REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
May 26, 1999, between Aureal Semiconductor Inc., a Delaware corporation (the
"COMPANY"), and TCW Special Credits ("TCW"), as agent and on behalf of the
funds and accounts listed under the heading "TCW Holders" on SCHEDULE 1
hereto (the "TCW HOLDERS") and Oaktree Capital Management, LLC ("OCM"), as
agent and on behalf of the funds and accounts under the heading "Oaktree
Holders" on SCHEDULE 1 hereto (the "OAKTREE HOLDERS" and, together with the
TCW Holders, collectively, the "HOLDERS").
R E C I T A L S
WHEREAS, on the date hereof, each Holder is the owner of the
respective number of shares of the Company's Common Stock, par value $.01 per
share (the "COMMON STOCK"), and other securities of the Company convertible
into shares of Common Stock set forth opposite the name of such Holder on the
Schedule 1 hereto;
WHEREAS, in connection with the Company's restructuring, certain of
the Holders have (i) acted as standby purchasers in connection with the
Company's offering to its stockholders of rights to purchase a pro rata
portion of up 33,333,333 shares of Common Stock (the "RIGHTS SHARES") for an
aggregate purchase price of up to $20,000,000 and (ii) converted all of the
shares of 8% Series B Convertible Preferred Stock (the "SERIES B STOCK") held
by the Holders and received an aggregate of 47,222,282 shares (the
"RESTRUCTURING SHARES") in connection therewith;
WHEREAS, the parties hereto desire to provide for the registration
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder as in effect from time to time (the "SECURITIES ACT"), of the
shares of Common Stock owned or acquired by the Holders, on the terms and
conditions set forth herein; and
WHEREAS, a Special Committee of the Board of Directors of the
Company has authorized the officers of the Company to execute and deliver
this Agreement in the name of and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, in addition to
the definitions set forth above and elsewhere herein, the following terms
shall have the following respective meanings:
"AFFILIATE" of a Holder shall mean a person who controls, is
controlled by or is under common control with such Holder or, the spouse or
children (or a trust exclusively for the benefit of a spouse and/or
children) of such Holder or, in the case of a Holder which is a trust, the
trustee and the beneficiaries of such trust.
"CLEARANCE NOTICE" shall have the meaning specified in the last
paragraph of Section 5.
"COMMISSION" shall mean the United States Securities and Exchange
Commission and any successor agency thereto.
"COMMON STOCK" shall have the meaning specified in the first Recital.
"COMPANY" shall have the meaning specified in the Preamble.
"DEMAND NOTICE" shall have the meaning specified in Section 2(a).
"DEMAND REGISTRATION" shall have the meaning specified in
Section 2(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"HOLDER" shall mean a Holder or any transferee or assignee to whom the
rights under this Agreement are assigned in accordance with the provisions
of Section 10 hereof.
"MAXIMUM OFFERING SIZE" shall have the meaning specified in
Section 3(b)(ii).
"OCCURRENCE NOTICE" shall have the meaning specified in the last
paragraph of Section 5.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"REGISTRABLE STOCK" shall mean: (i) the Common Stock beneficially
owned by the Holders on the date hereof (including, without limitation, the
Rights Shares and the Restructuring Shares) or otherwise issuable upon
exercise, conversion or surrender of securities of the Company beneficially
owned by the Holders on the date hereof; (ii) any Common Stock issued as
(or issuable upon the conversion or exercise of any warrant, right, option
or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Common Stock owned by the Holders on the date hereof, (iii) any Common
Stock or other securities of the Company acquired by any Holder after the
date hereof and (iv) any Common Stock issued by way of a stock split of the
Common Stock referred to in clauses (i), (ii) or (iii) above. For purposes
of this Agreement, any Registrable Stock shall cease to be Registrable
Stock when (x) a registration statement covering such Registrable Stock has
been declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement or (y) such Registrable
Stock is sold or distributed pursuant to Rule 144 (or any similar or
successor provision (but not Rule 144A)) under the Securities Act.
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"REQUESTING HOLDERS" shall have the meaning specified in Section
2(a).
"SECURITIES ACT" shall have the meaning specified in the third
Recital.
"SHELF REGISTRATION" shall have the meaning specified in
Section 2(b)(i).
"SHELF REGISTRATION STATEMENT" shall have the meaning specified in
Section 2(b)(ii).
"HOLDER" or "HOLDERS" shall have the meaning specified in the
Preamble.
"UNDERWRITTEN OFFERING" or "Underwritten Registration" shall mean a
registration in which securities of the Company are sold to an underwriter
or underwriters for reoffering to the public.
2. DEMAND REGISTRATION .
(a) At any time commencing 180 days after the date of this Agreement,
the Holders of at least 10% of the then outstanding Registrable Stock (the
"REQUESTING HOLDERS") may request, in a written notice to the Company (a
"DEMAND NOTICE"), that the Company file a registration statement under the
Securities Act covering the registration of Registrable Stock the
reasonably anticipated aggregate price to public of which exceeds
$2 million in the manner specified in such notice (a "DEMAND
REGISTRATION"). Promptly following receipt of a Demand Notice (such request
to state the number of shares of Registrable Stock to be so included and
the intended method of distribution), the Company shall (x) within sixty
(60) days notify all other Holders of such request in writing and (y) use
its best efforts to cause to be registered under the Securities Act all
Registrable Stock that the Requesting Holders and such other Holders have,
within sixty (60) days after the Company has given such notice, requested
be registered in accordance with the manner of distribution specified in
the Demand Notice by the Requesting Holders.
(b) (i) If any Demand Registration is requested to be a "shelf"
registration by the Requesting Holders of the Registrable Stock to be
included in such Demand Registration, the Company shall cause to be
filed pursuant to Rule 415 under the Securities Act a shelf
Registration Statement (a "SHELF REGISTRATION STATEMENT") with respect
to the number of shares of Registrable Stock requested to be so
registered (a "SHELF REGISTRATION"). The Company shall keep such
Shelf Registration Statement continuously effective for a period of at
least two years following the date on which the Commission declares
such Shelf Registration Statement effective under the Securities Act
(subject to extension pursuant to Section 4(a) and the last paragraph
of Section 5 hereof), or such shorter period ending when all of the
shares of Registrable Stock covered by such Shelf Registration
Statement have been sold.
(ii) Upon the occurrence of any event that would cause the Shelf
Registration Statement (A) to contain a material misstatement or
omission or (B) to be not effective and usable for resale of
Registrable Stock during the period
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that such Shelf Registration Statement is required to be effective
and usable, the Company shall promptly file an amendment to the
Shelf Registration Statement, in the case of clause (A), correcting
any such misstatement or omission and, in the case of either clause
(A) or (B), use its best efforts to cause such amendment to be
declared effective and such Shelf Registration Statement to become
usable as soon as practicable thereafter.
(c) If the Requesting Holders intend to have the Registrable Stock
distributed by means of an Underwritten Offering, the Company shall include
such information in the written notice referred to in clause (x) of
Section 2(a) above. In such event, the right of any Holder to include its
Registrable Stock in such registration shall be conditioned upon such
Holder's participation in such Underwritten Offering and the inclusion of
such Holder's Registrable Stock in the Underwritten Offering (unless
otherwise mutually agreed by a majority in interest of the Requesting
Holders and such Holder) to the extent provided below. All Holders
proposing to distribute Registrable Stock through such Underwritten
Offering shall enter into an underwriting agreement in customary form with
the underwriter or underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting Holders and approved
by the Company's Board of Directors (which approval shall not be
unreasonably withheld); PROVIDED, that (i) all of the representations and
warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the
benefit of such Holders of Registrable Stock, (ii) any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of
such Holders of Registrable Stock, and (iii) no Holder shall be required to
make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Stock of such Holder and such
Holder's intended method of distribution and any other representations
required by law or reasonably required by the underwriter. If any Holder
of Registrable Stock disapproves of the terms of the underwriting, such
Holder may elect to withdraw all its Registrable Stock by written notice to
the Company, the managing underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration and shall
remain Registrable Stock.
(d) The Company shall not be obligated to effect more than three
Demand Registrations; PROVIDED, however, that a Demand Registration shall
not be deemed to have been effected for purposes of this Section 2(e)
unless: (i) it has been declared effective by the Commission; (ii) it has
remained effective for the period set forth in Section 5(a) and (iii) the
offering of Registrable Stock pursuant to such registration is not subject
to any stop order, injunction or other order or requirement of the
Commission (other than any such stop order, injunction or other requirement
of the Commission prompted by any act or omission of a Requesting Holder).
(e) If, pursuant to the provisions of this Section 2, the Company
attempts to register Registrable Stock and the holders of a majority of the
Registrable Stock requested to be included in such registration
subsequently withdraw from such offering and, as a result, the offering of
any Registrable Stock does not occur, then such
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withdrawal shall be deemed a demand registration for purposes of this
Section 2 unless (i) the withdrawal follows disclosure of or is due to
material adverse information not publicly disclosed by the Company prior
to delivery of the Demand Notice resulting in such registration or (ii)
the Company's registration expenses, including the fees and disbursements
of the Company's legal counsel, are fully reimbursed by the Holders.
3. INCIDENTAL REGISTRATION.
(a) Subject to Section 8 and the other terms and conditions
set forth in this Section 3, if at any time the Company determines
that it shall file a registration statement under the Securities Act
(other than a registration statement on Form S-4 or S-8 or filed in
connection with an exchange offer or an offering of securities
solely to the Company's existing stockholders) on any form that
would also permit the registration of the Registrable Stock and such
filing is to be on the Company's behalf and/or on behalf of selling
holders (including Requesting Holders) of its securities for the
sale of shares of Common Stock, the Company shall each such time
promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such
registration statement, which date shall be no earlier than 30 days
from the date of such notice, and advising such Holders of their
right to have Registrable Stock included in such registration. Upon
the written request of any Holder received by the Company no later
than 30 days after the date of the Company's notice, the Company
shall use its best efforts to cause to be registered under the
Securities Act all of the Registrable Stock that each such Holder
has so requested to be registered.
(b) The Company's obligation to include Registrable Stock in
a registration statement pursuant to Section 3(a) above is subject
to the following limitations, conditions and qualifications:
(i) If, at any time after giving written notice of its
determination to register its securities and prior to the effective
date of any registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give
written notice of such determination to the Holders and thereupon the
Company shall be relieved of its obligation to use any efforts to
register any Registrable Stock in connection with such aborted
registration; PROVIDED, that the provisions of this clause (i) shall
not affect the obligations of the Company with respect to a Demand
Registration.
(ii) If, in the opinion of the managing underwriter, the total
amount of such securities to be so registered, including such
Registrable Stock, will exceed the maximum amount (the "MAXIMUM
OFFERING SIZE") of the Company's securities that can be sold in such
offering, then the Company shall include in such registration, in
the following priority up to the Maximum Offering Size: (x) first,
all of the securities proposed to be registered for offer and sale
by the Company, (y) second, all of the Registrable Stock requested
to be included in such registration by the Holders pursuant to this
Section, allocated, if necessary for such offering not to exceed the
Maximum Offering Size, pro rata among the
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Holders requesting registration of such Registrable Stock on the
basis of the relative number of shares of Registrable Stock each
such Holder has requested to be included in such registration, and
(z) third, any other securities of the Company requested to be
registered by any other parties.
4. HOLDBACK AGREEMENTS.
(a) Each Holder of Registrable Stock agrees, if so required
(pursuant to a timely notice) by the Company or the managing underwriter
in any Underwritten Offering, not to effect any public sale of
distribution of securities of the Company of the same class as the
securities included in such Underwritten Registration, or any securities
convertible into or exchangeable to exercisable therefor, during the 7
days prior to and the 90 days after any Underwritten Registration
pursuant to Section 2 or Section 3 has become effective, except as part
of such Underwritten Registration; PROVIDED, that no Holder shall be so
required unless the executive officers and directors of the Company and
each holder of 5% or more (on a fully diluted basis) of its equity
securities, or any securities convertible into or exchangeable or
exercisable for such securities, so agree. Notwithstanding the foregoing
sentence, each Holder of Registrable Stock subject to the foregoing
sentence shall be entitled to sell securities during the foregoing period
in a private sale. If a request is made pursuant to this Section 4(a),
then the time period during which a Shelf Registration is required to
remain continuously effective for such Holders of Registrable Stock
pursuant to the terms of this Agreement shall be extended 210 days.
None of the foregoing provisions of this Section 4(a) shall
apply to any Holder of Registrable Stock if such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
PROVIDED, that any such Holder shall undertake not to effect any public
sale or distribution of the Registrable Stock unless such Holder has
provided 15 days' prior written notice of such sale or distribution to
the underwriter or underwriters.
(b) The Company agrees (i) if so required by the managing
underwriter of any Underwritten Offering, not to effect any public sale
or distribution of securities of the same class as the securities
included in such Underwritten Registration or securities convertible into
or exchangeable or exercisable therefor during the 7 days prior to and
the 90 days after any Underwritten Registration pursuant to Section 2 or
Section 3 has become effective, except as part of such Underwritten
Registration and except pursuant to registrations on Form S-4 or S-8 or
any successor form to such Forms, and (ii) to use commercially reasonable
efforts to cause each holder of equity securities included in any
Underwritten Registration or any securities convertible into or
exchangeable or exercisable therefor, in each case purchased from the
Company at any time after the date of this Agreement (other than in a
public offering) to agree not to effect any public sale or distribution
of or otherwise dispose of shares of equity securities (or such other
securities) during such period except as part of such Underwritten
Registration.
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5. REGISTRATION PROCEDURES. Whenever required under Section 2 or
Section 3 of this Agreement to use its best efforts to effect the registration
of any Registrable Stock, the Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to cause
such registration statement to become and remain effective for the period
of the distribution contemplated thereby;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to each Holder such numbers of copies of the registration
statement and each prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto) in conformity with
the requirements of the Securities Act and such other documents and
information as they may reasonably request;
(d) use its best efforts to register or qualify the Registrable Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the Registrable Stock covered by the registration
statement; PROVIDED, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in
or to file a general consent to service of process in any jurisdiction
wherein it would not but for the requirements of this paragraph (d) be
obligated to do so;
(e) promptly notify (but in any event within five business days) the
selling Holders of Registrable Stock, their counsel and the managing
underwriters, if any, and confirm such notice in writing, (i) when a
prospectus or any prospectus supplement has been filed and, with respect to
a registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
registration statement or related prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or of any order preventing or
suspending the use of any prospectus or the initiation of any proceedings
by any Person for that purpose, (iv) if at any time the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated by Section 6(l) below cease to be true
and correct in all material respects (except that phrase "in all material
respects" shall be disregarded to the extent any such representation and
warranty is qualified by "material," "material adverse change," "material
adverse effect" or any phrase using any such term), (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of exempting from qualification of a registration statement
or any of the Registrable Stock for offer or sale under the securities or
blue sky laws of any jurisdiction, or to the extent the Company has
knowledge or has received notice, of the contemplation, initiation or
threatening of any proceeding for such purpose, (vi) of the happening of
any event that makes any statement made in such registration statement or
related prospectus or any
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document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in such registration statement, prospectus or documents so that it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made (in the case of the prospectus only) not misleading, and (vii) of
the Company's reasonable determination that a post-effective amendment to
a registration statement would be appropriate;
(f) furnish, at the request of any Holder requesting registration of
Registrable Stock pursuant to Section 2, if the method of distribution is
by means of an Underwritten Offering, on the date that the shares of
Registrable Stock are delivered to the underwriters for sale pursuant to
such registration, or if such Registrable Stock is not being sold through
underwriters, on the date that the registration statement with respect to
such shares of Registrable Stock becomes effective: (i) a signed opinion,
dated such date, of the independent legal counsel representing the Company
for the purpose of such registration, addressed to the underwriters, if
any, and if such Registrable Stock is not being sold through underwriters,
then to the Holders making such request, as to such matters as such
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably request
and as would be customary in such a transaction and (ii) letters dated such
date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if any,
and if such Registrable Stock is not being sold through underwriters, then
to the Holders making such request (1) stating that they are independent
certified public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act and (2) covering such other financial matters
(including information as to the period ending not more than five business
days prior to the date of such letters) as such underwriters or the Holders
holding a majority of the Registrable Stock included in such registration,
as the case may be, may reasonably request and as would be customary in
such a transaction;
(g) enter into customary agreements (including, if the method of
distribution is by means of an Underwritten Offering, an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the
Registrable Stock to be so included in the registration statement;
(h) As promptly as practicable upon the occurrence of any event
contemplated by paragraph (e)(vi) above, prepare a supplement or post-
effective amendment to the registration statement or a supplement to the
related prospectus or any documents incorporated or deemed to be
incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Stock
being sold thereunder, such prospectus will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances; in which they are made, not misleading
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(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission; and
(j) use its best efforts to list the Registrable Stock covered by
such registration statement with any securities exchange on which the
Common Stock of the Company is then listed.
For purposes of Sections 5(a) and 5(b), the period of distribution of
Registrable Stock in a firm commitment Underwritten Offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable
Stock in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable Stock covered thereby and one year after the
effective date thereof.
Each Holder of Registrable Stock agrees that, upon receipt of written
notice from the Company of the happening of any event of the kind described
in Section 5(e)(ii), 5(e)(iii), 5(e)(v), 5(e)(vi) or 5(e)(vii) (an
"OCCURRENCE NOTICE"), such Holder will forthwith discontinue disposition of
such Registrable Stock covered by such registration statement or prospectus
until such Holder's receipt of the copies of the supplemented or amended
registration statement or prospectus contemplated by Section 5(h), or until
it receives notice in writing (a "CLEARANCE NOTICE") from the Company that
the use of the applicable prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated or deemed to
be incorporated by reference in such prospectus, and, if so directed by the
Company, such Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Stock current at the
time of receipt of such notice. If the Company shall deliver an Occurrence
Notice in connection with any registered sale of Registered Stock, the time
periods mentioned in Section 2 hereof shall be extended by the number of days
during such periods from and including the date of delivery of such
Occurrence Notice to and including the date when each seller of Registrable
Stock covered by such registration statement receives (x) the copies of the
supplemented or amended prospectus contemplated by Section 5(h) hereof or (y)
a Clearance Notice, as the case may be.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding
themselves, the Registrable Stock held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
7. EXPENSES OF REGISTRATION. All expenses incurred in connection
with each registration pursuant to Section 2 and Section 3 of this Agreement,
excluding underwriters' discounts and commissions, but including without
limitation all registration, filing and qualification fees, word processing,
duplicating, printers' and accounting fees (including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state
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securities or blue sky laws, fees and disbursements of counsel for the
Company, and the fees and disbursements of one counsel for the selling
Holders (which counsel shall be selected by the Holders holding a majority in
interest of the Registrable Stock being registered), shall be paid by the
Company. The Holders shall bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection
with any registrations, filings and qualifications made pursuant to this
Agreement.
8. UNDERWRITING REQUIREMENTS. In connection with any Underwritten
Offering, the Company shall not be required under Section 3 to include shares of
Registrable Stock in such Underwritten Offering unless the Holders of such
Registrable Stock accept the terms of the underwriting of such offering that
have been reasonably agreed upon between the Company and the underwriters
selected by the Company.
9. RULE 144 AND RULE 144A INFORMATION. With a view to making
available the benefits of certain rules and regulations of the Commission which
may at any time permit the sale of the Registrable Stock to the public without
registration,
(a) at all times after ninety (90) days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Stock promptly
upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents
so filed by the Company as such Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing
such Holder to sell any Registrable Stock without registration; and
(b) at all times during which the Company is neither subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, nor
exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it
will provide, upon the written request of any Holder of Registrable Stock
in written form (as promptly as practicable and in any event within 15
business days), to any prospective buyer of such stock designated by such
Holder, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act.
10. INDEMNIFICATION. In the event any Registrable Stock is included
in a registration statement under this Agreement:
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(a) The Company shall indemnify and hold harmless each Holder and its
directors and officers, each person who participates in the offering of
such Registrable Stock, including underwriters (as defined in the
Securities Act), and each person, if any, who controls such Holder or
participating person within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or several,
as incurred, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of any material fact contained in such
registration statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any amendments
or supplements thereto) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse each such Holder and its directors and officers, such
participating person or controlling person for any legal or other expenses
as reasonably incurred by them (but not in excess of expenses incurred in
respect of one counsel for all of them unless there is an actual conflict
of interest between any indemnified parties, which indemnified parties may
be represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED,
however, that subject to Section 10(e), the indemnity agreement contained
in this Section 10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of any such Holder, its directors and officers, participating person
or controlling person, and shall survive the transfer of such securities by
such Holder.
(b) Each Holder requesting or joining in a registration shall,
severally and not jointly, indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company
within the meaning of the Securities Act, and any underwriter against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person or underwriter
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with information furnished by or on behalf of such Holder expressly for use
in connection with such registration; and each such Holder shall reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person or underwriter (but not in excess of
expenses incurred in respect of one counsel for all of them unless there is
an actual conflict of interest between any indemnified parties, which
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such loss, claim, damage, liability or
11
action; PROVIDED, however, that, subject to Section 10(e), the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, and PROVIDED,
further, that the liability of each Holder hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense which
is equal to the proportion that the net proceeds from the sale of the
Registrable Stock sold by such Holder under such registration statement
bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds received by
such Holder from the sale of Registrable Stock covered by such registration
statement; PROVIDED, that the foregoing limitation of liability shall not
apply to limit the liability of a Holder for any losses, claims, damages or
liabilities subject to indemnification by such Holder under this paragraph
(b) to the extent such losses, claims, damage or damages are finally
judicially determined to be solely attributable to the gross negligence or
willful misconduct of such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 10, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have
the right to participate in and assume the defense thereof with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party; PROVIDED, however, that an indemnified party shall have
the right to retain its own counsel, with all fees and expenses thereof to
be paid by such indemnified party, and to be apprised of all progress in
any proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action shall relieve such indemnifying party of
any liability to the indemnified party under this Section to the extent
such failure to so notify materially prejudices the indemnifying party's
ability to defend such action.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material fact
or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
12
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees
and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 10(a) or
10(b) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
11. TRANSFER OF REGISTRATION RIGHTS. The registration rights of
any Holder under this Agreement with respect to any Registrable Stock may be
transferred to (a) any transferee of such Registrable Stock who at any time
acquires at least ten per cent (10%) of such Holder's shares of Registrable
Stock (adjusted for stock splits and stock consolidations after the effective
date of this Agreement) or (b) any Affiliate of such Holder; PROVIDED,
however that (i) the transferring Holder shall give the Company written
notice at or prior to the time of such transfer stating the name and address
of the transferee and identifying the securities with respect to which the
rights under this Agreement are being transferred; (ii) such transferee shall
agree in writing, in form and substance reasonably satisfactory to the
Company, to be bound as a Holder by the provisions of this Agreement; and
(iii) immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act. Except
as set forth in this Section 11, no transfer of Registrable Stock shall cause
such Registrable Stock to lose such status.
12. SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Stock is required hereunder, Registrable Stock held by the Company or its
affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
13. SUCCESSORS AND ASSIGNS. Subject to Section 11, the terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto. Except as
expressly provided in this Agreement, nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
13
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. TITLES. The titles of the Sections of this Agreement are used
for convenience only and are not to be considered in construing or
interpreting this Agreement.
17. NOTICES. Any notice required or permitted under this
Agreement shall be in writing and shall be delivered in person, by
hand-delivery, mailed by certified or registered mail, next-day air courier
faxed:
(a) if to the Company, at
Aureal Semiconductor Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx
(b) to each Holder at the address set forth on Schedule 1 hereto, or
if such Holder shall not be listed on Schedule 1 hereto, at the address
therefor as set forth in the Company's records or, in any such case, at
such other address or addresses as shall have been furnished in writing
by such party to the others.
The giving of any notice required hereunder may be waived in writing by the
parties hereto. Every notice or other communication hereunder shall be
deemed to have been duly given or served on the date on which personally
delivered, or on the date actually received, if sent by mail or fax, with
receipt acknowledged.
18. AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended and the observance of any provision of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and each
Holder of Registrable Stock. Any amendment or waiver effected in accordance
with this Section 18 shall be binding upon each Holder of Registrable Stock,
each future Holder and the Company.
19. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable
in accordance with its terms.
20. EFFECT UPON OTHER AGREEMENTS. This agreement supersedes the
rights and obligations of the Holders (but not any other party other than the
Company) pursuant to the Registration Rights Agreement dated as of December
30, 1994 (as amended) between the Company and the other parties thereto, the
Registration Rights Agreement dated as of
14
February 25, 1998 between the Company and the parties thereto and the
Registration Rights Agreement dated June 5, 1998 between the Company and the
subscribers parties thereof.
21. ENTIRE AGREEMENT. All prior agreements of the parties
concerning the subject matter of this Agreement are expressly superseded by
this Agreement. This Agreement contains the entire Agreement of the parties
concerning the subject matter hereof. Any oral representations or
modifications of this Agreement shall be of no effect.
[Signature pages follow]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AUREAL SEMICONDUCTOR INC.
By:
----------------------------------
Name:
Title:
TCW SPECIAL CREDITS, on behalf of and as
agent for the TCW Holders and not in its
individual capacity
By:
---------------------------------
Name:
Authorized Signatory
OAKTREE CAPITAL MANAGEMENT, LLC, on
behalf of and as agent for the Oaktree
Holders and not in its individual
capacity
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
Schedule I
S-1
Schedule 1
The TCW Holders Beneficial Ownership
(1) TCW Special Credits Trust
Warrants 619,500
Common Stock 14,156,248
TOTAL 14,775,748
(2) TCW Special Credits Fund IIIb
Warrants 1,209,000
Common Stock 26,544,174
TOTAL 27,651,174
(3) TCW Special Credits Trust IIIb
Warrants 944,000
Common Stock 20,748,759
TOTAL 21,692,759
The Oaktree Holders
(1) Weyerhaeuser Company Master Retirement Trust
Warrants 250,000
Common Stock 11,591,250
TOTAL 11,841,250
(2) Columbia/HCA Master Retirement Trust
Warrants 8,250
Common Stock 384,285
TOTAL 392,535
(3) OCM Opportunities Fund II, L.P.
Warrants 816,750
Common Stock 38,002,749
TOTAL 38,819,499
2
