentage
Interest
----------
<S> <C>
TCW Special Credits Trust 21%
TCW Special Credits Find IIIb 41%
TCW Special Credits Trust IIIb 32%
Delaware State Employees Retirement Fund 6%
-----------
Total 100%
</TABLE>
- 5 -
<PAGE>
EXHIBIT 6
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
1
<PAGE>
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.
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
3
<PAGE>
The GALILEO FUND, L.P.
By: DDJ Galileo, LLC, its General Partner
By:
------------------------------------
Name: Judy K. Mencher
Title: Member
4
<PAGE>
COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 2 TO THE
REGISTRATION RIGHTS AGREEMENT
PURCHASER:
By:
------------------------------------
Name:
Title:
5
<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
6
<PAGE>
EXHIBIT 7
AUREAL SEMICONDUCTOR INC.
4245 Technology Drive
Fremont, California 94538
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT is made as of August 6, 1997, 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").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1. SALE OF UNITS.
1.1 SALE. Subject to the terms and conditions hereof, the Company
will issue and sell to each Purchaser, and each Purchaser will purchase from
the Company, at a Closing (as defined below), the number of Units set forth
opposite each Purchaser's name on EXHIBIT A. A "Unit" shall be composed of a
share of the Company's Common Stock ("Share"), and a warrant to purchase
one-half (0.5) of a share of Common Stock ("Warrant Share"). The exercise
price per Warrant Share shall be $2.00. A form of the warrant is attached as
EXHIBIT B ("Warrant"). The purchase price per Unit ("Unit Purchase Price")
shall be equal to $2.00. Each Warrant to purchase one (1) Warrant Share
shall be valued at $0.10.
2. CLOSING DATES; DELIVERY.
2.1 CLOSING DATES. Each of the closings of the purchase and sale
of the Units (collectively, the "Closings," and individually, a "Closing")
shall be held at the offices of Gray Cary Ware & Freidenrich, A Professional
Corporation, 400 Hamilton Avenue, Palo Alto, California 94301-1825 on the
dates as hereinafter provided (the "Closing Dates"):
(a) The First Closing for the purchase and sale of not less
than 1,000,000 Units (the "First Closing") shall be held on August 6, 1997,
or on such other date as the Purchasers and the Company may agree (the "First
Closing Date").
(b) If the full amount of the Units authorized for sale in
Section 1.1 above is not sold at the First Closing, the Company shall have
the right any time prior to the expiration of the 90 day period which shall
commence on the day immediately following the First Closing Date (the "Second
Closing"), to sell additional Units to one or more of the Purchasers or
additional investors as approved by the Company's Board of Directors, and
such investors shall be added to EXHIBIT A and be considered "Purchasers" for
purposes of this Agreement.
2.2 DELIVERY. Subject to the terms of this Agreement, at the Closing
the Company will deliver to the Purchasers the stock certificates representing
the Shares to be purchased by the Purchasers from the Company, against payment
of the purchase price
1
<PAGE>
therefor by delivery of funds via wire transfer. In addition, the Company
will deliver at the Closing a Warrant or Warrants to each Purchaser,
registered in the name of such Purchaser, based on the number of Units
purchased by such Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
in EXHIBIT C 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.
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 Shares,
Warrants and Warrant Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement and all other agreements
contemplated hereby, including the Warrants. 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 and no shares of Preferred Stock. As
of June 30, 1997, there were issued and outstanding 39,720,326 shares of the
Company's Common Stock. All such issued and outstanding shares have been
duly authorized and validly issued, are fully paid and non-assessable and
were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The Company maintains stock option
plans and has issued stock options and warrants as noted below:
(a) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's 1995
Stock Option Plan and 1994 Stock Option Plan (collectively, the "Plans")
issued to employees or consultants to the Company: 9,323,530
(b) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Crystal River
Engineering, Inc. ("CRE") Stock Option Plan: 2,144,069
(c) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's Outside
Director Stock Option Plan: 200,000
2
<PAGE>
(d) Shares of Common Stock reserved for issuance pursuant to
exercise of two currently outstanding warrants (one to Hambrecht & Quist for
50,000 shares, one to Financing for Science International for 50,000 shares):
100,000
(e) Shares of Common Stock reserved for issuance pursuant to
exercise of warrants to be issued to certain lenders in connection with the
expansion and restructuring of the Company's debt and extension thereof
through March 31, 2000, for 3,150,000 shares.
Other than the above noted reserved shares and the Warrant Shares to be
reserved for issuance pursuant to exercise of the Warrants, 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 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 Shares, the Warrants and the Warrant Shares 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 Shares and the Warrants (and the Warrant Shares
issuable upon exercise of the Warrants), when issued in compliance with the
provisions of this Agreement or the Warrants, as the case may be, will be
validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares, Warrants and Warrant
Shares 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 Shares, Warrants or
Warrant Shares.
3.5 PATENTS, TRADEMARKS, ETC. Except as set forth in EXHIBIT C,
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 and as proposed to be conducted with
no known infringement of or conflict with the rights of others. Except as
contemplated in this Agreement, there are no outstanding options, licenses,
or agreements of any kind relating to the foregoing, nor is the Company bound
by or a party to any other options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. Except as disclosed in the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1997 (the "10-Q"), the
Company has not received any communications alleging that it has violated or,
by conducting its business as
3
<PAGE>
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity. The Company is not aware that any of its employees are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of
his or her best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted or that
would prevent any such employee from assigning inventions to the Company.
Neither the execution nor delivery of this Agreement, nor the carrying on of
the Company's business as proposed, will, to the best of the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company
does not believe that it is or will be necessary for the Company to utilize
any inventions of any of its employees (or people it currently intends to
hire) made prior to their employment by the Company.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Except as set forth in EXHIBIT C, the Company is not in violation of any term
of its Certificate of Incorporation or Bylaws, nor is the Company in
violation in any material respect of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, and to the best of the Company's
knowledge, the Company is not in violation of any order, statute, rule or
regulation applicable to the Company. The execution, delivery and
performance of and compliance with this Agreement and the other agreements
contemplated hereby, and the issuance and sale of the Shares, Warrants and
Warrant Shares pursuant hereto, will not result in (a) any such violation, or
(b) be in conflict with or constitute a default under any such term or (c)
result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company pursuant to any such
term. In addition, the execution, delivery and performance of and compliance
with this Agreement and the other agreements contemplated hereby, and the
issuance and sale of the Units and Warrants pursuant hereto, will not result
in a violation of any law, statute or regulation applicable to the Company.
3.7 EMPLOYEES. Each officer and key employee of the Company has
executed an Employee Proprietary and Confidential Information Agreement. The
Company, after reasonable investigation, is not aware that any of its
employees are in violation thereof, and the Company will use its best efforts
to prevent any such violation.
3.8 LITIGATION, ETC. Except as set forth on EXHIBIT C, there are
no actions, proceedings or investigations pending against the Company or its
officers, directors, or stockholders, or to the best of the Company's
knowledge, against employees or consultants of the Company (or, to the best
of the Company's knowledge, any basis therefor or threat thereof): (1) which
might result in (a) any material adverse change in the business, prospects,
conditions, affairs or operations of the Company, or in any of their
properties or assets, or (b) any material impairment of the right or ability
of the Company to carry on its business as now conducted or as proposed to be
conducted, or (c) any material liability on the part of the Company; or (2)
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith. The Company does not currently plan to
initiate any litigation.
3.9 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or
4
<PAGE>
designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with: (a) the valid execution and
delivery of this Agreement; or (b) the offer, sale or issuance of the Shares,
Warrants and Warrant Shares; or (c) the obtaining of the consents, permits and
waivers specified in subsection 5.1(c) hereof; or (d) the consummation of any
other transaction contemplated hereby; except, if required, filings or
qualifications under the Securities Act of 1933, as amended (the "Securities
Act") and California Corporate Securities Law of 1968, as amended (the "Law"),
which filings or qualifications, if required, will have been timely filed or
obtained.
3.10 OFFERING. In reliance on the representations and warranties
of the Purchasers in Section 4 hereof, the offer, sale and issuance of the
Units in conformity with the terms of this Agreement will not result in a
violation of the requirements of Section 5 of the Securities Act or the
qualification requirements of the Law.
3.11 TAXES. The Company has timely filed all tax returns that are
required to have been filed with appropriate federal, state, county and local
governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise and other taxes due as
reflected on said returns. There is no pending dispute with any taxing
authority relating to any of such returns and the Company has no knowledge of
any proposed liability for any tax to be imposed upon the properties or
assets of the Company for which there is not an adequate reserve reflected in
the Company's financial statements contained in the 10-Q or the Company's
Annual Report on Form 10-K for the fiscal year ended December 29, 1996 (the
"10-K").
3.12 REGISTRATION RIGHTS. Except pursuant to the Registration
Rights Agreement, dated as of December 30, 1994, as amended (the "Rights
Agreement"), by and among 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 to the Rights Agreement, the Copernicus
Fund, L.P., the Galileo Fund, L.P., and certain purchasers of the Company's
Common Stock, the Company is not obligated to register any of its presently
outstanding securities which may hereafter be issued.
3.13 DISCLOSURE. Neither this Agreement and the exhibits hereto,
nor any of the other statements or certificates furnished or to be furnished
to the Purchasers pursuant hereto or in connection with the transactions
contemplated hereby, including, the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders, the 10-Q and the 10-K contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein and therein not misleading in
light of the circumstances under which such statements were made.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS AND
RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933.
4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PURCHASERS.
Each Purchaser represents, warrants and covenants to the Company as follows:
5
<PAGE>
(a) The Units to be received by the Purchaser will be
acquired for investment for the Purchaser's own account, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act and the Law.
The Purchaser has the full right, power and authority to enter into and
perform this Agreement and all other agreements contemplated hereby, and this
Agreement and all other agreements contemplated hereby constitute valid and
binding obligations of the Purchaser. The Purchaser acknowledges and
understands that the Units must be held indefinitely unless the Units are
subsequently registered under the Securities Act (see Section 6.2) and
qualified under the Law or an exemption from such registration and such
qualification is available.
(b) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Units (other than in conjunction with an
effective registration statement for the Units under the Securities Act) in
the United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership
or other entity created or organized therein) unless and until (i) the
Purchaser shall have notified the Company of the proposed disposition, and
(ii) the Purchaser shall have furnished the Company with an opinion of
counsel satisfactory in form and substance to the Company to the effect that
such disposition will not require registration under the Securities Act.
(c) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the Purchaser's prospective investment in the Units. The Purchaser
has the ability to bear the economic risks of the Purchaser's prospective
investment. The Purchaser has been furnished with and has had access to such
information as the Purchaser has considered necessary to make a determination
as to the purchase of the Units together with such additional information as
is necessary to verify the accuracy of the information supplied. The
Purchaser is fully aware of (i) the highly speculative nature of the
investment in the Units; (ii) the financial hazards involved; (iii) the lack
of liquidity of the Shares, Warrants and Warrant Shares, and the restrictions
on the transferability of the Shares, Warrants and Warrant Shares; and (iv)
the tax consequences of investment in the Units. The Purchaser has had all
questions which have been asked by the Purchaser satisfactorily answered by
the Company. The Purchaser has not been offered the Units by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any such media.
4.2 LEGENDS. Each certificate or other instruments representing
any of the Shares and Warrant Shares may be endorsed with the following
legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
6
<PAGE>
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES IN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS OR ANY AREA SUBJECT TO ITS JURISDICTION, OR TO
ANY PERSON WHO IS A NATIONAL OR RESIDENT OF THE UNITED STATES (INCLUDING ANY
ESTATE OF SUCH PERSON OR ANY CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED
OR ORGANIZED THEREIN) UNLESS SUCH SHARES HAVE BEEN EITHER REGISTERED UNDER
THE SECURITIES ACT OR ARE EXEMPT, IN THE OPINION OF THE COMPANY'S COUNSEL,
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(c) Any other legends required by the Law.
The Company need not register a transfer of legended Shares, Warrants or Warrant
Shares, and may also instruct its transfer agent not to register the transfer of
the Shares, Warrants or Warrant Shares unless the conditions specified in each
of the foregoing legends are satisfied.
4.3 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. Any legend
endorsed on a certificate or other instrument pursuant to subsection 4.2(a)
and 4.2(b) and the stop transfer instructions with respect to such legended
securities shall be removed, and the Company shall issue a certificate
without such legend to the holder of such securities if such securities are
registered under the Securities Act and a prospectus meeting the requirements
of Section 10 of the Securities Act is available or if such holder satisfies
the requirements of Rule 144(k) and, where reasonably deemed necessary by the
Company, the holder provides the Company with an opinion of counsel for such
holder of the securities, reasonably satisfactory to the Company, to the
effect that (i) such holder meets the requirements of Rule 144(k) or (ii) a
public sale, transfer or assignment of such securities may be made without
registration.
4.4 RULE 144. The Purchaser is aware of the adoption of Rule 144
by the Securities and Exchange Commission (the "SEC") promulgated under the
Securities Act, which permits limited public resales of securities acquired
in a nonpublic offering, subject to the satisfaction of certain conditions.
The Purchaser understands that under Rule 144, the conditions include, among
other things: the availability, under certain conditions, of certain current
public information about the issuer and the resale occurring not less than
two years after the party has purchased and paid for the securities to be
sold. The Company covenants that (i) the Company will use its best efforts
to comply with the current public information requirements of Rule 144(c)(1)
under the Securities Act and (ii) at all such times as Rule 144 is available
for use by the Purchaser, the Company will furnish the Purchaser upon request
with all information within the possession of the Company required for the
preparation and filing of Form 144.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligation of the
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<PAGE>
Purchasers to purchase the Units at the Closing is subject to the fulfillment to
their satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived in accordance with the provisions of
subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Company's
business and assets shall not have been adversely affected in any material
way prior to the Closing Date. The Company shall have performed in all
material respects all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b) OPINION OF COMPANY'S COUNSEL. Gray Cary Ware &
Freidenrich, A Professional Corporation, counsel to the Company, shall have
delivered an opinion addressed to the Purchasers, dated the Closing Date,
substantially in the form as that attached hereto as EXHIBIT D.
(c) CONSENTS AND WAIVERS. The Company shall have obtained in
a timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this
Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the
purchase of the Units hereunder shall be legally permitted by all laws and
regulations to which the Purchasers and the Company are subject.
(e) COMPLIANCE CERTIFICATE. The Company shall have delivered
a Certificate, executed by the President and the Chief Financial Officer of
the Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (c) and (d) of this Section 5.1.
(f) EXECUTION OF AMENDMENT TO THE RIGHTS AGREEMENT. The
Company and the Purchasers shall have executed Amendment No. 3 to the
Registration Rights Agreement dated December 30, 1994, in the form attached
hereto as EXHIBIT E.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to sell and issue the Units at the Closing is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing Date of
the following conditions, any of which may be waived by the Company in
accordance with the provisions of subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 4 hereof
shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) CONSENTS AND WAIVERS. Each of the Purchasers shall have
obtained in a timely fashion any and all consents, permits and waivers
necessary or
8
<PAGE>
appropriate for consummation of the transactions contemplated by
this Agreement.
(c) SATISFACTION OF CONDITIONS. The conditions set forth in
subsections (c), and (d) of Section 5.1 shall have been fulfilled.
6. COVENANTS OF COMPANY.
6.1 USE OF PROCEEDS. The Company shall use the proceeds from
this financing for working capital purposes. This may include acquisition of
certain strategic technologies. In addition, the Company may use the
proceeds from this financing to temporarily paydown its line of credit with
TCW on an interim basis to reduce borrowing costs.
7. MISCELLANEOUS.
7.1 WAIVERS AND AMENDMENTS. This Agreement or any provision
hereof may be amended, waived, discharged or terminated only by a statement
in writing signed by the party against which enforcement of the amendment,
waiver, discharge or termination is sought.
7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California without regard to conflict of
law principles.
7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the
Purchasers. All statements as to factual matters contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties by the Company hereunder as of the date of
such certificate or instrument.
7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto.
7.5 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto.
7.6 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be delivered personally
or mailed by first class mail, postage prepaid, or via facsimile or
TWX/Telex, addressed (a) if to the Purchasers at the address set forth on
EXHIBIT A to this Agreement, or at such other address as the Purchasers shall
have furnished to the Company in writing, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other
address as the Company
9
<PAGE>
shall have furnished to the Purchasers in writing, with a copy of any said
notice to be sent to Gray Cary Ware & Freidenrich, 400 Hamilton Avenue, Palo
Alto, California 94301-1825, Attention: James M. Koshland, Esq. Notices
that are mailed shall be deemed received ten (10) days after deposit in the
mail. In the event that the notice is sent by facsimile or TWX/Telex, notice
shall be deemed to have been received when sent and confirmed as to receipt.
7.7 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
7.8 EXPENSES. The Company and the Purchasers shall each bear
their own expenses and legal fees in connection with this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, the Company
shall pay the reasonable legal fees and related costs of B III Capital
Partners, L.P. up to an aggregate of $10,000.
7.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to the Company or to the Purchasers shall
impair any such right, power or remedy of the Company or the Purchasers, nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any delay or omission to exercise any
right, power or remedy or any waiver of any single breach or default be
deemed a waiver of any other right, power or remedy or breach or default
theretofore or thereafter occurring. All remedies, either under this
Agreement, or by law otherwise afforded to the Company or the Purchasers,
shall be cumulative and not alternative.
AUREAL SEMICONDUCTOR INC.
By
---------------------------------------------
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COUNTERPART SIGNATURE PAGE TO
UNIT PURCHASE AGREEMENT
DATED AS OF __________, 1997
"PURCHASER"
If you are an individual, Name (Please Print)
please sign and print your name
to the right ---------------------------------
---------------------------------
Signature
If you are signing on behalf of Name of Organization
an entity, please print the legal
name of the entity and sign to the
right, indicating your title ---------------------------------
Name (Please Print)
---------------------------------
Title:
--------------------------
11
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
NAME AND ADDRESS UNITS PURCHASE PRICE
<S> <C> <C>
IT Asset Management 60,000 $120,000
14 rue de Berri
75008 Paris France
Attn: Muriel Faure,
President Directeur General
B III Capital Partners, L.P. 750,000 $1,500,000
141 Linden Street, Suite 4
Wellesley, MA 02181
Attn: General Counsel
Pequod Investments L.P. 100,000 $200,000
450 Park Avenue, 28th Floor
New York, NY 10022
Attn: Jonathan Gallen
Oaktree Capital Management, LLC, 500,000 $1,000,000
as investment manager of the Weyerhaeuser
Master Retirement Trust, separate account
550 S. Hope Street, 22nd Floor
Los Angeles, CA 90071
Attn: Richard Masson
TCW Special Credits 500,000 $1,000,000
as agent and on behalf
of certain funds and accounts
set forth in Schedule I attached hereto
Totals 1,910,000 $3,820,000
</TABLE>
12
<PAGE>
EXHIBIT B
FORM OF WARRANT
13
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS
AUREAL SEMICONDUCTOR INC.
Pursuant to Section 3 of the Unit Purchase Agreement dated August 6,
1997 (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 July 25, 1994, the company and its then wholly-owned
subsidiary, Pellucid, Inc. ("Pellucid") filed separate voluntary petitions in
the United States Bankruptcy Court seeking protection under Chapter 11 of the
United States Bankruptcy Code. On December 19, 1994, the Bankruptcy Court
confirmed the companies' Second Amended Joint Plan of Reorganization (the
"Plan of Reorganization") which became effective December 30, 1994. Pursuant
to the Plan of Reorganization, certain shares of Common Stock were held in
escrow for the final satisfaction of claims pending against the Company.
There are currently approximately 48,000 shares of Common Stock held in
escrow. Pursuant to voting agreements between the Company and the escrow
holders, the escrow holders have agreed to vote all such shares in each
election of directors and with respect to other matters submitted to a
stockholder vote in the same proportions as the votes cast by the outstanding
shares of Common Stock not held in escrow.
The Company may increase the reserves under the Plans and the Outside
Director Stock Option Plan so that the reserves under such plans, in the
aggregate, equal twenty percent (20%) of the then fully diluted Common Stock
of the Company.
SECTION 3.5. As described in the Company's 1996 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.
SECTION 3.8. See Section 3.5.
14
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
15
<PAGE>
EXHIBIT E
AMENDMENT NO. 3 TO THE REGISTRATION RIGHTS AGREEMENT
16
<PAGE>
EXHIBIT 8
AMENDMENT NUMBER 3 TO
REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT NUMBER 3 (the "Amendment") to the Registration Rights
Agreement dated as of December 30, 1994, as amended by Amendment Number 1
dated February 21, 1996 and Amendment Number 2 dated June 10, 1996 (the
"Rights Agreement"), is made as of August 6, 1997, by and among Aureal
Semiconductor Inc., a Delaware corporation (the "Company"), the purchasers of
Units set forth on Exhibit A to the Unit Purchase Agreement dated August 6,
1997 (the "Purchase Agreement"), by and among the Company and such purchasers
(the "Purchasers"), and the Prior Holders (as defined below). 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 (collectively,
the "No. 1 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 No. 1 Prior Holders and to make each of
the No. 1 Prior Holders a party to the Rights Agreement.
C. The Company, the No. 1 Prior Holders and the purchasers set forth
on Exhibit A to the Common Stock Purchase Agreement dated June 10, 1996,
amended the Rights Agreement pursuant to Amendment Number 2 to Registration
Rights Agreement dated June 10, 1996 (such purchasers and the No. 1 Prior
Holders are collectively referred to herein as the "No. 2 Prior Holders") to
grant equal registration rights to the No. 2 Prior Holders and to make each
of the No. 2 Prior Holders a party to the Rights Agreement.
D. The No. 1 Prior Holders and the No. 2 Prior Holders are
collectively referred to herein as the Prior Holders and are set forth on
SCHEDULE 1 hereto.
E. 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
1
<PAGE>
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 Agreements dated February 21, 1996, and June 10, 1996, by and among
the Company and such Prior Holders, (iii) all shares of Common Stock issued
pursuant to the Purchase Agreement to the Purchasers, (iv) all Warrant Shares
issued upon exercise of the Warrants (as defined in the Purchase Agreement)
and (v) shares of Common Stock issuable upon exercise of warrants issued
pursuant to the Second Amended and Restated Loan Agreement dated August 6,
1997 (the "Loan Agreement") between the Company and TCW (including 470,455
shares of Common Stock issuable upon exercise of warrants issued to B III
Capital Partners as a participant under the Loan 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, as amended, shall be
amended and restated in its entirety to provide as follows:
(a) The Company has registered the Registrable Shares, other
than those described in Sections 1(iii), (iv) and (v) and certain of those
described in Section 1(i) herein (collectively, the "UNREGISTERED REGISTRABLE
SHARES"), on Form S-3 (No. 333-3870) (the "INITIAL SHELF REGISTRATION"). The
Company will use its best efforts to include the Unregistered Registrable
Shares in the Initial Shelf Registration. If not included in the Initial
Shelf Registration within ninety (90) days after the Closing under the
Purchase Agreement, the Company will file a Subsequent Shelf Registration
within ninety (90) days after the Closing under the Purchase Agreement and
will use its best efforts to have such Subsequent Shelf Registration declared
effective by the SEC. 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
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 and the Registrable Shares covered thereby have been sold in
the manner set forth and as contemplated in such Subsequent Shelf
Registration (the "EFFECTIVENESS PERIOD").
3. Except as amended hereby, the Rights Agreement dated November
30, 1994, as amended on February 21, 1996, and on June 10, 1996, remains in
full force and effect.
4. By their signatures hereto, each of the Purchasers becomes a
party to the
2
<PAGE>
Rights Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 3 as of
the day and year first above written.
THE COMPANY:
AUREAL SEMICONDUCTOR INC.
By:
--------------------------------
Name:
Title:
3
<PAGE>
COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 3 TO
REGISTRATION RIGHTS AGREEMENT
PRIOR HOLDERS:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
1
<PAGE>
COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 3 TO
REGISTRATION RIGHTS AGREEMENT
PURCHASERS:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
1
<PAGE>
SCHEDULE I
Prior Holders:
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 Investment L.P.
Chestnut Investors III Inc.
Palomino Fund Ltd.
Pinto Investment LLC
Cerberus Partners, L.P.
Cerberus International
Ultra Cerberus
The Copernicus Fund, L.P.
The Galileo Fund, L.P.
IT Technologies Investment
Pequod Investments, L.P.
Senaca Capital
Oaktree Capital Management, LLC, as investment manager of Weyerhaeuser
Company Master Pension Trust, separate account
Heinz H. Steinmann
Leslie K. Alexander
1
<PAGE>
EXHIBIT 9
AMENDMENT NUMBER 4 TO
REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT NUMBER 4 (the "Amendment") to the Registration Rights
Agreement dated as of December 30, 1994, as amended by Amendment Number 1
dated February 21, 1996, Amendment Number 2 dated June 10, 1996 and Amendment
No. 3 dated August 6, 1997 (the "Rights Agreement"), is made as of June ____
1998, by and among Aureal Semiconductor Inc., a Delaware corporation (the
"Company"), TCW Special Credits, as agent and on behalf of the funds and
accounts set forth on Schedule I hereto ("TCW Special Credits") and B III
Capital Partners, L.P. ("B III"), and each as a purchaser of the Company's
Convertible Series B Preferred Stock issued pursuant to the 8% Series B
Convertible Preferred Stock Purchase Agreement dated June ___, 1998 (the
"Series B Agreement"), by and between the Company, TCW Special Credits and B
III (the "Series B Holders"), and the Prior Holders (as defined below).
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 (collectively,
the "No. 1 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 No. 1 Prior Holders and to make each of
the No. 1 Prior Holders a party to the Rights Agreement.
C. The Company, the No. 1 Prior Holders and the purchasers set forth
on Exhibit A to the Common Stock Purchase Agreement dated June 10, 1996,
amended the Rights Agreement pursuant to Amendment Number 2 to Registration
Rights Agreement dated June 10, 1996 (such purchasers and the No. 1 Prior
Holders are collectively referred to herein as the "No. 2 Prior Holders") to
grant equal registration rights to the No. 2 Prior Holders and to make each
of the No. 2 Prior Holders a party to the Rights Agreement.
D. The Company, the No. 1 Prior Holders, the No. 2 Prior Holders and
the purchasers set forth on Exhibit A to the Unit Purchase Agreement dated
August 6, 1997, amended the Rights Agreement pursuant to Amendment Number 3
to Registration Rights Agreement dated August 6, 1997 (such purchasers and
the No. 1 Prior holders and No. 2 Prior Holders are collectively referred to
herein as the "No. 3 Prior Holders") to grant equal registration rights to
the No. 3 Prior Holders and to make each of the No. 3 Prior Holders a party
to the Rights Agreement.
E. The No. 1 Prior Holders, the No. 2 Prior Holders and the No. 3
Prior Holders are collectively referred to herein as the Prior Holders and
are set forth on SCHEDULE 1 hereto.
1
<PAGE>
F. The Company and the Prior Holders now wish to amend the Rights
Agreement, as amended, in order to grant equal registration rights to the
Series B Holders and to make each of the Series B Holders 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 Agreements dated February 21, 1996, March 11, 1996 and June 10,
1996, by and among the Company and such Prior Holders, (iii) all shares of
Common Stock issued pursuant to the Unit Purchase Agreement dated August 6,
1997 by and among the Company and such Prior Holders (the "Unit Purchase
Agreement"), (iv) all Warrant Shares issued upon exercise of the Warrants (as
defined in the Unit Purchase Agreement), (v) shares of Common Stock issuable
upon exercise of warrants issued pursuant to the Second Amended and Restated
Loan Agreement dated August 6, 1997 (the "Loan Agreement") between the
Company and TCW (including 450,000 shares of Common Stock issuable upon
exercise of warrants issued to B III Capital Partners as a participant under
the Loan Agreement) and (vi) shares of Common Stock issuable upon conversion
of the shares of the Company's Series B Preferred Stock issued to the Series
B Holders pursuant to the Series B Agreement and Certificate of Designation
for the Company's Series B Preferred Stock. 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, as amended, shall be
amended and restated in its entirety to provide as follows:
(a) The Company has registered the Registrable Shares, other
than those described in Section 1(vi) and certain of those described in
Section 1(i) herein (collectively, the "UNREGISTERED REGISTRABLE SHARES"), on
Form S-3 (No. 333-3870) (the "INITIAL SHELF REGISTRATION"). The Company will
use its best efforts to include the Unregistered Registrable Shares in the
Initial Shelf Registration. If not included in the Initial Shelf
Registration within ninety (90) days after the Closing under the Series B
Agreement, the Company will file a Subsequent Shelf Registration within
ninety (90) days after the Closing under the Series B Agreement and will use
its best efforts to have such Subsequent Shelf
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Registration declared effective by the SEC. 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 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 and the Registrable Shares covered thereby
have been sold in the manner set forth and as contemplated in such Subsequent
Shelf Registration (the "EFFECTIVENESS PERIOD").
3. Except as amended hereby, the Rights Agreement dated
December 30, 1994, as amended on February 21, 1996, on June 10, 1996 and on
August 6, 1997, remains in full force and effect.
4. By its signature hereto, each of the Series B Holder becomes a
party to the Rights Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 4 to
the Registration Rights Agreement as of the day and year first above written.
THE COMPANY:
AUREAL SEMICONDUCTOR INC.
By:
-----------------------------
Name:
Title:
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COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 4 TO
REGISTRATION RIGHTS AGREEMENT
PRIOR HOLDERS:
By:
----------------------------
Name:
-------------------------
Title:
-------------------------
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COUNTERPART SIGNATURE PAGE TO
AMENDMENT NUMBER 4 TO
REGISTRATION RIGHTS AGREEMENT
SERIES B HOLDERS
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
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SCHEDULE I
Prior Holders:
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 Investment L.P.
Chestnut Investors III Inc.
Palomino Fund Ltd.
Pinto Investment LLC
Cerberus Partners, L.P.
Cerberus International
Ultra Cerberus
B III Capital Partners, DDJCapital III, LLC, its General Partner
The Copernicus Fund, L.P.
The Galileo Fund, L.P.
IT Technologies Investment
Pequod Investments, L.P.
Senaca Capital
Oaktree Capital Management, LLC, as investment manager of Weyerhaeuser
Company Master Pension Trust, separate account
Oaktree Capital Management, LLC, as investment manager of Weyerhaeuser
Company Master Retirement Trust, separate account
Heinz H. Steinmann
Leslie K. Alexander
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Exhibit 10
AUREAL SEMICONDUCTOR INC.
8% SERIES B CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
THIS 8% SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT is made
as of June ___, 1998, 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 Purchasers, as either an original lender or assignee of an
original lender, and the Company are parties to the Second Amended and
Restated Loan Agreement dated August 7, 1997, as amended by the First
Amendment to Second Amended and Restated Loan Agreement dated as of May 6,
1998 (the "Loan Agreement"), pursuant to which, among other things, the
Purchasers increased the amount of the revolving credit facility to up to
$31.5 million, have fully funded the Tranche A and B commitment of the
revolving credit facility (such outstanding Tranche A and B, hereinafter the
"Outstanding Debt");
WHEREAS, the Purchasers are the record and beneficial owners of the
Outstanding Debt under the Loan Agreement in the amounts set forth on EXHIBIT
A; and
WHEREAS, the Purchasers seek to convert the Outstanding Debt into equity
of the Company upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereby agree as follows:
1. SALE OF STOCK. Subject to the terms and conditions hereof, the
Company will issue and sell to each Purchaser, and each Purchaser will
purchase from the Company, at a Closing (as defined below), the number of
shares of 8% Series B Convertible Preferred Stock of the Company (the "Series
B Stock") set forth opposite each Purchaser's name on EXHIBIT A. In
consideration for each share of Series B Stock, each Purchaser shall agree to
cancel eight hundred dollars ($800.00) of the Outstanding Debt owed by the
Company to such Purchaser. In connection with the foregoing transactions, the
Company acknowledges that the participation interests in the Tranche B
Commitment (as such term is defined in the Loan Agreement) in the amount of
$4.5 million has been, immediately prior hereto, elevated to an assignment.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the
Series B Stock (the "Closing") shall be held on June __, 1998 (the "Closing
Date"), at the offices of Gray Cary Ware & Freidenrich LLP, 400 Hamilton
Avenue, Palo Alto, California 94301-1825.
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2.2 DELIVERY. Subject to the terms of this Agreement, at the
Closing the Company will deliver to the Purchasers the stock certificates
representing the Series B Stock to be purchased by the Purchasers from the
Company, against cancellation of the Outstanding Debt owed by the Company to
each Purchaser.
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.
3.2 CORPORATE POWER. The Company has all requisite legal and
corporate power to enter into this Agreement and all other agreements
contemplated hereby, to sell the Series B Stock 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 and 5,000,000 shares of Preferred
Stock. As of March 27, 1998, there were issued and outstanding 42,082,938
shares of the Company's Common Stock and 500 shares of the Company's Series A
Preferred Stock ("Series A Stock"). All such issued and outstanding shares
have been duly authorized and validly issued, are fully paid and
non-assessable and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The Company maintains
stock option plans and has issued stock options and warrants as noted below:
(a) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's 1995
Stock Option Plan and 1994 Stock Option Plan (collectively, the "Plans")
issued to employees or consultants to the Company: 9,594,975;
(b) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Crystal River
Engineering, Inc. Stock Option Plan: 1,999,269;
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(c) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's Outside
Director Stock Option Plan: 200,000;
(d) Shares of Common Stock reserved for issuance pursuant to
exercise of warrants to be issued to certain lenders in connection with the
expansion and restructuring of the Company's debt and extension thereof
through March 31, 2000: 3,150,000;
(e) Shares of Common Stock reserved for issuance pursuant to
exercise of an outstanding warrant to Hambrecht & Quist: 50,000;
(f) Shares of Common Stock reserved for issuance pursuant to
exercise of outstanding warrants issued by the Company to purchasers of units
on August 6, 1997: 955,000; and
(g) Shares of Common Stock reserved for issuance pursuant to
exercise of outstanding warrants to Swartz Investments, LLC: 140,000.
Other than the above noted reserved shares and the Common Stock to be
reserved for issuance upon conversion of the Series A Stock and the Series B
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 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 Series B Stock, and the Common Stock issuable upon
conversion of the Series B Stock 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 Series B Stock, when issued in compliance with the
provisions of this Agreement, and the Common Stock issuable upon conversion
of the Series B Stock, as provided for in the Certificate of Designation (the
"Certificate of Designation"), a form of which is attached hereto as EXHIBIT
C, will be validly issued, fully paid and nonassessable, and will be free of
any liens or encumbrances; provided, however, that the Series B Stock and the
Common Stock issuable upon conversion thereof 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.
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(c) No person has any right of first refusal or any
preemptive rights in connection with the issuance of the Series B Stock or
the Common Stock issuable upon conversion of the Series B Stock.
3.5 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 and as proposed to be conducted with
no known infringement of or conflict with the rights of others. Except as
contemplated in this Agreement, there are no outstanding options, licenses,
or agreements of any kind relating to the foregoing, nor is the Company bound
by or a party to any other options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. Except as disclosed in the Company's Annual Report
on Form 10-K for the period ended December 28, 1997 (the "10-K"), the Company
has not received any communications alleging that it has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware
that any of its employees are obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to
promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted or that would prevent any such
employee from assigning inventions to the Company. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business as
proposed, will, to the best of the Company's knowledge, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated. The Company does not believe that it is or will
be necessary for the Company to utilize any inventions of any of its
employees (or people it currently intends to hire) made prior to their
employment by the Company.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The
Company is not in violation of any term of its Certificate of Incorporation
or Bylaws, nor is the Company in violation in any material respect of any
mortgage, indenture, contract, agreement, instrument, judgment or decree, and
to the best of the Company's knowledge, the Company is not in violation of
any order, statute, rule or regulation applicable to the Company, including
by not limited to the Securities Exchange Act of 1934 and the reporting
obligations of the issuer with respect to Rule 144 under the Securities Act.
The execution, delivery and performance of and compliance with this Agreement
and the other agreements contemplated hereby, and the issuance and sale of
the Series B Stock (and the issuance of the Common Stock issuable upon
conversion of the Series B Stock) pursuant hereto, will not result in (a) any
such violation, or (b) be in conflict with or constitute a default under any
such term or (c) result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company
pursuant to any such term. In addition, the execution, delivery and
performance of and compliance with this Agreement and the other agreements
contemplated hereby, and the issuance and sale of the Series B Stock pursuant
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hereto, will not result in a violation of any law, statute or regulation
applicable to the Company, including Section 203 of the Delaware General
Corporation Law.
3.7 EMPLOYEES. Each officer and key employee of the Company has
executed an Employee Proprietary and Confidential Information Agreement. The
Company, after reasonable investigation, is not aware that any of its
employees are in violation thereof, and the Company will use its best efforts
to prevent any such violation.
3.8 LITIGATION, ETC. Except as set forth on EXHIBIT B, there are
no actions, proceedings or investigations pending against the Company or its
officers, directors, or stockholders, or to the best of the Company's
knowledge, against employees or consultants of the Company (or, to the best
of the Company's knowledge, any basis therefor or threat thereof): (1) which
might result in (a) any material adverse change in the business, prospects,
conditions, affairs or operations of the Company, or in any of their
properties or assets, or (b) any material impairment of the right or ability
of the Company to carry on its business as now conducted or as proposed to be
conducted, or (c) any material liability on the part of the Company; or (2)
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith. The Company does not currently plan to
initiate any litigation.
3.9 GOVERNMENTAL CONSENT, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority or any other person on the part of the Company is required in
connection with: (a) the valid execution and delivery of this Agreement; or
(b) the offer, sale or issuance of the Series B Stock (or the Common Stock
issuable upon conversion of the Series B Stock); or (c) the obtaining of the
consents, permits and waivers specified in subsection 5.1(c) hereof; or (d)
the consummation of any other transaction contemplated hereby; except, if
required, filings or qualifications under the Securities Act of 1933, as
amended (the "Securities Act") and California Corporate Securities Law of
1968, as amended (the "Law"), which filings or qualifications, if required,
will have been timely filed or obtained.
3.10 OFFERING. In reliance on the representations and warranties
of the Purchasers in Section 4 hereof, the offer, sale and issuance of the
Series B Stock in conformity with the terms of this Agreement will not result
in a violation of the requirements of Section 5 of the Securities Act or the
qualification requirements of the Law.
3.11 TAXES. The Company has timely filed all tax returns that are
required to have been filed with appropriate federal, state, county and local
governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise and other taxes due as
reflected on said returns. There is no pending dispute with any taxing
authority relating to any of such returns and the Company has no knowledge of
any proposed liability for any tax to be imposed upon the properties or
assets of the Company for which there is not an adequate reserve reflected in
the Company's financial statements contained in the 10-K.
3.12 REGISTRATION RIGHTS. Except pursuant to the Registration
Rights Agreement, dated as of December 30, 1994, as amended (the "Rights
Agreement"), by and
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among 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 to the Rights Agreement, the Copernicus Fund, L.P., the Galileo
Fund, L.P., and certain purchasers of the Company's Common Stock, and the
Registration Rights Agreement dated March 6, 1998, among the Company, Swartz
Investments, LLC and subscribers of the Company's Series A Stock, the Company
is not obligated to register any of its presently outstanding securities
which may hereafter be issued.
3.13 DISCLOSURE. Neither this Agreement and the exhibits hereto,
nor any of the other statements or certificates furnished or to be furnished
to the Purchasers pursuant hereto or in connection with the transactions
contemplated hereby, including the 10-K, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements contained herein and therein not misleading in light of the
circumstances under which such statements were made.
3.14 COMPLIANCE WITH PUBLIC REPORTING REQUIREMENTS. As of the
Closing Date, the Company is in compliance in all material respects with the
applicable requirements of the Exchange Act of 1934, as amended.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS AND
RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933.
4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PURCHASERS.
Each Purchaser represents, warrants and covenants to the Company as follows:
(a) The Series B Stock and the Common Stock issuable upon
conversion of the Series B Stock (collectively, for purposes of this Section
4, the "Securities") to be received by the Purchaser will be acquired for
investment for the Purchaser's own account, for investment and not with a
view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act and the Law. The
Purchaser has the full right, power and authority to enter into and perform
this Agreement and all other agreements contemplated hereby, and this
Agreement and all other agreements contemplated hereby constitute valid and
binding obligations of the Purchaser. The Purchaser acknowledges and
understands that the Securities must be held indefinitely unless the
Securities are subsequently registered under the Securities Act and qualified
under the Law or an exemption from such registration and such qualification
is available.
(b) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act
or an exemption from registration under applicable federal securities laws).
(c) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the Purchaser's prospective investment in the Securities. The
Purchaser has the ability to bear the economic
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risks of the Purchaser's prospective investment. The Purchaser has been
furnished with and has had access to such information as the Purchaser has
considered necessary to make a determination as to the purchase of the
Securities together with such additional information as is necessary to
verify the accuracy of the information supplied. The Purchaser is fully
aware of (i) the highly speculative nature of the investment in the
Securities; (ii) the financial hazards involved; (iii) the lack of liquidity
of the Securities, and the restrictions on the transferability of the
Securities; and (iv) the tax consequences of investment in the Securities.
The Purchaser has had all questions which have been asked by the Purchaser
satisfactorily answered by the Company. The Purchaser has not been offered
the Series B Stock by any form of advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any such media.
4.2 LEGENDS. Each certificate or other instruments representing
any of the Securities may be endorsed with the following legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.
(b) Any other legends required by the Law.
The Company need not register a transfer of legended Securities, and may also
instruct its transfer agent not to register the transfer of the Securities
unless the conditions specified in each of the foregoing legends are
satisfied.
4.3 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. Any legend
endorsed on a certificate or other instrument pursuant to subsection 4.2(a)
and 4.2(b) and the stop transfer instructions with respect to such legended
securities shall be removed, and the Company shall issue a certificate
without such legend to the holder of such securities if such securities are
registered under the Securities Act and a prospectus meeting the requirements
of Section 10 of the Securities Act is available or if such holder satisfies
the requirements of Rule 144(k) and, where reasonably deemed necessary by the
Company, the holder provides the Company with an opinion of counsel for such
holder of the securities, reasonably satisfactory to the Company, to the
effect that (i) such holder meets the requirements of Rule 144(k) or (ii) a
public sale, transfer or assignment of such securities may be made without
registration.
4.4 RULE 144. The Purchaser is aware of the adoption of Rule 144
by the Securities and Exchange Commission (the "SEC") promulgated under the
Securities Act,
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which permits limited public resales of securities acquired in a nonpublic
offering, subject to the satisfaction of certain conditions. The Purchaser
understands that under Rule 144, the conditions include, among other things:
the availability, under certain conditions, of certain current public
information about the issuer and the resale occurring not less than one year
(with certain restrictions) after the party has purchased and paid for the
securities to be sold. The Company covenants that (i) the Company will use
its best efforts to comply with the current public information requirements
of Rule 144(c)(1) under the Securities Act and (ii) at all such times as Rule
144 is available for use by the Purchaser, the Company will furnish the
Purchaser upon request with all information within the possession of the
Company required for the preparation and filing of Form 144.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligation of
the Purchasers to purchase the Series B Stock at the Closing is subject to
the fulfillment to their satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived in accordance with the
provisions of subsection 6.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Company's
business and assets shall not have been adversely affected in any material
way prior to the Closing Date. The Company shall have performed in all
material respects all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b) OPINION OF COMPANY'S COUNSEL. Gray Cary Ware &
Freidenrich LLP, counsel to the Company, shall have delivered an opinion
addressed to the Purchasers, dated the Closing Date, substantially in the
form as that attached hereto as EXHIBIT D.
(c) CONSENTS AND WAIVERS. The Company shall have obtained in
a timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this
Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the
purchase of the Series B Stock hereunder shall be legally permitted by all
laws and regulations to which the Purchasers and the Company are subject.
(e) COMPLIANCE CERTIFICATE. The Company shall have delivered
a Certificate, executed by the President and the Chief Financial Officer of
the Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (c) and (d) of this Section 5.1.
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(f) EXECUTION OF AMENDMENT TO THE RIGHTS AGREEMENT. The
Company and the Purchasers shall have executed Amendment No. 4 to the
Registration Rights Agreement dated December 30, 1994, in the form attached
hereto as EXHIBIT E.
(g) FAIRNESS OPINION. Houlihan Lokey Howard & Zukin ("HLHZ")
shall have delivered an opinion to the Company regarding the fairness of the
sale of the Series B Stock by the Company to the Purchasers, in a form
reasonably satisfactory to the Purchasers and the Company.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to sell and issue the Series B Stock at the Closing is subject to
the fulfillment to the Company's satisfaction on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company in
accordance with the provisions of subsection 6.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 4 hereof
shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) CONSENTS AND WAIVERS. Each of the Purchasers shall have
obtained in a timely fashion any and all consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
this Agreement.
(c) OUTSTANDING DEBT. The Company shall have received
documentation regarding the cancellation the Outstanding Debt from the
Purchasers prior to the Closing.
(d) RELEASE OF SECURITY INTERESTS. The Purchasers shall have
filed the appropriate UCC forms to release all of the Purchasers' liens on
the Company's assets.
(e) FAIRNESS OPINION. HLHZ shall have delivered an opinion
to the Company regarding the fairness of the sale of the Series B Stock by
the Company to the Purchasers, in a form reasonably satisfactory to the
Purchasers and the Company.
(f) SATISFACTION OF CONDITIONS. The conditions set forth in
subsections (c) and (d) of Section 5.1 shall have been fulfilled.
6. MISCELLANEOUS.
6.1 WAIVERS AND AMENDMENTS. This Agreement or any provision
hereof may be amended, waived, discharged or terminated only by a statement
in writing signed by the party against which enforcement of the amendment,
waiver, discharge or termination is sought.
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6.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California without regard to conflict of
law principles.
6.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the
Purchasers. All statements as to factual matters contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties by the Company hereunder as of the date of
such certificate or instrument.
6.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto.
6.5 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto.
6.6 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be delivered personally
or mailed by first class mail, postage prepaid, or via facsimile or
TWX/Telex, addressed (a) if to the Purchasers at the address set forth on
EXHIBIT A to this Agreement, or at such other address as the Purchasers shall
have furnished to the Company in writing, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other
address as the Company shall have furnished to the Purchasers in writing,
with a copy of any said notice to be sent to Gray Cary Ware & Freidenrich
LLP, 400 Hamilton Avenue, Palo Alto, California 94301-1825, Attention: James
M. Koshland, Esq. Notices that are mailed shall be deemed received ten (10)
days after deposit in the mail. In the event that the notice is sent by
facsimile or TWX/Telex, notice shall be deemed to have been received when
sent and confirmed as to receipt.
6.7 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
6.8 EXPENSES. The Company and the Purchasers shall each bear
their own expenses and legal fees in connection with this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, the Company
shall pay the reasonable legal fees and related costs of the Purchasers, up
to an aggregate of $10,000.
6.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
10
<PAGE>
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to the Company or to the Purchasers shall
impair any such right, power or remedy of the Company or the Purchasers, nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any delay or omission to exercise any
right, power or remedy or any waiver of any single breach or default be
deemed a waiver of any other right, power or remedy or breach or default
theretofore or thereafter occurring. All remedies, either under this
Agreement, or by law otherwise afforded to the Company or the Purchasers,
shall be cumulative and not alternative.
6.12 ARBITRATION. Any controversy or claim arising out of or
related to this Agreement or the breach thereof, shall be settled by binding
arbitration in San Francisco, California in accordance with the Expedited
Procedures (Rules 53-57) of the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). A proceeding may be commenced upon written
demand by the Company, any original Purchaser (as set forth on EXHIBIT A
hereto) or Purchasers holding a majority of the Series B Stock. The
arbitrator shall enter a judgment by default against any party which fails or
refuses to appear in any properly noticed arbitration proceeding. The
proceeding shall be conducted by one arbitrator. The arbitrator will be
chosen by the parties from a list provided by the AAA, and if they are unable
to agree within ten (10) days, the AAA shall select the arbitrator. The
arbitrator must be an expert in securities law and financial transactions.
The nonprevailing party in any arbitration shall pay all costs and expenses
incurred by the prevailing party, including reasonable attorney fees and
expenses. Each party submits irrevocably to the jurisdiction of any state
court or United States District Court sitting in San Francisco, California
for purposes of enforcement of any discovery order, judgment or award in
connection with such arbitration. The award of the arbitrator shall be final
and binding upon the parties and may be enforced in any court having
jurisdiction.
AUREAL SEMICONDUCTOR INC.
By ______________________________
11
<PAGE>
COUNTERPART SIGNATURE PAGE TO
8% SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF JUNE ___, 1998
"PURCHASER"
TCW Special Credits, as agent and
on behalf of the funds and accounts
set forth on Schedule I, attached
hereto
By: TCW Asset Management Company
Its: Managing General Partner
By: ____________________________
By: ____________________________
If you are signing on behalf of Name of Organization
an entity, please print the legal
name of the entity and sign to the __________________________
right, indicating your title
Name (Please Print)
______________________________
Title:________________________
12
<PAGE>
COUNTERPART SIGNATURE PAGE TO
8% SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF JUNE ___, 1998
"PURCHASER"
B III Capital Partners, L.P.
By: __________________________
Its: _________________________
13
<PAGE>
SCHEDULE I
(8% SERIES B CONVERTIBLE PREFERRED STOCK)
<TABLE>
<CAPTION>
TCW TRANCHE A & B LENDERS NO. OF SHARES
------------------------- -------------
<S> <C>
TCW Special Credits Trust 7,087
TCW Special Credits Fund IIIb 13,838
TCW Special Credits Trust IIIb 10,800
TCW Special Credits, as Investment Manager 2,025
of Delaware State Employees Retirement Fund
(separate account)
</TABLE>
14
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES AMOUNT OF CANCELED DEBT
- - ---------------- ------ -----------------------
<S> <C> <C>
TCW Special Credits Trust 7,087 $ 5,670,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Attn: Kenneth Liang
TCW Special Credits Fund IIIb 13,838 $ 11,070,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Attn: Kenneth Liang
TCW Special Credits Trust IIIb 10,800 $ 8,640,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Attn: Kenneth Liang
TCW Special Credits, as Investment
Manager of Delaware State Employees
Retirement Fund (Separate Account) 2,025 $ 1,620,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Attn: Kenneth Liang
15
<PAGE>
B III Capital Partners, L.P. 5,625 $ 4,500,000
c/o DDJ Capital Management, LLC
141 Linden Street, Suite S-4
Wellesley, MA 02181
Attn: General Counsel
------ --------------
TOTAL 39,375 $ 31,500,000
</TABLE>
16
<PAGE>
EXHIBIT B
SCHEDULE OF EXCEPTIONS
AUREAL SEMICONDUCTOR INC.
Pursuant to Section 3 of the 8% Series B Convertible Preferred Stock Purchase
Agreement dated June ___, 1998 (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. Capitalized terms used in this schedule unless
otherwise specified have the same meanings given them in the Agreement.
Section 3.3
- - -----------
The Company may increase the reserves under the Plans automatically so that
the reserves under such plans, in the aggregate, equal twenty percent
(20%) of the then fully diluted Common Stock of the Company.
The Company is currently negotiating the sale of up to $15,000,000 of Series
C Preferred Stock. In the event the Company issues shares of Series C
Preferred Stock, the Company will reserve an equal number of shares of Common
Stock for issuance upon conversion of such shares.
Section 3.5
- - -----------
As described in the Company's 1996 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.
On February 27, 1998, Aureal was served with an action filed by Creative
Technology Ltd., a Singapore corporation, and E-MU Systems, Inc., a
California corporation, in federal district court in the Northern District of
California, alleging patent infringement by Aureal. The plaintiffs claim that
Aureal's Vortex 8820 PCI-based AC'97 Digital Audio Processor infringes United
States Patent No. 5,342,990 entitled "Digital Sampling Instrument Employing
Cache-Memory" which basically describes a specific implementation for a
stand-alone music synthesizer circuit. The Company has reviewed the
allegations in the omplaint and believes that the action is completely
without merit and intends to vigorously pursue defense of this action.
Shiva Holdings Limited ("Shiva") filed a cross-complaint against the Company
in December 1997 alleging breach of contract, breach of implied covenant of
good faith and fair dealing, fraud and negligent misrepresentation in
connection with the Agreement for Purchase of
17
<PAGE>
Certain Assets entered into between Shiva and the Company in February 1996.
The Company had filed an action against Shiva for breach of contract and
specific performance in connection with the failure of Shiva to pay
certain amounts due under the February 1996 agreement. Shiva alleges that
the Company made certain misrepresentations in the sale of assets by the
Company to Shiva and is seeking damages in excess of $1,000,000. The
Company believes that the claims by Shiva are groundless and intends to
defend them vigorously.
On or about September 4, 1997, Jonathan S. Abel, Ph.D., filed a Demand for
Arbitration against the Company in the San Francisco office of the American
Arbitration Association. The demand asserts claims for declaratory relief
and breach of contract. It seeks general and compensatory damages of
$16,770, together with additional damages according to proof, and a judicial
determination that Dr. Abel has performed his contractual duties, has not
misappropriated any Aureal trade secrets and that certain technology that Dr.
Abel has developed does not belong to Aureal. The Company believes that the
claims by Dr. Abel are groundless and intends to defend them vigorously.
The Company has licensed its Media Vision retail trade names to a third
party.
Section 3.8
- - -----------
See Section 3.5.
18
<PAGE>
EXHIBIT C
CERTIFICATE OF DESIGNATION
19
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
20
<PAGE>
EXHIBIT E
---------
AMENDMENT NO. 4 TO THE REGISTRATION RIGHTS AGREEMENT
21
<PAGE>
EXHIBIT 11
JOINT FILING AGREEMENT
Each of the undersigned acknowledges and agrees that the foregoing
statement on Schedule 13D is filed on behalf of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of the undersigned without the necessity of filing additional joint
acquisition statements. Each of the undersigned acknowledges that it shall
be responsible for the timely filing of such amendments, and for the
completeness and accuracy of the information concerning it contained therein,
but shall not be responsible for the completeness and accuracy of the
information concerning the other, except to the extent that he or it knows or
has reason to believe that such information is inaccurate.
Dated as of this 17th day of June, 1998.
THE TCW GROUP, INC.
BY: /S/ MOHAN V. PHANSALKAR
- - -----------------------------------------------
Mohan V. Phansalkar
Authorized Signatory
TRUST COMPANY OF THE WEST
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory
TCW ASSET MANAGEMENT COMPANY
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory
TCW SPECIAL CREDITS
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory of
TCW Asset Management Company, the
Managing General Partner of TCW
Special Credits
TCW SPECIAL CREDITS FUND IIIb
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory
of TCW Asset Management Company, the Managing
General Partner of TCW Special Credits, the
General Partner of TCW Special Credits Fund IIIb
<PAGE>
TCW SPECIAL CREDITS TRUST
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory of
Trust Company of the West, the trustee of
TCW Special Credits Trust
TCW SPECIAL CREDITS TRUST IIIb
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson, Authorized Signatory of
Trust Company of the West, the trustee of
TCW Special Credits Trust IIIb
ROBERT A. DAY
BY: /S/ MOHAN V. PHANSALKAR
- - -----------------------------------------------
Mohan V. Phansalkar
Under Power of Attorney dated January 30, 1996,
on file with Schedule 13G Amendment No. 1 for
Matrix Service Co. dated January 30, 1996
OAKTREE CAPITAL MANAGEMENT, LLC
BY: /S/ D. RICHARD MASSON
- - -----------------------------------------------
D. Richard Masson
Principal
